Harvard Goes Corporate
March 27, 2007 | Filed Under Legal Ed, Governance
One of the things this corporate lawyer feels is that law school did not prepare me very well for a career in commercial law (except for a business planning class taught by this esteemed professor).
Harvard Law School shows some savvy in a recent issue of their alumni bulletin by detailing the work of eleven members of their faculty in the area of corporate governance.
One caught my eye:
Finally, the newest member of the corporate law faculty has been delving into the world of innovation—specifically, how parties to contracts can be more creative in designing their deals. Since joining the HLS faculty this academic year from the University of Virginia School of Law, Professor George Triantis, an expert on corporate finance and commercial law, has been focused on the ways that lawyers and clients produce novel and creative contractual terms. In a yearlong seminar, he has been looking at some of the factors that promote or impede innovation, including the impact of judicial, legislative and regulatory action, and in a recent article, he examined ways of anticipating litigation in contract design.
While we would never want to commercialize the ivory tower, I applaud HLS for taking a bit of a realistic look at some of the issues corporate lawyers face.
On the other hand, law school does allow me to wax poetic about Shaffer v. Heitner!
Your Pad or Mine?
March 26, 2007 | Filed Under The Client Speaks, Law Firm Trends, Managing
Are the legal bills you get in the mail today what you are expecting?
According to UK’s The Lawyer, some GCs are growing increasingly concerned over law firm bills, and the size and contents thereof.
In a recent study by that publication, 69% of in-house counsel surveyed had some concerns about the padding of bills; the number rises to 73% when GCs alone are asked.
While there was no definition of “padding,” some participants said it may not be fraud, but more like a failure to scrutinize bills before sending them and what constitutes “good time” from other charges.
Here are some of the responses:
– “I’ve been billed for a conversation between colleagues. And I’m not paying for a junior to learn the ropes.”
– “There’s a lot of time on bills that gives general counsel the impression of padding because too much junior training and learning time is billed and not written off.”
– “Because of the pressure on partners to market, as well as to be legal advisers, they don’t often monitor the bills closely enough, so junior staff might be going off on wild goose chases that the client will be billed for.”
So while there is much talk of rising rates and starting salaries, the clients speak.
It will be interesting to see who is listening.
GE Brings Good Firms to Life
March 23, 2007 | Filed Under Legal Resources, Managing
Corporate Counsel details the latest eco-magination from GE on how it selects the roster of outside counsel it will use in its worldwide operations.
Under the so-called “Gen Two” regime, GE has backed away from such decision tools that it has used in Gen One (lilke a 20 page RFP and online auctions) to a shorter online RFP (saves paper!). This resulted in the herd of “preferred provider firms” being thinned from 140 to 108.
Other attributes of the new deal:
In addition to the changing lineup, GE also restructured the actual terms of the working arrangements. Under Gen Two, the firms must now propose alternative fee arrangements for every matter and offer a binding core team of attorneys to work on GE cases. The two-year contracts of Gen One were stretched to four years, and firms must renegotiate discounted rates halfway through the agreement.
Interestingly, one way the reductions apparently started was in the short-list of firms to get a Gen Two RFP. Those firms “that in-house lawyers gave the lowest ratings” to apparently didn’t get a password to the RFP site.
So the first lesson for law firms: don’t just be nice to the GC or managing counsel. That new staff attorney may have a long memory.
Crisis and Response
March 21, 2007 | Filed Under Litigation, Crisis Planning
There are two interesting items for corporate counsel who are sometimes pressed into service as PR advisor (or worse, spokesperson).
The first is from the Center for Media and Democracy, which details a short history (with a definite slant) of corporate responses to citizen group attacks, and how some of them may have backfired when the company responded with legal action. As the authors note:
Some companies decide they want to get even, PR backlash and lawyers’ costs be damned. CEOs call in their lawyers, who may see the courts as a way to punish — or even silence — critics. Angry PR advisers might also advocate legal threats and actions. Yet, history shows that legal actions against critics often only scucceed in turning a low-level issue into a full-blown public image crisis.
On a related topic, the Legal Times has an article about how outside counsel should handle the public during a trial. Michael Levy and Richard Levick offer sage advice to lawyers who may be comfortable in the courtroom, but may turn into a fish out of water when on the courthouse steps with a microphone shoved their way. They delve a bit deeper, covering two key issues:
First, what are the risks and benefits of public outreach during litigation? It is a question that allows for a broader picture of how and why communications campaigns are developed and the fundamental choices that have to be made in each case.
Second, how can companies and their lawyers work with communications professionals without exposing highly confidential and sensitive client information to discovery? It is a specific concern that relates directly to the larger, evolving role of the public relations adviser.
With all the access to media that people have, and all the outlets that never existed before (like blogs!), companies need to take a much more long-term view of their PR strategy. As tempting as it may be to try to commence legal action against a wayward citizens group, or stonewall the press during high-profile litigation, in most cases adopting a more even-keeled response (with a trained human face out front) is about the best you can do.
It’s getting harder and harder to have the last word.
Chiquita and Columbia
March 20, 2007 | Filed Under Criminal Liability, Compliance
Chiquita Brands announced last week an agreement with the US Department of Justice regarding “protection payments” made in Columbia by a former subsidiary:
In 2003, Chiquita voluntarily disclosed to the Department of Justice that its former banana-producing subsidiary had been forced to make payments to right- and left-wing paramilitary groups in Colombia to protect the lives of its employees. The company made this disclosure shortly after senior management became aware that these groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to make payments to such organizations. Since voluntarily disclosing this information, Chiquita has continued to cooperate with the DOJ’s investigation.
The DOJ’s press release is here, and reads a bit like a Tom Clancy novel. The bottome line for Chiquita, according to the DOJ:
Chiquita pleaded guilty pursuant to a written plea agreement. Under the terms of the plea agreement, Chiquita’s sentence will include a $25 million criminal fine, the requirement to implement and maintain an effective compliance and ethics program, and five years’ probation. Chiquita also has agreed to cooperate in this ongoing investigation. Sentencing will occur on June 1, 2007.
While the DOJ has admitted that this matter is “complicated” that apparently did not prevent the prosecution. You get the sense that the full story has not emerged; Chiquita maintains that it was motivated to ensure the safety of its employees. The DOJ’s press release repeatedly mentions that Chiquita had advice of counsel that these payments were illegal under American law.
There is even a report that Columbia may seek to extradite certain Chiquita officials. A few days prior to the announcement of the plea agreement, Chiquita appointed a new compliance officer.
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