Nobody Loves a Lawyer

by Caitlin Liu    Sep 26 2007

That’s particularly true of big companies.  Most of them fired an outside counsel in the last 18 months, and those that didn’t often wish they had.  Unhappy with your lawyer?  You’re not alone.  Most of America’s largest companies ousted at least one of their outside counsel in the last 18 months, and only a third like their primary law firm well enough to recommend it to someone else, a recent survey shows.

And with attorney fees spiraling to heart-stopping new heights-corporate legal bills have nearly doubled in the last five years and law firms now pay just-out-of-school associates $160,000 a year-corporate America’s bile-spitting may only get worse.

For the rest of this well-researched and provocative article, see Portfolio.com.

EU Court: No In-House Counsel Privilege

Sep 17, 2007

By Martha Neil for ABA Online.

Highlighting the differences between American law practice and international law practice, the second-highest court in the European Union ruled today that attorney-client privilege does not apply to communications between companies and their in-house counsel.

Contending that attorney-client privilege applied, a Dutch chemical company and lawyers’ groups had sought to exclude from evidence in an antitrust case documents seized in a 2003 dawn investigatory raid of Akzo Nobel’s offices in Manchester in Britain, according to the International Herald Tribune and the Lawyer. However, the Court of First Instance rejected that argument, saying that there is no privilege because in-house lawyers are loyal to their companies and don’t offer independent legal advice.

Akzo had argued that two types of documents were covered by attorney-client privilege: those prepared by in-house counsel in order to seek advice from external lawyers, and those prepared by in-house counsel discussing how to implement external lawyers’ advice, reports Reuters.

The ruling underscores the importance of retaining outside counsel, to whom attorney-client privilege does apply, in sensitive matters concerning European companies, says Julian Joshua, a former European Commission official who is now a Howrey law firm partner in Brussels. “What’s clear is that companies should take great care not to generate themselves the very dossier that the investigators will use to condemn them,” he tells the Herald Tribune.

Akzo hasn’t yet decided whether to appeal the ruling.

Why Legal Hold Management is an Important Internal Control — – Can You Test Yours?

Every organization needs an auditable, centralized process for tracking legal holds, yet most admittedly lack good controls in this area.  Processes are not comprehensive and properly coordinated through proper policy development and training. We provide a few reasons here for that somewhat lofty statement, but this important topic deserves much deeper analysis.

Legal hold management has become a focal point since the passage of the amendments to the Federal Rules of Civil Procedure last year, but the duty to preserve in the face of known or anticipated litigation has always existed at common law.  The new rules are procedural and merely speak to the consequences that could flow when an organization cannot demonstrate that it has procedures in place to suspend the routine disposition of information.  In 2002, following the Arthur Andersen debacle, the Sarbanes Oxley amendments included changes to the Federal Obstruction of Justice Law, exposing individuals up to 20 years behind bars for the intentional destruction or concealment of information relative to pending or “contemplated” federal proceedings.  Effective compliance with the Federal Rules of Civil Procedure and the Federal Obstruction of Justice Law is unattainable without an enforceable and auditable records and information management program.

The use of Microsoft Excel or Access is a fine interim measure to track legal holds and preserve a record that individuals were notified to suspend the routine destruction or disposition of information.  Many companies do no more than this. In large organizations, or even smaller entities that have regular litigation exposure, however, a static repository of legal hold notices simply is not enough.  This is not an argument in favor of capital investment in a clunky new IT system (with software licensing and all the trimmings) for litigation hold management.  The starting point is having an understandable policy and proper employee training. 

Substantive criminal and civil laws necessitate action when an organization is on actual or constructive notice of legal or regulatory problem.  The need to provide notice of hold instructions occurs well before outside counsel is retained to represent a company.  A database or spreadsheet that merely tracks litigation holds but does not provide a real-time lens into an organization’s litigation profile will present difficulties.  A system must be accessible to and regularly updated by outside and inside litigation counsel, or whoever is charged with oversight of litigation at a company.  Like reserves management and analysis for FSAS 5, litigation hold management must be part of comprehensive litigation management procedures. However counsel tracks litigation, if at all, they must track holds in perfect lockstep with the opening and closing of litigation files. 

Your organization might already have license to use MS SharePoint or other applications with collaborative tools that can be configured inexpensively using to establish a platform that inside and outside counsel may use to access and track critical litigation data.  A law department you should have no problem getting adequate support and funding to create a system that does not require capital investment.  The key, however, remains in the policy development training, and training lawyers is not easy. 

