Revolutionary Change vs. Evolutionary Change

Are these competing forces or can we implement both, resulting in a long
need change in the in-house/outside counsel relationship? We have a 20th
century structure trying to hold up a 21st century market. The seams are
giving way and cracks are in the foundation. We can no longer patch it
along the way with small concessions. ACC is calling for a monumental
change.

Get rid of the skyboxes! Get rid of the fancy recruiting of new attorneys!
And, get rid of those plush offices! This is the first step in reaching a
new structure, according to some leading in-house counsel.

Communicate! Communicate! Communicate better to the outside counsel your
needs, goals, and corporate values! This is the cry from the outside
counsel to reduce the friction between the parties.

In the end, I think it would be best to start with the premise that most
lawyers do not have a business background/education and we need to stop
trying to function as we do...and get some help from sound business minds.
It is sort of like the premise that only a fool for a lawyer represents
him/herself. May we begin the process today.

Learn more about the ACC Value Challenge at www.acc.com/valuechallenge

-Ellen Zavian, Associate General Counsel, ACC

Value Challenge Launched - Streaming Live from www.acc.com

Today, ACC launches it's Value Challenge- a program designed to create a constructive dialog and practical resources that help lawyers better align legal costs with client objectives and the value of the services provided.

About Value Challenge
Listen to the Launch (LIVE today at 1pm EST)
Read Today's Launch Agenda

How Do You Blog When The Financial System Is Apparently Collapsing Around You?

First, I did not know that Henry Paulson and Ben Bernanke were reading my blog—when I advocated a bailout for everybody I was joking. Apparently, they took me seriously or at least they are trying to do it for the entire financial industry.

Is there a lesson in this for lawyers? Remember the days when everyone admired those highly paid Wall Street investment bankers. They were all described as really bright. Their compensation, their offices we assumed had to be a reflection of their intellectual prowess.

What about lawyers—do the location of their office or the hourly rate really reflect intellectual prowess, or it merely a reflection of the same market aberration we are seeing in the investment community? Just a thought.

-Larry Salibra
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Words, Words, Words

In my last few blogs, I have been describing how we lawyers have used words to substitute for or manipulate reality, and how Judge Posner even wrote a book about it.

My last blog described how Hank Greenberg used words to draw an artificial distinction between the financial conditions of Lehman and AIG and suggesting that this excused us from re-examining the correctness of our conduct. Recently John Snow, former Treasury Secretary, and now the proud owner of Chrysler was on CNBC describing why the subsidized loans that Detroit automakers seek are not bailouts like Bear, Fannie, Freddie and AIG; he said they are “unfunded mandates”. This means he would like the same bailouts as the other entities, but he does not want shareholder value impaired or his management role terminated.

What were these mandates—Congress wanted the automakers to make fuel efficient cars. Like these automakers could happily skip along making SUV’s but for this Congressional mandate?



-Larry Salibra
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Plasticity of Legal Rhetoric

That phrase, “Plasticity of Legal Rhetoric” is not mine, but Judge Posner’s which he uses in his book, “Overcoming Law. However, I had recognized the concept long before I read it in Posner’s book, which, in fact, had been brought to my attention by a judge friend of mine who had been subjected to my ravings on the topic.

I decided to discuss this issue just after looking at the non-precedential conduct, because it fits into an underlying theme, we have a legal system that has very serious flaws—one of which is the ability to ignore real facts or create fictitious facts to get a result. If judges feel comfortable doing this, then non-precedential conduct becomes an extremely useful tool in helping, as Judge Arnold noted to hide the conduct.

So how did I describe plasticity of legal rhetoric? It is stating that a fact it true and repeating it two times in place of scientific evidence, or to refute scientific evidence to the contrary. Stated another way it is holding that a brick wall does not exist as matter of law and then making sure you are not in the vicinity of the brick wall as the speeding car approaches it.

It also has other very troubling manifestations.

