September 2010 Archives

Greetings in house attorneys...in the mood for some good news? Then you had better head elsewhere. Corporate Counsel just released it's 2010 Law Department Metrics Benchmarking Survey, conducted by ALM Legal Intelligence. According to the survey, in house departments are up against shrinking staff, budgets and resources, while being expected to fulfill the demands of workload increases.

"Law departments have faced increased workloads during past downturns, but this recession is clearly different," said Anthony Paonita, editor in chief of Corporate Counsel. "Our latest survey demonstrates that in-house counsel, and their outside firms, are not immune to the ongoing, company-wide budget cuts the current economy has forced on virtually all corporations across the country."

A few of the more interesting figures from the study:

Dimitrios Biller has won an early round in the fight between Toyota and Biller, one of the automaker's former top attorneys. However, Biller claims that all was not well at the company and he faced a dilemma after encountering a culture of "hypocrisy and deceit." He eventually sued the company and sought to introduce documents he had in his possession as evidence of criminal activity. Biller alleges that Toyota destroyed evidence, committed perjury, violated court orders, committed mail and wire fraud, violated court orders and engaged in criminal conspiracy.

An arbitrator ruled that Biller can submit internal Toyota documents in court as evidence of his claim that Toyota told him to hide evidence of vehicle defects. Biller is prepared to submit four boxes loaded with internal documents from Toyota in support of his case.

In house counsel counting of the benefit of attorney-client privilege were dealt a decisive blow this week by the European Court of Justice, the European Union's highest court. The ECJ soundly rejected arguments from a Dutch chemical company that had asserted attorney-client privilege, or legal professional privilege, over communications between employees and in house attorneys.

The ECJ's advocate general issued an advisory opinion in April which meant that the court was likely to rule in favor of limiting attorney-client privilege when asserted by in house counsel. The Wall Street Journal reports that in 1982, the ECJ made a ruling that exempted in house counsel from the protections of attorney-client privilege. The court found that because the lawyers are employees of the company, they cannot give independent advice and therefore, attorney-client privilege does not apply. This is in stark contrast to the law in the United States, where in house attorneys receive protection under attorney-client privilege.

A hot area in the in house world right now: preservation of electronic evidence or "e-evidence." These days, more and more evidence exists only electronically. However, the fact that a piece of evidence is never printed on a piece of paper does not absolve in house counsel of the obligation to safeguard it.

As in house counsel, if there is a reasonable likelihood of litigation on a matter or if a matter is already being litigated, you have a responsibility to preserve evidence under the Federal Rules of Civil Procedure. This includes monitoring preservation of e-evidence. You must take steps to make sure that you do not fall short of this duty, or both you and your company could face major repercussions.

So what do you need to protect and preserve? The American Bar Association General Practice and Solo and Small Firm Division recently discussed this issue. In short, whenever it can be "reasonably anticipated" that an action will be filed, you must preserve all potentially relevant evidence or run the risk of facing sanctions.

As in-house counsel, you are probably well aware of the risks to the company if gender discrimination is allowed to take place. One might assume that large companies have rules and systems in place to prevent any kind of widespread gender discrimination. But as a recent lawsuit filed in U.S. District Court in New York demonstrates, that's not always the case. 

"Goldman Sachs Sued," was the headline in the financial world Wednesday. The firm is being sued by three women who formerly worked for the firm. The women allege rampant gender discrimination, where men receive significantly higher pay and more promotions. The lawsuit alleges violations of state and federal gender equality laws. The women are seeking class action status on behalf of an unknown additional number of women who were also discriminated against in what they call a "pattern and practice" of discrimination based on gender. They seek recovery for lost wages as well as emotional distress and humiliation. Goldman has denied the gender discrimination allegations. 

It's easy to understand that a business isn't exactly thrilled when one of their own employees steps forward to alert authorities of company violations. But as an in-house attorney, you have a duty to balance the short term interests of the company with potential long term fallout for retaliating when a whistleblower sues.

A whistleblower is an employee reports company misconduct and legal violations, such as fraud or financial malfeasance. Whistleblowers are offered protections by a number of state and federal laws, therefore it is imperative that you ensure that your company does not violate the law when a whistleblower sues the business. Besides the obvious legal risks, a poorly handled whistleblower case can create a public relations nightmare.

Hewlett-Packard has filed suit against Mark V. Hurd, former CEO and chairman. The lawsuit comes just a day after Hurd joined Oracle, an HP rival, as co-president. HP seeks to enforce confidentiality agreements signed by Hurd.

According to HP, the contract signed by Hurd obligates him to protect the trade secrets and other confidential information to which he was privy. HP further argues that Hurd cannot reasonably hold the job of co-president without making use of the trade secrets he learned while at HP. In the complaint, HP called Hurd's move to Oracle, "a serious threat to HP's business."

Hurd's tenure as CEO ended after five years, during which time he faced a sexual-harassment investigation. He also faced allegations of inaccurate expense reports related to time spent with an actress, The Associated Press reports.

The King has been sold. But at least he didn't come cheap.

Burger King has been sold to 3G Capital Management for $3.26 billion, approximately $24 a share. $3.26 billion is quite a lot of money, though banks lended over three-quarters of the money, $2.8 billion. Burger King has seen the value of the company take a major hit over the past several years, so getting the company for $3 billion now seems like a steal. Interestingly enough, the company has bounced back and forth from being a public and private company several times.

With the economy down from the financial crisis, many investors see major opportunities for scooping up companies. In particular, fast food and chain restaurants that are public companies may continue to sell. The aquisition of businesses present great opportunities for corporate counsel. A business about to be bought or sold requires excellent legal representation.