In House - The FindLaw Corporate Counsel Blog

January 2017 Archives

The days of outside counsel handling an entire case may be coming to their end. Instead, clients are increasingly unbundling legal services, assigning tasks piecemeal across multiple firms and lawyers, in order to find the most cost efficient legal services, according to a forthcoming paper in the Fordham Law Review.

These changes, according to the paper, mark a shift in who controls litigation costs and tasks, moving from the lawyer to the client, and parallel similar developments in the rules of civil procedure.

Attorney-Client Privilege Waived in Whistleblower Suit

As a trial winds down on a lawyer's whistleblower case for $8 million against his former employer in San Francisco, a federal judge has already decided a significant issue for in-house counsel on the attorney-client privilege.

U.S. District Court Judge Joseph Spero said that the defendant Bio-Rad waived its privilege when it disclosed documents from a related case. In administrative proceedings with the Department of Labor, attorney Sanford Wadler had alleged the company violated the Foreign Corrupt Practices Act. In the whistleblower case, the company answered with documents from the labor case that contained the allegedly confidential communications.

The judge said Bio-Rad could not use the information against Wadler as a one-sided sword, such as claims that he was fired for poor performance. The confidential information cut both ways, including email between Wadler and others about the company's alleged violations of federal laws.

This morning, President Trump signed an executive order designed to radically slash federal regulations: for each new regulation put forward, the EO demands, federal agencies must propose two for elimination. Even more, the EO sets a yearly budget for regulatory costs. In 2017, the amount allowed for new regulations is zero dollars and zero cents.

The coming year, it seems, could see a major regulatory shift.

I-9 Issues When Hiring Foreign Workers

Hang on to your I-9's; you're gonna need them.

If you don't know what Form I-9 is, then perhaps you haven't worked for an American company in a few decades. The U.S. government has required workers and employers to complete I-9's for every new employee since Nov. 6, 1989. It is required when hiring citizens and non-citizens, and all must attest that they are legally in the country.

As you absorb President Trump's orders Wednesday to construct a wall between the United States and Mexico, along with actions to cut back on legal immigration, including keeping Syrian refugees out of the country, now do you remember Form I-9?

Merger Blocked of Health Insurance Titans Aetna and Humana

Citing antitrust violations, a federal judge has blocked Aetna's $37 billion purchase of Humana, Inc.

U.S. District Judge John D. Bates said the deal would violate antitrust laws by reducing competition among insurers. Under the proposed merger agreement, Aetna now owes Humana a $1 billion breakup fee.

The insurance companies' lawyers scrambled Tuesday to chart out the next course of action. Aetna is considering an appeal, but also is concerned about the prospects for a pending $48 merger with Cigna Corp.

Govenrment lawyers, meanwhile, are caught mid-step in the transfer of power in Washington. The Obama administration started the ligitation against the Aetna-Humana deal, and they are waiting for a decision on the Anthem-Cigna case

There's plenty in-house attorneys can learn from Volkswagen's emissions fraud scandal: the role of the private organizations in enforcing regulations, the teeth in the Clean Air Act, the strange overlap between copyright law and defeat devices.

But ever since the automaker's $4.3 billion settlement with the Department of Justice two weeks ago, we've all been fixated on one thing: the role of one VW in-house attorney in bungling a litigation hold, resulting in destroyed documents and implicating the attorney in obstruction of justice. The lawyer, known only as "Attorney A," may still be under investigation.

Ever sense the Bretton Woods Conference in 1944, Western governments have been moving toward free trade and open markets. For generations, reducing barriers to trade has been almost universally approved by the dominant political class, leading to institutions like the IMF, GATT, NAFTA, and the WTO -- an entire alphabet of neoliberalism.

But the same day that the global elites were leaving Davos, having spent nearly a week singing the praises of open markets, Donald Trump was inaugurated as President of the United States, his victory fueled in part by skepticism towards international trade. And the president put that skepticism into action on Monday, issuing an executive order abandoning the Trans-Pacific Partnership, a free trade agreement long supported by the Obama administration.

General Counsel's Whistleblower Trial Proceeds Against Ex-Employer

Sun-tzu, a Chinese general and military strategist, is credited with coining the phrase about 2,400 years ago: "Keep your friends close, and your enemies closer." Sanford "Sandy" Wadler, formerly general counsel at Bio-Rad Laboratories Inc., might be feeling that about his former employer today.

Wadler, who worked for Bio-Rad for two decades, is suing the company for allegedly firing him after he blew the whistle on its conduct in China. He contends that he was forced out of his job after he advised the company about potential bribery in violation of the Foreign Corrupt Practices Act.