The Rule of Three I’s

This rule is attributed to Warren Buffett, but I do not know that to be true. When I heard about it, I immediately thought about they way lawyers draft contracts

The rule says first come innovators, second there are imitators and finally come idiots. The commentator who described this rule and attributed it to Buffett was using the rule to describe how rational risk distribution became widespread and finally irrational.

I have litigated very bulky contracts drafted by very distinguished law firms, and was amazed at the level of confusion described in those large, undoubtedly very expensive, bound volumes.

The three I’s have an analogue in contract drafting. Initially a distinct problem is confronted by creative lawyers who draft a provision to address that issue. Then come the imitators, the bulk of our profession, they look at all those provisions in various contracts and copy them into their contract often without a complete understanding as to their relevance to the transaction—it is called boilerplate and tends to grow exponentially.

Then comes the last of the I’s. I actually saw a contract term that was in substance as follows: “In the event of two conflicting decisions by the United States Supreme Court on an issue addressed by this contract, the latter shall govern.”

Notwithstanding the extremely remote possibility that such a situation would exist, being invaded by an army from Pluto is probably more likely, this term does appear to state the obvious.

By the way, I did not make up this provision—someone was actually putting these in contracts.

New to In-House Committee Legal Quickie- online life

Any thoughts about what Ted Claypoole shared with the New to In-house Committee today on Second Life and the issues surrounding it?

Below is the description of the Legal Quickie from today's call:

Business Risks and Rewards in Online Virtual Worlds.

Moderator: Susanna McDonald, General Counsel, Claimant Management Systems
Guest speaker: Ted Claypoole, authority on internet law at Womble Carlyle Sandridge & Rice, PLLC

Topic Description:
Millions of people participate in online virtual worlds, and millions of dollars are spent in them. The three-dimensional immersive computing that characterizes these worlds will probably be the future of interactivity online for nearly all businesses. Companies are beginning to participate in these online communities, but the risks and rewards are not always clear.

This presentation will define and explain the significant online virtual worlds and will discuss who is participating in them. The speaker will discuss the various ways that corporations are playing and profiting from these social networks, and the new economies created by new worlds. Finally, the group will analyze and discuss the legal risks and business risks that your company may face if it chooses to play or profit in the virtual space.

In particular, the presentation will focus on legal risks highlighted bhttp://www.blogger.com/img/gl.link.gify the Second Life Banking Crisis of 2007-2008, and on case studies of corporate commitments to virtual worlds.

For more information on virtual worlds, including Second Life, visit the links below.

http://en.wikipedia.org/wiki/Virtual_world
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9018238&pageNumber=4
http://virtuallyblind.com/2007/05/04/trademark-infringement-vws/

What Are In-house Counsel Thinking—the Demise of Lehman and Merrill

I waited until Tuesday to write this because I wanted the emotion of the moment to fade. Those of you who have been reading my blogs have known that I have not been a fan of government intervention.

Today for those of you not in financial institutions your biggest concern maybe whether you will ever be able to afford to retire. But for our colleagues in financial institutions I am wondering what is going through their minds.

As a trial lawyer, the moment the jury went out or at the close of an appellate argument, I would begin reexamining every decision I made in the conduct of the trial or the argument and if the jury or panel returned with an adverse verdict, that re-examination would go on for weeks.

I am wondering if they are looking at those “complex financial instruments” and wondering like I did what they could have done differently, or whether their legal education even prepared them for this experience.

I was listening to Hank Greenberg this morning on CNBC attempting to distinguish AIG from Lehman. He said Lehman was insolvent, whereas AIG was simply illiquid. To me being illiquid means, there is money in my checking account, but I cannot cash a check today because the banks are closed; however, tomorrow it is virtually certain I will have the cash—I should have not problem pledging that check as collateral.

Insolvency means there is no money in the checking account. If AIG is in fact simply illiquid, why has it not been able to pledge its assets as collateral? I am wondering what AIG’s lawyers are telling their client—is illiquidity simply the asset owner’s euphuism for insolvency? Are we once again trying to make words dominate reality?

