Litigation

A couple of decades ago, a friend was defending a case that involved a corporate entity named “LHIW, Inc.” The case seemed defensible for a while. Then, during a deposition, opposing counsel thought to ask a witness what the heck “LHIW, Inc.,” stood for.

Suffice it to say that it’s tough to defend a transaction that involves a shell company named “Let’s Hope It Works, Inc.”

Ten years ago, a company was spinning off the piece of its business that was saddled with product liability exposure. The transaction would create one new, clean company and one tainted company that would spend its days defending itself or paying claims over time. Did the internal corporate documents really have to refer to the two new entities as “GoodCo” and “CrapCo”?

Why did I flash back to those memories? Because I recently ran across a situation where someone cleverly named an investment vehicle “SNP, Inc.” That was fine and good until someone thought to ask what “SNP, Inc.,” stood for. Naturally: “Should Not Participate, Inc.”

The more things change, the more they stay the same. But I have a proposal on this front . . .

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Judge Bruce Markell

Were there ever a time to use “fail,” as the contemporary vernacular permits, it is now, and in reference to this deplorable display of legal representation: it was an epic fail.

– Judge Bruce Markell, in a recent opinion in a Las Vegas Chapter 13 bankruptcy proceeding, which concluded that the debtors’ attorneys, Barry Levinson and Jeremy Mondejar, should be sanctioned for their ineffective representation.

(What did these Cooley Law graduates allegedly do to irk Judge Markell in this way? Take a look, after the jump.)

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For every matter that we handle, we need one “unifying mind.” We need one person at the helm; that person must either personally know everything that’s happening in the matter or, at a minimum, know where the knowledge lies. (Extraordinary cases may be beyond the capacity of a single unifying mind and may require two or more. But those situations are exceptional, and they pose challenges beyond what I’m thinking about today.)

The unifying mind might be found anywhere in the hierarchy, depending on the type of matter involved. At a law firm, the unifying mind can be a partner, if the matter is large and the partner a hands-on type. Or the unifying mind can be an associate charged with monitoring and tracking all events. But everyone on the team should know who’s at the helm, so everyone knows the person who should receive copies of correspondence, alerts about upcoming events, and reports about how things are going.

At an in-house law department, we, too, must have a unifying mind for every matter. In the litigation world, a corporation may have several line lawyers whose job is to supervise cases on a day-to-day basis. The line lawyer primarily responsible for overseeing a particular case should typically serve as the unifying mind for that matter. Outside counsel should communicate with that person, and everyone in-house should know that’s the lawyer to call if they need detailed information about a lawsuit.

That’s all fine in theory, but two things often screw this up in practice. What two things?

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Following the federal government’s raid in January 2012 on Megaupload, the company that owned and operated the notorious file-sharing site megaupload.com, the criminal case has already started making its way through the court system. The government froze the company’s assets, and the CEO is under house arrest, but Megaupload still managed to hire some high-powered, Biglaw representation. Good for them, right?

Well, maybe not. The government has objected to Quinn Emanuel entering the case to represent Megaupload. The government cites conflicts of interest.

What are the alleged conflicts? And what does Quinn have to say about the situation?

The firm just filed a saucy brief responding to the objection. Let’s just say that Quinn isn’t taking it lying down…

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Tom Wallerstein

I’ve known some lawyers to proudly proclaim that in litigation, they leave no stone unturned. They boast that they will pursue every defense, review every document, and raise every argument. In doing so, presumably, they assure victory. They strive to win at any cost.

This approach makes sense when a well-funded client faces bet-the-company litigation. In that case, of course, a lawyer should pursue every possible path to victory, even if a particular path seems like a long shot. It may cost a lot to win, but even more to lose. In these cases, the economic interest of the attorney and the client are aligned. If the amount at stake warrants it, the lawyer can work the case to the max, and the client is happy to pay for it.

But smaller firms handling smaller matters know that many times, winning in litigation is relative to the amount at stake and the fees incurred. Every client is initially delighted to receive a favorable verdict at trial. But when the heat cools down, and only the bill remains, even the winning client may resent his lawyer when he reflects on the price he paid for his “victory”….

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Suppose you’re doing business in a country that is perceived as being corrupt. For example, Myanmar, North Korea, and Somalia take the bottom three slots in the 2010 Corruption Perceptions Index.

Okay, let me rephrase that: Suppose you’re doing business in a country where it’s actually lawful to do business, but the country is perceived as being corrupt. Cambodia or Zimbabwe might fit the bill. (On reflection, it strikes me that my own company may actually do business in those two places. If we do, then I, naturally, love the judicial systems in Cambodia and Zimbabwe. If my company is ever in court in one of those places, please don’t hold this column against us. It’s just that terribly unfair perception of corruption that gives you guys a bad name.)

