Competitive Intelligence for Better Law Firm Decision-Making

by JRaasch on January 26, 2012 · 0 comments

in martindale.com

Important law firm decisions should never be made in a vacuum.  Instead, they should be made with an abundance of the right information in hand.  For many law firm decisions, “the right information” means competitive intelligence.

Competitive intelligence is defined as a systematic and ethical program for gathering, analyzing and managing information about the external business environment – information that can affect all of a law firm’s plans, decisions and operations.

Competitive intelligence can be information about organizations – like your clients, potential clients and adversaries.  It can be information about other law firms – like collaborators, opposing counsel or even potential merger partners.  It can be information about the legal needs in particular industries or markets.

Competitive intelligence can also be information about people – like the people you will meet in a pitch, in the boardroom, in the courtroom (like opposing counsel or an expert witness) or in a hiring interview.

In any of these settings, knowledge of companies and people is power.

“When gathering competitive intelligence, there is a wrong way and a right way to go about it,” said Wanda McDavid.  “The wrong way is typified by computer hackers like Lisbeth Salander in The Girl with the Dragon Tattoo.  As much as we enjoy the book and the movie, and want Lisbeth to succeed, we cannot condone her tactics.  This kind of corporate espionage makes for good entertainment, but bad – and unethical – business.

“The ethical gathering of competitive intelligence complies with all applicable laws – domestic as well as international,” said McDavid.  “It is obtained from legitimate online and print sources, in both public and subscription databases.  When obtained by interviews (either with targeted competitor staff and customers or as general field research), the ethical interviewer discloses up front both her identity and the purpose of the interview.”

McDavid and her colleague Judy Goater discussed the ethical gathering and use of competitive intelligence by law firms at the monthly educational program of the Rocky Mountain Chapter of the Legal Marketing Association (www.legalmarketing.com/rockymountain).  The program was held Jan. 10 at Maggiano’s Little Italy in downtown Denver.

McDavid is president and Goater is director of services development at Access Information (www.access-information.com), a Denver-based firm that specializes in the discovery and compilation of competitive intelligence for use by law firms.  Both have master’s degrees in librarianship and vast experience in the legal industry.  The PowerPoint slides from this presentation have been made available on the company website, in the “training” section.

“Before starting any competitive research project,” said McDavid, “it is essential that you have a plan.  Thanks to the Internet, there are an almost unlimited number of resources out there.  You can waste a lot of time and money searching them all.  If we know your goals for a particular research project, we can help you concentrate your resources on the most likely, valid and reliable sources for your purpose.”

Competitive intelligence on companies, competitors and adversaries

Some sources of competitive intelligence about companies, competitors and adversaries are paid and some are free to the public.  Because of the nature of their work, many law firms and law librarians already have access to many of the paid recourses.  These include products offered by industry giants LexisNexis and Thomson West.

“For industry research, I also like to use a product called Profound, offered by MarketReserch.com,” said McDavid.  “They offer a wide range of reports for purchase.  An entire report can be costly but, if you know exactly what you are looking for, you can order just part of a report for a lesser fee.

“And don’t forget,” said McDavid.  “Many of these paid resources are available for you to use free of charge at the Denver Public Library.”

Free resources for company research include www.llrx.com and Zimmerman’s Research Guide (http://law.lexisnexis.com/infopro/zimmermans).  In its database, Zimmerman’s offers links to both company information and company personnel.  “Both of these sites are great places to start if you are trying to get an overview of the kind of research that is out there,” said McDavid.

Information on companies can be found at Hoovers, Yahoo! Finance, Google Finance, Nexis company information and Valuation Resources.com.

“A lot of good research is available from Google,” said McDavid.  “We all know how to do a Google search, but much more refined searches and results are available via the Google Advanced General Search Page.  Google Scholar and Google Advanced Scholar Search offer useful results that have been ‘purged’ of casual hits.”

