In the News: Let's Make a Deal!

Corporate Counsel's Sue Reisinger reports on the increase in deferred prosecution and non-prosecution deals between the DOJ and companies under investigation. Read the full story, "Trying Not to Keep Up With the Andersons" on law.com.

Bonus: ACC's Susan Hackett is quoted in the article...twice!

In the News: You're No SuperLawyer! (at least in New Jersey)

A New Jersey Supreme Court ethics panel ruled to prohibit New Jersey lawyers from advertising their inclusion in or participating in the selection process for two lawyer guides, "Best Lawyers in America" and "SuperLawyers." The panel believes these types of guides violate the rule of professional conduct by suggesting that one lawyer is better than another. Read the full story.

Is this a victory for the profession or an ill-conceived crusade? What do you think?

In the News: The Latest Twist in the KPMG Case

Like any good summer blockbuster, the thrills just keep on coming in the KPMG case. Previously, Judge Kaplan ruled that prosecutors had gone to too far by demanding that KPMG cut off legal fees for the 17 defendants in the case if it wished to be deemed "cooperative." Kaplan went so far as to urge the defendants to sue KPMG for said legal fees...and they did. Now, three of the defendants are seeking to suppress proffer statements they made to prosecutors, arguing that they would have never met with prosecutors had the legal fees issue not been hanging over their heads. Kaplan has yet to rule.

Read all about it on law.com today.

Backdating Scandals: What's REALLY Going On?

Media coverage of backdating scandals, newly-released research indicating widespread backdating practices in corporations, and hush-hush hints of allegations pending and charges soon to be filed, dominated the business news pages of the Wall Street Journal, Financial Times, and the legal media for the last few days. What's really going on here?

My conversations with CLOs on this issue indicate that while "true" backdating is a heinous practice, many of the current allegations levied by the governance ratings organizations, the SEC, and the media have swept into that category a whole bunch of practices that:

a.) aren't illegal (and indeed were tacitly condoned by auditors and the SEC)
b.) have been common practice in companies that have always prided themselves on the integrity in their compensation processes,
c.) have been openly disclosed (so there's no concern over super-secret executive shenanigans) and
d.) have CLOS and the business leaders they advise furious about being categorized as engaging in corrupt practices that inappropriately enriched company executives.

Companies that as a common practice choose a prospective or current date to grant options and then get that grant authorized by the Board's compensation committee members for approval (say, by passing a date of July 6 through telephonic approval on or before July 6), but who did not complete the paperwork to make the transaction complete for accounting purposes until later (say, July 19) are not appropriately swept into the same category as folks who decide on July 19 that they'd like to grant options dated July 6. To my (admittedly-non-securities-expert) mind, these two activities are entirely different things, and evidence entirely different mind-sets. But I'm talking to lots of people whose companies are being investigated for the former practice, as if they've engaged in some kind of secret criminal conspiracy to unjustly enrich business team members.

Clearly, one of the benchmarks emerging for companies that may have chosen dates ad hoc in the past is to consider setting dates that options will be granted for a regular schedule in the future (so that no one can claim that backdating to choose more advantageous dates was practiced).

But in the meantime, practitioner groups are forming to push back on what is being perceived as yet another attempt to criminalize non-criminal behavior, while at the same time that the SEC, investor groups, and even a special task force in San Francisco (will the State AGs be far behind?) are forming ranks to pursue possible charges against companies and execs that include a whole bunch of folks who never had a clue that their above-board and board-condoned options grant practices were going to be future classified as shady dealings. Certainly the SEC and auditors, which knew about many of the practices they now sweep into a general category of inappropriate backdating, never before suggested they had any problems with the practices. Just to cover the bases, the
SEC has supposedly asked the PCAOB to delay an examination and proposals regarding this issue for the moment. Kind of hard to know what to advise when only hindsight is 20/20, eh?

Of course there are egregious practices in the backdating scandals currently under scrutiny, but there seem to be a whole lot more folks who may be implicated (and essentially blackmailed into either expense defensive tactics or settlements) whose practices were above-board, non-criminal, and -- frankly -- widely considered just good business sense and common practice by regulators, in-house counsel, and so-called governance experts. What's your take?

Susan Hackett
Senior Vice President and General Counsel
hackett@acca.com

In the News: Ka-ching! GC Compensation Survey

Corporate Counsel magazine has pulled together all the details of the compensation packages of the top GCs. Find out who got that $4.5 million bonus we've all been dreaming of and who got no bonus at all (and dropped from 17 to 71 on the annual list). You can read an article about the survey right now, but will need to register (free) to see the full roster.

In the News: The Latest on KPMG

In a not unexpected move, the former KPMG employees who had the coverage of their legal fees capped by the company and who earned the support of Judge Lewis A. Kaplan in uncapping said fees, have filed suit against KPMG to...you guessed it!...compel the company to advance their legal fees.

You can read the full article (as usual) on law.com.

Bonus: The story contains a list of the defendants and notes who is representing each.

IP--How Does Your Company Protect It?

By making an employee's alleged theft of its trade secrets public, The Coca-Cola Co. accomplished three things, experts say. It managed to control the message about the incident, it demonstrated its commitment to prosecute such thefts and it raised a red flag about the risks all companies face in protecting their most valuable possession -- their intellectual property. In a memo to Coke employees, CEO Neville Isdell said he has ordered a thorough review of the company's information protection practices. How would your company respond to an attempt to steal it's IP?

Read More

In the News: Law Firms and Pro Bono

How important is pro bono work to you? Do you hold your law firms to the same standard? However you answer, it should still be interesting to see how the top 200 law firms stack up in a ranking of their pro bono efforts. You can read the related article "AmLaw 200 Firms Still Have a Way to Go on Pro Bono" on law.com, but you'll need a subscription to see the whole list.

Do you want to confirm your commitment to pro bono? Take CPBO's Corporate Pro Bono Challenge.

In the News: Whistleblowing Around the Globe

My favorite source for legal news, law.com, has a story on the conflict between the Sarbox whistleblower requirement in the US vs. the European take on the issue.

But this isn't really news. The issue was covered in the ACC Docket article, "Clash of the Titans," back in the April issue. Read both and tell me which is better.

And now for something completely different: I noticed today that my grocery store's new slogan is "Experience the Unexpected." Not sure that's really what I want from my grocery store. I'm just sayin'.

Lawyers Don't Write Blogs, huh?

According to the ABA's Market Research Department, there are 1,116,967 lawyers licensed to practice in the United States in 2006. The U.S. Department of Labor's Bureau of Labor Statistics reported in 2004 that there were 735,000 actually practicing then.
According to Lexblog founder and CEO Kevin O'Keefe, there are only between 1,200 to 2,000 blawgs in existence now.

Doing the math, only about 1 percent of lawyers are blogging.

What's the deal, lawyers? Why are we so timid when it comes to sharing our opinions on a blog? What do you think?

Read more about this at Law.com