Flight Capitol
June 26, 2007 | Filed Under Litigation, International, Regulation
The attraction of an NYSE listing may be under increasing pressure, according ($sub req’d) to the Financial Times.
Concerns about litigation are cited in a new survey that points to a rise in the international nature of capital markets. London and Hong Kong are cited as growing at the expense of the NYSE:
Nearly 60 per cent of respondents to the survey of attorneys specialising in initial public offerings said the risk of securities litigation, coupled with the cost of developing infrastructure for a public company and meeting accounting standards, discouraged companies from going public in the US, according to Gavin Anderson, the US financial communications company. Richard Truesdell, of Davis Polk and Wardwell, said that, while US exchanges continued to capture a strong share of international offerings, their position was at risk.
“Overseas markets have developed attractive regulatory frameworks and they are getting better at marketing and providing liquidity to support IPOs,” he said.
The Gavin Anderson firm interviewed attorneys from 20 US firms representing issuers on almost $11 billion of US IPOs last year.
While it is true that law firms can benefit from the work created by increased regulation (like Sarbanes-Oxley), this survey shows that long-term it may be more of a mixed blessing if more securities work is headed offshore.
The NYSE, of course, is not sitting still, the parent company is now called NYSE Euronext.
HP, the SEC, and Reliance on Counsel
May 24, 2007 | Filed Under Litigation, Compliance, Governance
The SEC confirmed yesterday that HP would not face sanctions over a failure to explain why director Thomas Perkins left during last year’s Dunn-director investigation saga.
“From the whole hubbub that erupted last summer, this is it” in terms of SEC enforcement, said Marc Fagel, associate regional director for the SEC in San Francisco. “We view the issue as a narrow one, which is, what is a company’s responsibility when a director resigns.”
It is unusual, in my experience, for a regulator to use the word “hubbub.” Sort of hard to press charges over hubbubs.
The SEC’s decision was explained thusly:
“It was a new rule and (HP) relied on their attorneys,” Fagel said. “They got legal advice from inside and outside counsel that they did not need to make the disclosure. You need to be careful how you sanction a company that relied on its counsel.”
“You need to be careful how you sanction a company that relied on its counsel.”
Ah, music to the ears of SEC partners everywhere. And a standard that regulators of various stripes should consider.
That said, will inside counsel make such a call in the future without an outside opinion? Are they covered (insurance, indemnity or otherwise) if they do and they are wrong?
While HP still faces related shareholder litigation, this is definitely a positive development for new HP GC Michael Holston.
This is News?
May 17, 2007 | Filed Under Litigation, Law Firm Trends
There’s a lot out there on the web, and not all of it is as it seems.
Take, for example, this “article” which appears to report on issues that major medical device company is facing over a prominent division.
What looks at first blush like news is actually an invitation to contact a plaintiffs’ attorney if you look at the link at the bottom of the page. Other signs include the fact that the “About” page has no identified editors or staff (but a fetching picture of a very earthy group in the wild), and the site’s FAQs are all about class actions.
It’s probably advisable to Google your company from time to time and see what you get. All the news that fits may not be news at all.
Open Source, Open Season?
May 14, 2007 | Filed Under Litigation, Technology
Fortune reports that Microsoft is taking a hard look at various free and open-source software (FOSS) and is planning a strategy to assert patent claims. Many large companies use such software in various applications across the enterprise.
Microsoft General Counsel Brad Smith and licensing chief Horacio Gutierrez sat down with Fortune recently to map out their strategy for getting FOSS users to pay royalties. Revealing the precise figure for the first time, they state that FOSS infringes on no fewer than 235 Microsoft patents.
Mr. Smith has been aggressive in building up Microsoft’s patent portfolio. When he became general counsel in 2002, the company filed 1,411 patent claims; in 2004 it submitted 3,780.
There were three options for the Microsoft GC regarding potential infringement:
First, it could do nothing, effectively donating them to the development community. Obviously that “wasn’t very attractive in terms of our shareholders,” Smith says.
Alternatively, it could start suing other companies to stop them from using its patents. That was a nonstarter too, Smith says: “It was going to get in the way of everything we were trying to accomplish in terms of [improving] our connections with other companies, the promotion of interoperability, the desires of customers.”
So Microsoft took the third choice, which was to begin licensing its patents to other companies in exchange for either royalties or access to their patents (a “cross-licensing” deal). In December 2003, Microsoft’s new licensing unit opened for business, and soon the company had signed cross-licensing pacts with such tech firms as Sun, Toshiba, SAP and Siemens.
Microsoft has not said whether it will pursue litigation over alleged FOSS patent infringement. If it does, expect the IP practice areas of major firms to get very busy.
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.
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