Court and government sites – especially the Secretary of State’s office — include public records and a wealth of useful information.  “If you want to know where a company is headed,” said McDavid, “check the U.S. Patent and Trademark Office Database.”

Competitive intelligence profiles

When preparing to meet with a potential client, lawyers often ask marketers or librarians to prepare a profile of the client.  “All too often,” said McDavid, “this is done just a few hours before the scheduled meeting – and we need to scramble.

“Even with very little lead time, you would be surprised at how much information you can turn up by simply visiting and mining the potential client’s website,” said McDavid.  “You should also search company or firm pages on social media sites.”

When you have a little more lead time to prepare – like for a proposal or the resulting beauty contest – then you can delve more deeply into client background.  Good sources for public companies include SEC filings.  Good sources for private companies include Dun and Bradstreet reports.

A good profile addresses some or all (depending on your time and research skills) of these categories:

  • Quick facts
  • Company overview
  • Business segments
  • Products/services
  • Business partners
  • Board of Directors
  • Key executives
  • Key developments
  • Representative clients
  • Legal issues and litigation
  • Locations
  • Case studies
  • Patent information
  • Marketing strategy
  • Competitors
  • Sources
  • News articles

Armed with this type of information, your lawyers and law firm are well-prepared to make good decisions about how to approach a potential client (or anyone else), and how to make a good impression once the contact takes place.

Competitive intelligence on people

Sometimes you need information about an individual rather than a company.  This person could be a client, a prospective client, a competitor, opposing counsel, a potential hire or a potential merger partner.  When you know something about the person you are meeting with, you can plan appropriately.

Sometimes, you need other kinds of information about people.  For example, you might need to track down a former employee or a potential witness.  “When such a person has gone ‘off the grid’ electronically, you might not have much to go on,” said Goater.  “This is where creativity comes into play.

“In one such case, a former executive had been gone from a company for five years,” said Goater.  “He had a common name, which made the search even more difficult.  Someone recalled him saying that he wanted to take over his family’s farm.  By using the farm subsidy database and narrowing the search by general geographic area and the man’s age, we were able to locate him for our client.”

Another reason to search for people is to acquire their contact information for use in a marketing database.  Good sources of contact information include telephone directories, professional directories and professional licensing agencies (if you know a person’s profession).  Online sources include a search on Yahoo! People.

Many of the commercial and general resources mentioned in the “companies” research section in this article work just as well for people.

“We often use a site called Jigsaw, owned by Salesforce” said Goater.  “It is a business-to-business contract database populated by marketers and salespeople around the country.  By contributing their contacts, users gain access to the database.  It includes 30 million contacts.  It is an especially good source for the contact information of individuals below the usual c-level executives that show up in most directories.”

If you know a person’s location, you can search local and regional media for mentions of their names and activities.  Social media – like Martindale Hubbell, LinkedIn, Facebook, Google+, Twitter and YouTube — are also good resources.  So are blog searches.  Social media include contact information, but they also broaden your research with less formal “chat” about people, their activities and the companies they work for.

“In gathering information about people,” said Goater, “you want to use a wide variety of sources – and you want to be very careful to validate any information you find before you act on it.  There is a lot of faulty information out there.  There are also privacy concerns.”

Today, information about companies and individuals is widely available. In fact, you could easily drown in all the data.  The trick is to focus your search in light of your business goals.  With this information in hand, you are well-positioned to make good decisions about the future of your law firm – and its work.

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Most Law Firms Are Offering Part-time Work Schedules

by Mike Mintz on January 26, 2012 · 0 comments

in Law Firms

In its 2011-2012 Directory of Legal Employers, the NALP (The Association of Legal Career Professionals) finds that 98% of law firms are offering a part-time option to their associates, partners, and other attorney employees. The part-time option sampling is of 1,269 law offices employing over 125,000 lawyers. The statistics are arranged by city, some metro areas and states, and distinguish between partners, associates and counsel/ of counsel, staff and senior attorneys. The larger the firm, the more likely the part-time option is offered.