Hit ‘Delete’ to Prevent EDD Disaster

By Stanley M. Gibson
Special to Law.com
August 7, 2007

The volume of e-discovery and its costs continue to rise for corporations, law firms and even solo attorneys. This phenomena has triggered a plethora of articles on the pitfalls and potential problems in EDD for the uninitiated or unaware. Frequently missing from the discussion, however, is practical experience and analysis from the trenches. This article addresses key EDD issues and pitfalls in a particular case involving 44 million pages of electronic records and a jury verdict of approximately $570 million, with a focus on the consequences of retaining too much electronic information and ways to solve problems that plague large companies in e-discovery.

For more see law.com.

Tax Shelters Paid Off Until IRS Took an Interest

By NATHAN KOPPEL
May 17, 2007

In 1998, Chicago tax lawyer Paul Daugerdas approached a Dallas law firm, Jenkens & Gilchrist, with a proposition. He said he sold tax shelters and advice to wealthy clients, charging them, in part, a percentage of their tax savings. If Jenkens brought him aboard, he said, he could generate as much as $6 million a year in revenue, according to three former Jenkens partners.

To Jenkens, a medium-size firm with big growth plans, that was serious money, much more than any of its lawyers were then bringing in billing by the hour. And the overture came at the right time. Jenkens had recently lost some tax lawyers, and Mr. Daugerdas was offering to bring several others with him.

For more see Wall Street Online Journal.

Lessons of The Am Law 100:Revenues and profits at the nation’s highest-grossing law firms grew by healthy margins in 2006. Same old story? Not quite….

By Aric Press and John O’connor
The American Lawyer
May 1, 2007

On the surface, at least, it’s the same happy story. New records galore: Gross revenue up 11.4 percent, profits per partner up 13.4 percent, revenue per lawyer up 7.3 percent, which is to say, at a clip exceeding the annual hike in billing rates. Times are so good for the men and women who own Am Law 100 firms that those who snared profits of a mere million dollars were below par: The mean was $1.2 million; the average among firms headquartered in New York, an astonishing $2.05 million.

For more see this link.

In Nonprosecution Deal Over Tax Shelters, Jenkens & Gilchrist to Pay $76M and Shut Doors

NEW YORK LAW JOURNAL – March 30, 2007 – Federal prosecutors in Manhattan have entered into a nonprosecution agreement with Dallas law firm Jenkens & Gilchrist over its past involvement in illegal tax shelters, a scandal that has already fatally crippled the once-thriving firm.

Between 1998 and 2003, the firm’s Chicago-based tax shelter practice provided hundreds of legal opinion letters in support of tax shelters the Internal Revenue Service subsequently deemed illegal. The criminal probe of the firm by the Southern District of New York U.S. Attorney’s Office followed several civil suits by tax shelter investors whose claims the firm has agreed to settle for $85 million.

For more on this story see Law.com.

The Practice of Law is a Business … Run by Lawyers

We have heard it before, the practice of law is a business. But the lawyers who run those businesses should consider delegating responsibility for public relations and client relations to folks with the right skill set and perspective. The press release from Mayer Brown indicating its decision to release 10 percent of its equity partership makes clear the move was made for improving the financial bottom line. The announcement received only venom from the corporate world, which read this move as one in the best interests of the partners who survived the cut.

For more see Wall Street Journal Law Blog.

Magistrate Sanctions Company For Failure To Preserve E-mails

On January 30, 2007, a federal magistrate judge in the U.S. District Court for the Southern District of New York imposed sanctions that included adverse inferences and attorney fees for a company’s failure to preserve electronically stored information and e-mails despite an agreement with a nonparty subsidiary that allowed the company full access to the documents in question.

See In re: NTL Inc. Securities Litigation, No. 02 Civ. 3013; Gordon Partners, et al. v. George S. Blumenthal, et al., No. 02 Civ. 7377, S.D.N.Y.; 2007 U.S. Dist. LEXIS 6198. A copy of the opinion will be posted shortly.

The Glenmont Group and Lexakos Form Strategic Alliance to Help Organizations Identify Managers for E-Discovery and Records Management Compliance

Shared Vision for Converging IT, Legal and Compliance Roles Into a New Breed of Corporate Leader
NEW YORK, NY–(MARKET WIRE)–Feb 19, 2007 — Organizations struggling to identify managers qualified for e-discovery and records management policy development received a big boost today when premier legal-tech recruiter The Glenmont Group and business advisory firm Lexakos announced a strategic alliance to help augment the availability of professionals for this new area. Blending their respective strengths in executive placement and corporate governance, this alliance will help fill a gaping hole for organizations struggling to find managers who can oversee internal controls and systems for handling electronically stored information in legal and regulatory matters.

For more see Yahoo Finance.