How do you conduct business there?

Very carefully, of course.

As a matter of compliance, your company must implement policies that forbid payments that are customary in the corrupt place, but forbidden by U.S. law. And your company must enforce those policies, perhaps by having a regional group that approves third parties with whom you do business or otherwise strives to comply with the law.

But that’s the front end. What do you do at the back end, if you find yourself in a dispute in the corrupt place?

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Deidre Dare aka Deidre Clark

The high-powered international law firm of Allen & Overy is a member of the Magic Circle. So why can’t they make Deidre Dare disappear?

As longtime readers will recall, Deidre Dare (real name: Deidre Clark) was a Columbia Law School graduate who worked in the Moscow office of Allen & Overy. Everything was going swimmingly, until Clark decided to write some erotic fiction on the side — erotic fiction that may have been based in part on Clark’s experiences working as an expat in Russia. One thing led to another, and Clark’s employment at A&O was terminated.

Clark sued the firm in London, alleging her firing was improper; that suit was dismissed on jurisdictional grounds. She then sued in New York, making claims for sexual harassment, sexual discrimination, wrongful termination, and retaliation, among other claims.

When we interviewed her last year, Clark (a member of the New York bar) sounded confident about her chances of success in the Big Apple: “I think NY will take jurisdiction. And thank God for that.”

So, was Clark correct? Will her suit be moving forward in New York?

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When you work as a litigator at a law firm, you know your cases. You know who said what to whom when. You know the recipients and dates of the critical emails. You know the precise terms of the contracts. You know what the opposing expert said at his deposition and how you’re going to attack him at trial.

In short, you know stuff.

When you move in-house — or, at a minimum, to certain in-house positions — those days may vanish. You may never know — really know — anything again.

The little cases may become barely a rumor: The employee was entitled to five weeks severance; he hired a lawyer and filed a lawsuit; we want authority to settle for ten weeks severance. You may kick the tires on the case for a few minutes, but that’s it. If you crave to know who said what to whom when, then you’re in the wrong job.

I feel a bit irresponsible having written those words, because they imply — indeed, they say — that folks in positions such as mine are doing their jobs without full knowledge. To many lawyers, that’s the ultimate sin. Yet in-house lawyers consistently say that a big piece of the transition from a firm to a corporation is learning to make decisions and take actions based on incomplete facts. (One of my colleagues recently said that he suffers from “in-house ADD.”)

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When does permissible “flattery” become impermissible “lies”?

I’ll use three real-life hypos — situations that I’ve lived — to explore the question.

First: I was a partner at a law firm. The client had just hired a new, junior in-house lawyer to oversee (among other things) the set of cases we were defending. The client called an all-hands meeting. Four or five of us from the firm attended, as did the general counsel of the company, a couple of deputy general counsel, the global head of litigation, and the month-old, new in-house guy, who we didn’t yet know from Adam.

My senior partner spoke first: “Before we get started, I just want to say that [the new, junior in-house guy] is a great addition to your law department. It’s not often that you work with someone for just a few weeks and immediately know that you’ll be able to do better work, more efficiently, with the new person on board. But you did just that with this hire. Congratulations! What a great lawyer!”

The junior in-house guy was beaming ear-to-ear. Later, in private, your senior partner says to you: “That’s how you cement a client relationship.”

So, what do you say: Permissible (intelligent, praiseworthy) flattery? Or unethical lies?

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Obtaining a summer associate position at a major law firm remains difficult. That’s the upshot of a recent report (PDF) issued by our friends at NALP. You can read summaries of the report at the NALP website and at the ABA Journal. This quip, by NALP executive director Jim Leipold, pretty much says it all: “This is not a hot recruiting market.”

Given that employers are still in the driver’s seat, at least when it comes to entry-level recruiting — recruiting of lateral lawyers, whether associates or partners, is a different kettle of fish — you’d think that law firms would use this opportunity to experiment a bit with fall recruiting. There are some interesting alternatives out there to the standard model of 20- to 30-minute screening interviews, typically held in the summer before or early fall of the 2L year, followed by callback interviews at the firms. E.g., JD Match (disclosure: a past ATL advertiser).

But law firms, as we know, are a conservative group. They tend to stick with existing models, even if those models are imperfect.

Well, most law firms. Nobody ever accused Quinn Emanuel of not daring to be different….

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