Most of those working part-time are women: 89.1% of part-time associates are women, and 65.8% of part-time partners are women, while 2.7% of the men are working part-time, but only 1% of the male associates. Overall, the percentage of lawyers working part-time is 6.7%.

Of those firms offering a part-time option, over 15% have an affirmative program offering it to all attorneys in the firm. However, almost half of the firms that offer a part-time option don’t offer the option to entry level lawyers. The percentage of those firms offering part-time employment to entry level lawyers varies widely by city. For instance, in the Boston area 32.4% of firms don’t offer the option to entry level lawyers, in NYC and Charlotte around 50% don’t offer it, while in Orlando and Houston over 71% don’t offer it.

The NALP is a non-profit trade organization of those involved in the legal employment process: U.S. and Canadian law schools and public and private sector employers of attorneys.

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The Importance of Anchor Text

by DebbieR on January 25, 2012 · 0 comments

in social media for lawyers,Web 2.0

Now that your blog is up and running, your next step is to make sure that people can find you and read your words of wisdom.

One of the ways to do this is through anchor text.  You are probably aware of using keywords in text so you come up  higher in rankings on search engines like Google—also called “search engine optimization,” or SEO.  For example, if you’re a divorce law firm in New Jersey, you might sprinkle in the keywords “New Jersey divorce attorneys” into your blog so those keywords show up in Google and people are led to your site.

Anchor text is a quick and easy way to boost your SEO. Anchor text uses words to link to a page. Instead of saying something like, “Learn more about our divorce attorneys by visiting www.nj-divorce-attorneys.com, “ you would instead write, “Learn more about our NJ divorce attorneys.” We call this kind of linking “SEO-friendly,” because it’s more illustrative and relevant to the target page.

The linked text is your anchor text—descriptive text that’s also a link. Anchor links act as a little vote of confidence to search engines, telling them, “Hey, check it out, this is what this page is about.” And that can lead to higher SEO rankings.

Anytime you want to link to a page in your website, use anchor text instead of linking to the entire web address. Remember to use the keywords. Saying “Contact us” is not as valuable as saying “Contact our NJ divorce attorneys today.” And remember not to overdo it. Two to three anchor links per page is plenty without going overboard.

Happy linking!

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Judges Restrict Use of GPS-Raise Questions About Privacy Rights in Digital Age

by Mike Mintz on January 25, 2012 · 0 comments

in Legal Technology,martindale.com

The U.S. Supreme Court recently voted unanimously that police violated the Fourth Amendment of the U.S. Constitution when they attached a GPS system to a suspect’s vehicle without first obtaining a search warrant.  However the Court’s reasoning was closely split 5-4, indicating that privacy issues in the age of cell phones, e-mail, etc. will remain a thorny issue for years to come.

According to Justice Scalia, the author of the majority opinion, the Fourth Amendment’s protection of  “persons, houses, papers and effects” extends to a person’s private property, including his motor vehicle.  The police physically occupied the suspect’s motor vehicle in order to obtain information, and this, Justice Scalia maintained, was a violation of a person’s right not to be subject to an unreasonable search and seizure. Justice Scalia stressed that even a small trespass onto personal property in order to obtain information constituted a search under the Fourth Amendment.

The minority opinion, authored by Justice Alito, agreed with Justice Scalia, but wanted to extend the limitation further, noting that the search violated a person’s reasonable expectation to privacy because the police monitored the suspect’s movements for months. Justice Alito contended that the Fourth Amendment should not only safeguard a person’s property against trespass but should be enlarged to protect a person regardless of where he was. The majority refused to extend the restriction that far, arguing that the simple act of placing the GPS on the car invaded the suspect’s property, similar to a warrantless home search.

Alito further argued that Justice Scalia’s strict approach left open a whole host of thorny issues because given the ever-evolving field of technology, law enforcement officials do not have to physically touch a car in order to monitor its movements, citing as an example smartphones that monitor one’s location.

