In House - The FindLaw Corporate Counsel Blog

April 2015 Archives

It's bad enough when low-level employees open the company up to litigation through thoughtless behavior. It's even worse when it's an executive. AT&T got a reminder of just how embarrassing, and potentially expensive that can be. The telecom company is facing a $100 million employee discrimination suit over racist texts and images allegedly sent by Aaron Slator, the company's (now former) president of content and advertising sales.

AT&T isn't the only company to have suffered from an high level employee's poor behavior. Is there anything, besides triage, that can be done to stop executives behaving badly before the lawsuits come in?

Hiring Outside Counsel? 5 Things to Consider

The decision whether to hire outside counsel is fraught with anxiety. Which firm? How much to pay? How much to have the outside firm do? It's like hiring a new employee (except you're hiring dozens of them).

Hiring an outside firm doesn't need to be stress-inducing. Just keep calm, take a breath, and consider these five ideas when making the leap.

Not My Jam: Pandora Didn't Pay Employees for Two Years

In the frenzied environment of the Silicon Valley startup, employees join the company even though they're not sure when their paychecks will arrive, if ever. Many startups aren't even financially viable for a while (if ever).

But how do you explain not paying wages at the company's inception? If you're Pandora, you just don't pay them, and later claim you didn't know that was illegal.

Models won't be the only ones working for minimum wage at Abercrombie and Fitch this summer. The clothing retailer has announced that it will no longer consider "body type or physical attractiveness" in hiring decisions -- it's even considering letting employees wear shirts to work.

O brave new world.

Abercrombie's "hunks only" policy had caused the company plenty of legal troubles over the years, including lawsuits over claims of legal and religious discrimination, one of which is before the Supreme Court right now. The change in the brand's hiring policy comes just a few months after its longtime CEO Mike Jeffries stepped down, a sign, no doubt, of how quickly common sense can be regained after a change of leadership.

Patent trolling, the process of threatening or engaging in abusive and often baseless patent litigation, has long been lamented in the legal and technology industries. You may have experienced it yourself, if your company has received demands for licensing payments for engaging in actions as common as sending emails or making photocopies. Reformers have increasingly called for limitations on these practices, finally leading to action from Congress.

However, that action doesn't go far enough, according to some advocates. As the Targeting Rogue and Opaque Letters Act (TROL Act) moves into markup before the House Committee on Energy and Commerce, two leading patent reform groups have said they cannot support the bill.

Successful people need inspiration, whether it's in the form of an encouraging mentor, a historical legal champion or just hilarious and well-written legal documents. In-house attorneys, or those aspiring to be one, can take motivation from the best GC's in the country. Here's a few that we think have careers worth emulating.

So, aside from being brilliant and hard working, how did some of the best general counsels in the world end up where they are today -- and what can you learn from them?

It's a common truism that a every lawyer should have a mentor. Having someone wiser and more experienced to bounce ideas off of, seek out professional advice, or model your advancement after can help make a career, or at least make one easier.

But for in-house counsel, finding a mentor can pose some unique challenges. You may be one of a few lawyers in your department, or you may be working in an isolated industry or location. But don't worry if you don't have senior partners to take you under their wings -- here are three ways to find a mentor while working in-house.

What Your Company's Policy on Employee References?

Employers want to make sure that the employee they've selected for a job is the right fit, which includes verifying some parts of the employee's story. This is what references are for, but companies also use references to assess a prospective employee's qualifications and ask for the referee's opinion.

That can create trouble in the form of lawsuits if the employee doesn't get the job. For this reason, companies need to have reference policies in place, governing what supervisors can -- and can't -- tell a former employee's prospective boss.

Comcast-Time Warner Merger Slightly More Doubtful

The merger between Comcast and Time Warner may have hit some rocky shoals, The New York Times and other outlets have been reporting all weekend. Sources inside the Justice Department, which has the final say over whether merger would go through, are skeptical of the deal because it would give the new company "just under 30 percent of the country's pay television subscribers" and "an estimated 35 to 50 percent of the nation's broadband Internet service," according to the Times.

That's got regulators concerned, despite Comcast's protestations that the deal is really in consumers' best interest.

KBR Inc., a Texas tech and engineering company, has settled the first SEC "pretaliation" enforcement action under Dodd-Frank, Inside Counsel reported yesterday. KBR's standard confidentiality agreement, used in internal investigations, forbids employees from "discussing any particulars" about the investigation without prior authorization from the law department. That's illegal pretaliation, according to the SEC.

In-house counsel, get ready to spend your weekend reviewing your company's confidentiality policies!

The nation's largest retailer, of both discount goods and guns, doesn't have to include a proposal from shareholders in its proxy materials, the Third Circuit ruled on Tuesday. A lower court had ruled that Walmart violated securities law when it refused to include a proposal by a shareholder and one of the nation's oldest churches, Trinity Wall Street.