-Larry Salibra
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Judicial Imagination-- Making Believe We Are Competent

Recently, I had the opportunity to chat with a friend and former Chief Judge of a State Supreme Court. I was disappointed because, Illinois State Supreme Court that had apparently fought the politically correct position of adopting a mandatory CLE requirement had succumbed a few years ago.

I mentioned to my friend the fact that mandatory CLE was in my view a pointless exercise designed by the State Supreme Courts to avoid criticism for lawyer incompetence. Put another way if they adopted mandatory CLE they could avoid having to seriously address the issue or even think about it.

To my surprise, my friend readily agreed that mandatory CLE was a joke. Anyone hiring a lawyer who relies on the fact that the lawyer is up to date on his mandatory CLE is making serious misjudgment.

One has only to visit those CLE classes held between Christmas and New Year’s and look at the partially awake, well partied lawyers reading the paper, most of whom never had and never will practice estate planning to get a real a picture of the “well, it is got to be done” CLE.

Then there is the let’s make the best of it CLE, where tax planning in definitely a prime focus. You check in at the Royal Hawaiian, looking down the corridor at the blue Pacific and think to yourself, that a little torts and civil procedure is well worth the deductibility just for the view—not to mention that it is snowing back home. What this profession will do to insure they are fulfilling the public trust is remarkable.

Judges—do you really want to insure the public has cost effective competent legal service—competition is the answer—not mandatory CLE. Reduce artificial restrictions on access to practice and competition will solve the problem. In addition you will eliminate the administrative costs of monitoring CLE compliance.

-Larry Salibra
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Ready for a Legal Self-Examination?: Legal Issues and Trends to which Every Nonprofit Should Pay Close Attention

Just as you visit your doctor to get your annual physical, as an in-house attorney, it is prudent at least once a year to diagnose your nonprofit organization's legal health and well-being. Even if not an expert in every area of law, a successful in-house nonprofit counsel needs to be able to spot legal red flags and be able to effectively
manage them.

Later today on the Nonprofit Organizations Committee conference call, we'll be presenting a "legal quickie" on a number of the most significant legal issues faced by the typical nonprofit organization today. Topics will include everything from meeting contracts to tax exemption to lobbying disclosure to copyrights and trademarks and more.


Identified in our ACC Top Ten article on the same topic are ten key current legal issues and trends to which every nonprofit organization should pay close attention. Alongside each issue is a link to one or more articles on the topic, to provide you with additional information necessary to do some legal self-examination.

Why Federal Courts . . .Part 7

WHY FEDERAL COURTS DO NOT APPLY THE RULE OF LAW: Part 7: Epilogue

First, let me point out an error I made on the prior blogs. I stated that Anastasoff (blog 1) was seeking to have a prior unpublished opinion applied so she could obtain a refund. That is not correct; she wanted the prior case unpublished case ignored so she could get the refund. Although this error does not impair the point I was making that the essence of common law requires the similar treatment between similarly situated parties, I am a bit surprised no one pointed out the error.

There has been much written about this topic and you can access a lot of it at this site. Many of the articles have direct hotlinks to a pdf file of the article.

What is most troubling is the recent emergence of this practice in Britain, described by Lee Peoples in his article comparing the practices in the US and Britain. A review of the history of the development of the common law in this article incorporates a reference to the limitations that technology placed on publication. The obvious limitations of the oral decisions of judges and hardbound publication have largely been eliminated by technology. The justification for the emergence of this practice in England, efficiency, by saving lawyers judging time and money, basically the Alito position, Peoples describes as “a sharp break with centuries of tradition”.

Why now? Why with technology dramatically reducing both time and cost in seeking relevant cases are the courts so concerned about efficiency? Why didn’t they adopt a rule prohibiting the introduction of recollections of oral rulings and limit precedent to only the few cases they chose to be considered precedent centuries ago?

Perhaps more now than ever before the technology is doing to judges that which it is doing to the rest of us—making them more accountable for the quality and consistency of their decision making. We no longer have the luxury of arguing that we were not speeding at the time of the collision when the computer chip in our car says we were speeding.