While Justice Scalia agreed that monitoring someone without perpetrating a physical trespass might be an unconstitutional invasion of privacy, he refused to resolve the issue, leaving it for the future when a specific case involving those issues arises.

The Supreme Court decision arose from a police operation that resulted in the capture of significant amounts of cocaine and cash when law enforcement raided a home. Law enforcement had watched the suspect’s home for months, including wiretapping his cellphone pursuant to a search warrant. However, the suspect’s conviction was thrown out on appeal because the police had followed him for months with a GPS without first obtaining a valid warrant.

Justice Sotomayor joined Justice Scalia’s majority opinion, but she stressed in a separately worded opinion the troubling privacy issues arsing from ever-evolving technology. As an example, she pointed out that routine actions are tracked by private websites.  She noted that legal precedent does not protect a person against third parties’ actions, for example when telephone companies voluntarily turn over information to the government on an individual.  She had strong reservations about this practice and asserted that people would not willingly submit to the warrantless disclosure to the government of their personal information.

This case raises many questions about the extent to which law enforcement can go in conducting police searches in the new digital age.  This issue will come up again and again in the future, especially as new technological advances are made. How far do you think the police can or should go in the digital age to conduct searches and seizures?

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Supreme Court OKs Congress’ Restoration of Copyright Protection to Foreign Works in the Public Domain

by Mike Mintz on January 24, 2012 · 0 comments

in Intellectual Property,martindale.com

The Supreme Court, in Golan v. Holder, U.S. Supreme Court, Slip Opinion No. 10-545 (decided January 18, 2012), approved an act of Congress that transformed the status of foreign works which had been in the public domain for many years if not decades to that of copyright protected status. This will have an effect on live and recorded musical performances and the publication of printed material, which in turn affects the use of foreign works in advertising and marketing campaigns that previously could be used royalty free. The Act in question is the Uruguay Round of Agreement Act (Title 17 U.S.C. §104A), enacted in 1994. The Act “restored” copyright protection to certain foreign works which were in the public domain. Although the Act protects exploiters of the affected works prior to the Act’s passage, prospectively the restoration placed those foreign works on an equal footing with US works.

The genesis of passage of the Act was America’s decision in 1989 to finally join the 1886 Berne Convention for the Protection of Literary and Artistic Works. The members of the Berne Convention agree to provide a minimum level of copyright protection and to treat authors from other member countries as well as they treat their own. Article 18 of Berne requires countries to protect the works of other member states unless the works’ copyright term has expired in either the country where protection is claimed or in the country of origin. Between 1891 and 1989, US copyright protection of foreign authors was limited to those whose works were published in the US and to those whose countries granted reciprocal protection to US authors. Prior to 1891, all foreign works were excluded from US copyright protection making the US the “Barbary coast of literature”, according to a US Senator in 1891.

Of significance, foreign works already in the public domain at the time the US joined the Convention remained in the public domain. As the Supreme Court pointed out, this approach by the US to Berne did not sit well with other members of the Convention. Partly in response to those complaints, the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS agreement) required all Berne signatories to adopt articles of the Berne Convention effectively requiring, by threat of WTO enforcement, certain categories of works that had been in the US public domain to be made subject to copyright protection. In response, Congress passed the Uruguay Round of Agreement Act, Section 514 of which granted protection to those categories of foreign works. The Act is appended to the Court’s opinion in Golan v. Holder.

The petitioners in Golan v. Holder were orchestra conductors, musicians, publishers, and others who formerly enjoyed free access to works that the Act removed from the public domain. The Court held that Congress did not exceed its authority under the Copyright and Patent Clause Art. I, § 8, cl. 8. Additionally, the Court held that the First Amendment did not inhibit Congress from restoring copyright status to works in the public domain. The Court pointed out that Congress had previously granted copyright protection to works in the public domain by enacting the Copyright Act of 1790 (which granted copyright protection to works that already had been published in the US) showing that the First Congress “did not view the public domain as inviolate.” One of the points made by the dissent, per Justice Breyer joined by Justice Alito, is that tradition and case law in the US sets us apart from continental Europe and inhibits us from harmonizing our copyright laws with those of countries in the civil-law tradition. The majority specifically disagreed with that dissenting position.