"If he had not made his report to the audit committee, he would have not been fired," plaintiff's attorney James Wagstaffe said in opening arguments last week.

What lawyer brought a razor-sharp wit to, well, a razor fight? Jack Sarno, general counsel of the razor-blades-by-mail startup Harry's.

After Gillette launched a campaign to "welcome back" former Harry's users, Sarno sent off a demand letter to Gillette, part of Procter & Gamble -- a demand letter with plenty of, ahem, edge.

Is Your Company's Confidentiality Agreement Illegal?

If all confidentiality agreements were truly kept confidential, it would be hard to determine if they were legally binding.

That assertion underlies a basic reason that all confidentiality agreements are not, in fact, binding. Public policy and many laws prohibit confidentiality in various areas. Indeed, some laws mandate disclosure of information that cannot be kept confidential.

Here are three types of confidentiality agreements and related problems to avoid:

Government lawyers seem to be in a rush to wrap up high-profile cases before the new administration takes over. In December, Deutsche Bank settled a federal investigation into its mortgage securities, for $7.2 billion. Then came Volkswagen, laying out almost $15 billion in what might be the most expensive corporate scandal ever. Last week, Takata agreed to settle an investigation into its cover up of airbag defects for $1 billion, a relative steal. Credit Suisse followed, agreeing to pay $5.3 billion for violations involving mortgage-backed securities.

Today, JPMorgan Chase joined the ranks, agreeing to pay $55 million to settle a Justice Department lawsuit that accused it of discriminatory mortgage lending practices targeted at African-American and Hispanic homebuyers.

Volkswagen has agreed to plead guilty to criminal charges and settle the federal investigation into its "clean diesel" emissions fraud -- for $4.3 billion in civil and criminal penalties. That comes on top of the nearly $15 billion the company has agreed to pay to consumers, making VW's emissions scandal perhaps the most costly corporate scandal ever.

But that's hardly the end of things for VW. Last week, six executives were charged with wire fraud, conspiracy, and violations of the Clean Air Act -- and more prosecutions could be coming, implicating even the company's in-house attorneys.

Takata to Pay $1 Billion in Air Bag Scandal

Japanese auto-parts maker Takata will pay $1 billion as part of a criminal settlement stemming from the company's cover-up of defective air bags that contributed to the deaths of at least a dozen motorists and injuries to almost two hundred others.

The U.S. Justice Department announced the deal Friday, which included one guilty plea to wire fraud, $25 million in fines, $125 million for injured motorists, and $850 million for recall and replacement costs. Prosecutors said Takata and three of its executives, who separately face fraud and conspiracy charges, repeatedly falsified critical test data about the safety of its products for more than a decade.

"Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits," said U.S. Attorney McQuade. "If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible."

NY Times Promotes David McCraw, Lawyer Who Called Out Trump During Election

David E. McCraw, newly appointed deputy general counsel for the New York Times, isn't one to shy away from confronting powerful people. At least, that's the reputation he earned for himself when he stood up against Donald Trump's lawyers during the presidential campaign last year.

They demanded that the Times apologize and retract an article about two women who alleged Trump had groped them. Showing that the pen may be mightier than the sword, McCraw virtually stared them down and said: "Go ahead. Make my day."

Fiat Chrysler installed 'engine management' software on more than 100,000 of its diesel vehicles, allowing them to release increased pollutants, according to the Environmental Protection Agency. The software was installed on 2014, 2015, and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks, the EPA says, and resulted in extra emissions of nitrogen oxide, a toxic pollutant and one of the main contributors to smog.

The accusations harken back to Volkswagen's emissions fraud, which was discovered in September 2015. There, Volkswagen used "defeat devices" to evade emissions test, allowing its "clean diesel" cars to otherwise emit illegal levels of pollution.

Salary negotiations can be a bit more difficult for in-house attorneys than for other lawyers. Whereas BigLaw firms tend to follow strict compensation plans, pay for in-house lawyers can vary significantly across companies, industries, and experience levels.

That means you'll need to put in extra work to understand what salary is possible for you and negotiate a decent compensation plan. Here are some tips.

Volkswagen Exec Arrested in Diesel Scandal

When Volkswagen first got caught cheating emissions tests in 2014, Oliver Schmidt was right to think his company might have a problem.

"It should first be decided whether we are honest," he said in an email to a Volkswagen colleague in April 2014. Schmidt was working as an executive over emissions testing in the United States at the time, but was transferred to Germany after the revelations led to a fiasco that has cost the company so far about $20 billion to pay for recalls, settlements, and criminal defense.

Arrested this week in Miami, Schmidt may now be thinking whether he should have returned to the United States. He has been charged with defrauding the government and conspiracy in the biggest cover-up of Clean Air Act violations in history.