More than any other branch of government, the judiciary is the most opaque—an in certain respects more dangerous. Perhaps it might not be able to reek cataclysmic havoc on us with the same overwhelming scale and intensity as the other branches—but such havoc has an important check—the fact that it impact is highly visible and strikes many at the same time, and therefore is far more likely to face strident opposition.

Judicial malfeasance is less visible, but its impact on those subject to its abuse is no less traumatic and in many cases the victims more defenseless.
In the web site I mentioned you will get many points of view, particularly from academics whose policy arguments often lack a critical perspective—that of looking down the barrel. For the criminal defendant who is denied a fair trial or the defendant unjustly forced to pay a judgment, efficiency may not seem to be a very important goal.

However, there is one major fallacy in the efficiency argument known to anyone who has tried a case and done a Lexis search on the law—the real cost of the litigation is generally not involved in preparation of your jury instructions or memorandum of law. It is in the development of the facts.

I have had the opportunity to find cases of judges with rulings contrary to the position they wanted to take with respect to my client, and watched them squirm when the ruling was brought to their attention—they do not like the feeling and that is why the non-publication—non citation rule exists.


-Larry Salibra
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It is a battle, not the war

No doubt that you all received e-mails from ACC including the personal note from Fred Krebs announcing the victory in changing DOJ policy on the attorney-client privilege. I want to extend my congratulations, particularly to Susan Hackett who has led the ACC effort.

However, in our enthusiasm, let us not forget that this was a joint effort among many organizations, including the National Chamber of Commerce, WLF and others and we need to jointly reaffirm our coalition because the job is not over. Winston S. Churchill said following the victory at El Alameinin in North Africa in WWII: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

In a series of blogs I described the systematic erosion of federal business civil liberties detailed by a paper recently published by the Washington Legal Foundation. Steve Bokat detailed the extensive participation of many organizations that have worked alongside ACC and WLF to confront these issues as a community. The present victory corrects an important part, but just a part of the overall problem. The judicial expansion of the crime fraud exception, for example, has many of the same detrimental impacts on the attorney-client privilege.

Of course we need to recognize the present achievement, but we also need to reaffirm our cooperation with coalition of which ACC is a part and use this opportunity to renew our commitment to win the war.


-Larry Salibra
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Why Federal Courts . . . Part 6

Part 6, Justification #4: A non-precedential opinion can be argued for its persuasiveness, even though it is not precedential.

This position appears to be the present state of affairs in the federal courts—the old rule was that if you cite a non-precedential case you will be sent to the eighth circle of the Inferno; now such a citation simply risks being sent to Purgatorio.

The position was advocated by Justice Samuel Alito and unfortunately reflects a fundamental misunderstanding of the common law and the nature of precedent. It was advocated by him (when he was at the Third Circuit) at the Congressional Hearing on the topic and was justified by the argument that if every opinion was written to be precedential judges would not enough time.

First, the “I am overworked” argument of the federal bench is meritless. The reason we have an opinion is for the bench to explain to the litigants the legally operative facts, how the law applies to those facts and therefore, the result. We do this to insure as, Judge Arnold (blog 1) noted, that the judiciary has a legitimate basis for the decision. If the federal judge is overworked –too bad, get another job. There is a long line out there looking to replace you, including a number of state judges in Ohio, who have far larger caseloads where every case is precedential.

Second, it conflicts with Judge Becker’s(Blog 4) position that even if a case is not precedential, the judiciary should provide the litigants with an explanation for the outcome. It seems that such an explanation should include a description of the operative legal facts and a description of how the law requires that result under those facts. Is that not a description of precedent?

Third, a case is persuasive because it has the same operative legal facts as the case before the court and is not legally disguisable. It is in fact precedent and similarly situated parties require similar treatment. With all due respect to Justice Alito, whom I know, how else can a case be persuasive? The reasoning sounds good because it is written in iambic pentameter?

-Larry Salibra
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