What is the effect of the Act now that it has been held constitutional? As the Supreme Court put it, Prokofiev’s Peter and the Wolf could once be performed free of charge, but now the right to perform it must be obtained in the marketplace just like the works of American composers Bernstein and Copeland.

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Supreme Court Justices Mull Issue of Qualified Immunity for Private Attorneys Conducting Investigations for Public Clients

by Mike Mintz on January 23, 2012 · 0 comments

in Labor and Employment Law,martindale.com

The U. S. Supreme Court recently heard arguments in the case Filarsky v. Delia (appealed from 9th Cir. 9/9/10) involving a private employment attorney, Steve Filarsky, retained by the City of Rialto to conduct an internal affairs investigation. Filarsky caused the City to order respondent firefighter Delia to consent to a warrantless search of his home. Delia subsequently brought a civil rights claim against both the City and Filarsky alleging, among other things, a violation of the Fourth Amendment. The district court granted Filarsky’s and the City’s motion to dismiss based on qualified immunity, but the Ninth Circuit Court of Appeals reversed in part, ruling that Filarsky, a private attorney, could not enjoy such immunity. Other circuit courts have granted qualified immunity to private lawyers retained by the government, and the Supreme Court must now resolve the circuit courts’ split.

Facts

Delia claimed to feel sick after cleaning up a toxic spill, but the Fire Department was suspicious of his claims because he had recently been experiencing disciplinary problems. The Fire Department commenced an internal investigation after discovering that Delia had been purchasing insulation for his home while claiming to the Department that he was physically incapacitated. The Department asked Filarsky, a private attorney, to lead the investigation. Delia subsequently admitted purchasing the insulation but claimed that he had not installed it yet.

During the investigation, Filarsky asked Delia’s permission to allow Department officials to enter his home and inspect the insulation without a warrant, but Delia refused.  Filarsky then obtained a written order from the Fire Chief, directing Delia to produce the insulation for inspection. Delia subsequently agreed and permitted the Department access to his home to inspect the insulation rolls. Delia then filed a civil rights claim under 42 U.S.C. §1983 against both Filarsky and City officials, alleging that the warrantless inspection of his house constituted a violation of the Fourth Amendment and an invasion of privacy pursuant to the Fourteenth Amendment. The U.S. District Court for the Central District of California dismissed the claim, concluding that all the defendants were entitled to qualified immunity.

On Delia’s appeal to the Ninth Circuit (Delia v. City of Rialto, 621 F.3d 1069 (9th Cir. 2010) the court affirmed the grant of qualified immunity to the City officials, but reversed the grant of immunity to Filarsky, refusing to follow the Sixth Circuit precedent in Cullinan v. Abramson, 128 F.3d 301 (6th Cir. 1997). Instead, the Ninth Circuit conformed to its own case law, which declined to extend qualified immunity in civil rights suits to private attorneys hired by the government. Gonzalez v. Spencer, 336 F.3d 832 (9th Cir. 2003). The U.S. Supreme Court granted certiorari to resolve the split between the circuit courts.

Filarsky’s Arguments

Filarsky contends that without the protection of immunity, private attorneys will refuse to represent the government, fearing exposure to liability from plaintiffs’ lawsuits. The loss of immunity may significantly raise private attorneys’ professional insurance premiums, driving many of them back into the private sector. Aggravating the situation is the failure of many malpractice policies to cover constitutional torts. Even where those policies that do cover such torts, the attorney would be exposed to liability exceeding the amount of the insurance coverage.  Also, some states prohibit insurers from covering punitive damages, which are allowed under Section 1983 actions.