Fiat Chrysler is the smallest of Detroit's 'Big Three' automakers. But it could become a lot bigger if it merged with General Motors.

If such a merger happened, it would likely have the blessing of President-elect Donald Trump -- and presumably the regulators working for his administration. At least, that's what Fiat Chrysler CEO Sergio Marchionne speculated this week.

Global Cybersecurity Threats Are Coming

In a world connected through the internet, satellites, cell zones, and wireless networks, cybersecurity threats can come from virtually anywhere and affect almost anybody.

This is especially true in the United States, where even the recent presidential election was affected by email hacks and security breaches. Cyber-espionage has become the weapon of choice for some governments.

In the breach, lawyers and their clients may want to consider cybersecurity laws taking shape in many parts of the world. Winston and Strawn partner Lisa Thomas lays out a global roadmap for the coming years:

E-Discovery Jobs in Demand in 2017

The rising tide of eDiscovery will lift the prospects for many job-seekers surfing the web in 2017.

According to a new report, eDiscovery will create hundreds of jobs at law firms and companies across the country. The report, Cowen Group's 2016 Compensation Trends in Legal Technology Report, bases its prediction on a survey of 244 businesses. It says that litigation will create jobs for attorneys, project managers, forensic specialists and other professionals.

Jennifer Schwartz, vice president of executive placement and advisory services at the Cowen Group, said that the demand for eDiscovery professionals is not unusual given that "over 50 percent of the legal market is going to a managed services outsourced model for e-discovery."

As a result, job hunters will find more opportunities for eDiscovery work at legal service providers than at law firms. More than half of the jobs will be at service providers, while less than one third will be at law firms. The report projected 38 openings for eDiscovery attorneys at law firms, approximately 15 percent of the total eDiscovery jobs available.

Millennials are taking over. With more than 75 million 20- to 30-somethings in their ranks, Millennials now outnumber Baby Boomers as America's largest generation. They recently became the largest part of the workforce, as well, and by 2025 they'll make up 75 percent of all workers.

But what do in-house counsel think of this new generation? According to a recent survey by Thomson Reuters, many in-house attorneys think Millennials will bring much-needed changes to the profession, while some of the old guard still have concerns about these upstarts.

Last year was a busy one for corporate insiders exposing wrongdoing. Spurred by large SEC whistleblower awards and stronger interpretations of federal laws protecting whistleblowers, 2016 saw major developments when it came to calling out corporate rule breaking. That even includes one in-house attorney turned whistleblower.

So, here are our top six whistleblower stories of the year, taken from the (recent) FindLaw archives.

Three Questions About 3D Printing

Legal issues are being created every time a new 3D object is printed.

Like issues with copying movies in the past and cloning living things in the future, the challenge for lawyers is keeping up with technology and the applicable law.

So far, 3D printing is ahead of the law, as the technology has been used to create rocket engines, guns, human tissue and even a bionic ear. We're talking potential problems that cross virtually every border from international to federal to state laws. So many issues arise in the 3D process, but let's consider three questions:

Google's Confidentiality Agreements Might Be Illegal, If Lawsuit Claims Are True

A Google employee claims the company has internal spies and encourages workers to report each other for violating company rules and demanding that they keep everything secret.

It's almost as good a story line as The Internship, the comedy set at Google's headquarters, except this story is not so funny. It's a lawsuit, and Google is not laughing.

"We will defend this suit vigorously because it's baseless," Google said in a statement. "We're very committed to an open internal culture, which means we frequently share with employees details of product launches and confidential business information. Transparency is a huge part of our culture."

The federal regulatory environment is primed for some significant changes. With a new Congress beginning its first session today, and a new presidential administration beginning in just a few weeks, there's a lot of regulatory shifts coming -- even if those changes don't come immediately.

Yet, if change is certain, the shape that it will come in isn't. We don't know, for example, how Dodd-Frank will mutate in the new political climate, or what a company's legal obligations will be under a post-Obamacare regime. But that doesn't mean you're completely rudderless. Thomson Reuters has a handy map for managing regulatory change and its ensuing risks. (Alright, it's an infographic, not a map.) Here's a brief overview of the steps.

Companies Are Hiring More Autistic Workers

Autism might now look good on a resume, depending on how you look at it.

While most employers do not seek out workers who have an autism spectrum disorder, some leading companies are looking for them. Microsoft, for example, is recruiting autistic people for jobs in software engineering and data sciences.

"In order to build the best products for everyone, we need to have a diverse and inclusive workforce across all abilities," Microsoft says on its website. "For example, in the case for autism, we know there is an untapped pool of talent with skills aligned to the work we are doing every day at Microsoft."