The case is a reminder of the fine line between shareholder proposals which seek to change a business's social policy, which are permissible, and those which seek to change its day-to-day operations, which a company may ignore.

It's already started. The 2016 presidential election is more than a year and a half away, but we're already being asked if we're ready for Hillary or willing to pass the hat for Ted Cruz. The election season is upon us and it's not going away anytime soon.

For many people, politicking isn't an after-hours only hobby, but something that pervades their whole life. So what's a GC to do when campaigning leaks into the office?

Amazon and Yelp are both currently suing companies that sell fake online reviews, a major reminder that online reputation can have a major impact on the success or failure of a business. Reading just three negative reviews can be enough to change the mind of most consumers, according to The Guardian, so sham online ratings may result in serious damages.

So, what should you do if your company is bombarded with false, negative reviews? Here are three tips:

Companies that rely on highly skilled foreign workers to replace domestic counterparts may be facing increased scrutiny in the near future. Ten senators recently called for an investigation into the government's H-1B visa program. That program allows employers to hire specialized foreign workers in order to fill slots that can't be filled by domestic labor.

Many companies, particularly in the tech industry, have been arguing for an expansion to the program. To critics, however, the H-1B visas aren't a source of new talent, but an open door to replacing American workers with lower paid foreign labor. Recent developments could put a kink in the plans of employers who rely on such visas.

JPMorgan Chase is instituting new software that will identify "rogue employees" before they actually do wrong, the banking and financial services company announced. We'll skip the comparison to "Minority Report," the early aughts film in which Tom Cruise hunts down "precriminals" before they can act.

Chase has been rattled by compliance problems over the past years, having recently settled a Department of Justice investigation into its mortgage practices for $13 billion. It has faced continuing investigation on multiple fronts, from accusations that it manipulated energy markets, to claims it improperly steered clients into self-serving investments.

Could a corporate Big Brother be the answer to Chase's woes? If it is, will others follow?

What Should In-House Lawyers Read? (Besides FindLaw)

After I fire up my computer every morning, I have some special alone time with my RSS feeds and my cup of coffee. I get oriented by reading about what's going on in the world (being in California means the rest of the country has already been awake for two to three hours, so a lot has happened).

In-house counsel need to stay up to date, as well. So what should you be reading (in addition to FindLaw's In House, of course)? Here are some of our favorite sites for GCs.

There are plenty of stories of lawyers leaving firm life. In fact, the attrition rates for associates are huge. That many lawyers will eventually move on is a given and it's no secret that many lawyers fleeing firm life would love to become in-house counsel or even GC's.

But, once the migration has been made, would a GC ever go back? Could she?

Things aren't looking good for Wynn resorts and casinos these days. Institutional Shareholder Services, a proxy advisory firm, issued an unusually strong condemnation of Wynn and its management, saying that it had created a corporate governance record that is "among the worst" in the U.S. It urged shareholders to withhold votes for every nominee to the board.

Elaine Wynn, one of the resort's co-founders, has been campaigning to rejoin the board. The board had voted to allow her seat to expire this April, reducing its size from eight to seven, and had supported two incumbent directors, but not her, for re-election.

As a co-founder of the company and director for 13 years, the proxy firm held her responsible for many of the failings at the resort company. Here are three lessons to be learned from their report:

A new phishing scheme to be on the look out for, one which is stealing millions from American companies and making headlines for its sophistication. This new threat to your cyber security adds a twist to traditional schemes: using live, human operators who fraudulently obtain your information during mock customer service calls.

The scam, labeled "Dyre Wolf" after the extinct and often mythologized predator, was discovered early in April by IBM. It's brought in $1 million thus far. That's nothing compared to many other schemes -- another sophisticated online fraud resulted in a $26 million judgment just the other day. Why is Dyre Wolf something to be concerned about then? The fact that it targets U.S. businesses and that it does so so well.

As Indiana and Arkansas were considering "religious freedom" bills that, opponents argued, would give companies the right to discriminate, several high profile corporations took public stances against them.

Apple, Salesforce, American Airlines and even Walmart spoke out against the legislation. Yeah, Walmart, the second largest corporation in America, often reviled by progressives, contacted the Governor of Arkansas and urged him to veto his state's RFRA legislation.

Why?

Ensuring Compliance: Your Year-Round Job

Compliance, compliance, compliance! Why does it seem like over half of the legal department's job is to make sure the corporation is dotting its I's and crossing its T's?

Because that is a large part of the legal department's job, especially in publicly traded companies where the shadow of the SEC looms like the background like Sauron. (OK, maybe not that menacingly.) Ebenezer Scrooge said he learned to have Christmas in his heart the whole year; that's the attitude GCs need when it comes to regulatory compliance.

Making friends outside the legal department can be difficult. For one, you might be shy or maybe you lack the shared interests needed to make a friendship stick. Or, maybe you just know too much inside dirt.

For in-house lawyers, spreading your social connections outside your department can raise some tricky issues.