Filarsky also claims that denying qualified immunity to private attorneys would raise the cost and lower the quality of legal services provided to the government.  Additionally, local government agencies will be hurt financially because they use private attorneys to represent them in order to save money. Furthermore, denial of qualified immunity will have a chilling effect on the attorneys because they will not be as candid and open when giving their legal opinions, thus forcing the government to make decisions on a less informed basis.

Delia’s Arguments

Delia claims that Filarsky is exaggerating and being speculative, claiming that private attorneys will not give up working for the public sector just because they do not receive qualified immunity. He claims that  all private attorneys, no matter their clients, face the risk of malpractice suits.  Moreover, there are other ways for private attorneys like Filarsky to protect themselves from liability.  For example, they can assert a good faith defense to Section 1983 actions.

Delia also claims that normal market competition would ensure that private attorneys provide their clients with efficient and vigorous representation. If private attorneys sacrifice effective legal representation over concern for protecting themselves against liability, market competition would replace these attorneys with others who can provide effective representation. Furthermore, Delia claims that the risk of liability from immunity related issues is lower than liability from malpractice.

Filarsky’s Proposed Test

Filarsky proposes the implementation of a functional-inquiry test to determine if a private attorney is entitled to qualified immunity. Courts would determine if the private attorney is the equivalent of a government employee by looking at his roles and duties. Under the test, the courts would look to the nature of the private attorney’s duties, the amount of supervision and control the attorney is subject to, the attorney’s role in the government’s exercise of essential duties, and the immunity afforded to government officials in that same role.

Delia’s Proposed Rule

Delia, however, rejects Filarsky’s functionality test as arbitrary and unsupported by precedent. First, determining whether a private attorney is under “close” government supervision is a fact-sensitive question that may end up circumventing immunity by having the public employees that are supposed to be protected by the immunity being dragged into the courtroom to perform this inquiry. Also, non-attorneys often conduct internal investigations—it is not exclusively an attorney’s duty or role.  Therefore, under Filarsky’s proposed rule, immunity might be extended to non-attorneys who perform such investigations on behalf of the government. Delia instead proposes that courts perform a “reasonableness” inquiry, asking, e.g., whether a reasonable attorney trained in conducting government personnel investigations would know that a warrantless search of Delia’s home was illegal.

Conclusion

No doubt, the Supreme Court’s decision will clarify the limits of the qualified immunity doctrine.  It could not have come at a better time. This issue becomes ever more significant these days because of budget constraints facing municipalities. These fiscal limitations lead to governments’ increasing use of private attorneys to perform governmental functions, hence the need for guidance from the Supreme Court.

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Frustration Grows Over Google’s Preferential Treatment of its Own Services

by Mike Mintz on January 20, 2012 · 0 comments

in Intellectual Property,martindale.com

Google’s competitors accuse Google of giving its own services preferential treatment in search results, and they claim that regulators are not doing enough about it.  Google has been busy promoting its own social network Google+ by integrating information from its other services into search results made by subscribers to Google+, thereby extending its search dominance and killing competition on the Web, according to critics.

The Federal Trade Commission, along with several states, is already investigating Google for other alleged anti-trust violations, and it indicated that it would add Google’s latest practices to its review.  The other alleged violations include Google’s copying reviews from other local web services such as Yelp onto Google Places, thereby giving an unfair advantage to its own service.  After an outcry over this practice, Google announced that it would stop copying reviews from other local web services onto its Places pages.  Instead it would only post reviews prepared by Google users.  There are still accusations that Google is using other content from rival sites, and critics insist that regulators pursue Google for its past practices in copying information from other local web services onto its pages.

Although some suggest that a claim can be made against Google for illegally tying its own services to its search function to gain an unfair market advantage, that same principle was not upheld in the Department of Justice’s anti-trust case against Microsoft.  In the Microsoft case, the U.S. Court of Appeals overturned the lower court’s ruling on this issue, and the parties eventually agreed to settle out of court. As part of that settlement, Microsoft agreed to ensure that Windows was compatible with non-Microsoft software and to untie its browser from its operating system.

The anti-trust provisions in the Microsoft case expired in May 2011, and Microsoft has decided to once again tie its browser to its Windows software. This time around, Microsoft is tying Internet Explorer 10 to Windows 8.  Nowadays, this practice is not unusual and may not raise the ire of the Department of Justice and state regulators the way it did over a decade ago.  The technological landscape has changed quite a bit since Microsoft initially undertook this practice.  In fact, one of its competitors, Apple also ties its browser to its operating system in such a way that it is impossible to untie.  Take for example the iPad. It is impossible to untie the Safari browser from the operating system.  So far there has been no outcry from the Department of Justice or local regulators regarding this practice.

Should there be? Also, should Google’s new “Search Plus Your World,” or “Search Plus Google+” as critics call it, be treated differently than a browser bundled in an operating system because of its ubiquity?

 

 

 

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SEC Announces Changes to its Settlement Policy

by Mike Mintz on January 19, 2012 · 0 comments

in martindale.com,Securities Law

The Securities and Exchange Commission (“SEC”) recently announced a change in its settlement policy. It will now demand that defendants admit wrongdoing if they have already made such an admission in a separate criminal proceeding. The SEC has finally rescinded the policy allowing defendants to use the non-committal “neither admit nor deny” language in settlements if there is a parallel criminal conviction and the defendant has already admitted violating the law. Clearly, if a defendant has already admitted criminal wrong-doing admitting wrongdoing in the civil case is inconsequential.

The policy change comes on the heels of a decision by U.S. Southern District of New York Judge Jed Rakoff in U.S. Securities and Exchange Commission v. Citigroup Global Markets, Inc., 11 Civ. 7387 where Judge Rakoff rejected a $285 settlement between the SEC and Citigroup.  In that opinion, he lambasted the SEC’s practice of allowing defendants to use the “neither admit nor deny” statement, noting that the public has an overriding interest to know the truth.  An appeals court subsequently put the proceedings on hold.  While SEC Enforcement Division Director Robert Khuzami denied that there was any link between Judge Rakoff’s decision and the recent change in the SEC’s policy, the timing does seem dubious.

Here is SEC Enforcement Division Director Robert Khuzami’s full statement on the new policy:

Following a review by senior enforcement staff that began this spring and separate discussions with the Commissioners over the last several months, last week we modified our settlement language for cases involving criminal convictions where a defendant has admitted violations of the criminal law. As explained below, the new policy does not require admissions or adjudications of fact beyond those already made in criminal cases, but eliminates language that may be construed as inconsistent with admissions or findings that have already been made in the criminal cases.

Under our traditional “neither admit nor deny” approach, a defendant could be found guilty of criminal conduct and, at the same time, settle parallel SEC charges while neither admitting nor denying civil liability. This approach has reflected that the goals, objectives and other factors in the civil settlements that we and other federal and state agencies enter into often are distinguishable from those at issue in criminal proceedings. It nevertheless seemed unnecessary for there to be a “neither admit” provision in those cases where a defendant had been criminally convicted of conduct that formed the basis of a parallel civil enforcement proceeding.

The change applies to cases involving parallel (i) criminal convictions or (ii) NPAs or DPAs that include admissions or acknowledgments of criminal conduct. Under the new approach, for those settlements we will:

  • Delete the “neither admit nor deny” language from the settlement documents.
  • Recite the fact and nature of the criminal conviction or criminal NPA/DPA in the settlement documents.
  • Give the staff discretion to incorporate into the settlement documents any relevant facts admitted during the plea allocution or set out in a jury verdict form or in the criminal NPA/DPA.
  • Retain the current prohibition on denying the allegations of the Complaint/OIP or making statements suggesting the Commission’s allegations are without factual basis.

‪The revision applies in the minority of our cases where there is a parallel criminal conviction (by plea or verdict) or criminal NPA/DPA involving factual or legal claims that overlap to some degree with the factual or legal claims set out in the Commission’s complaint or OIP.

This policy change does not affect our traditional “neither admit nor deny” approach in settlements that do not involve criminal convictions or admissions of criminal law violations. In particular, it is separate from and unrelated to the recent ruling in the Citigroup case, which does not involve a criminal conviction or admissions of criminal law violations. We have appealed that ruling and the reasons for that appeal are described in the public statement I issued at that time.

The policy change does not affect most of the SEC’s cases which are civil in nature, and it remains to be seen whether this policy change will have any meaningful effect on the settlement statements of financial heavyweights who will be accused of wrongdoing in the future.

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The Internet Goes Black to Stop SOPA and Censorship

by Mike Mintz on January 18, 2012 · 0 comments

in Intellectual Property

 

A funny thing happened to me today while using Wikipedia.

At around 10am EST I got a taste of what Internet censorship must look like. While researching an article using one of my favorite free sites, Wikipedia, it went black on me and showed this message:

 

 

 

At first I panicked: “oh no! I broke Wikipedia!”

Then I remembered that today, January 18, 2012, many websites are “blacking out” in protest of the Stop Online Piracy Act (SOPA) that is going around Congress this week. This video explains what SOPA is all about:

We posted on this blog about SOPA and it’s running mate the Protect IP Act last week: you can read about why we think it will pass, here.

What are your thoughts on it SOPA and the Protect IP Act? Should they be stopped?

 

 

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NLRB NIXES CLASS ACTION RESTRICTIONS

by Mike Mintz on January 17, 2012 · 0 comments

in Labor and Employment Law

Employers are now on notice from the NLRB that requiring employees covered under the National Labor Relations Act to waive class actions regarding wages, hours or working conditions is likely to be a violation of the Act. In D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764 (357 NLRB No. 184, January 3, 2012)  the NLRB held that it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together in class or collective actions to pursue employment-related legal claims in arbitration or in court. Employers who thought they could rely upon AT&T Mobility v. Concepcion, 131 S.Ct. 1740, 1746, 2011 U.S. LEXIS 3367 (2011) to require agreements restricting class actions will have to think again when employees are subject to the NLRA.

The Respondent in Horton, a national home builder, required all current and new employees to sign a mutual arbitration agreement as a term of employment restricting employment related claims to individual arbitration and waiving the right to a judicial forum. Additionally, the arbitration agreement restricted the arbitrator from consolidating an employee’s claim with claims of other employees. The NLRB found that such an agreement unlawfully restricts employees’ from engaging in concerted action for mutual aid or protection, which are substantive rights protected under Section 7 of the Act.

You will recall that in AT&T Mobility, the Supreme Court held that the Federal Arbitration Act preempted a California state rule that regarded as unconscionable a consumer arbitration agreement restricting class arbitration. The NLRB in Horton, which was a case of first impression for the Board, nevertheless found that its decision did not conflict with the Federal Arbitration Act or undermine the pro-arbitration policy underlying the FAA. The Board distinguished between an agreement imposed on an employee subject to the NLRA and a consumer agreement such as the one in AT&T Mobility which was between a cellular customer and a cell phone provider. To bolster its position, the Board stated that the mutual arbitration agreement in Horton would equally have violated the NLRA if it said nothing about arbitration, but merely required employees, as a condition of employment, to agree to pursue any claims in court against the Respondent solely on an individual basis. Further distinction made by the Board was that AT&T Mobility involved a conflict between federal and state law, while Horton involved a conflict between two federal laws. Should there be an appeal, which is likely, it will be interesting to see how the U.S. Court of Appeals will view the NLRB’s position of the NLRA relative to the FAA.

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