In House - The FindLaw Corporate Counsel Blog

April 2009 Archives

Date: Wednesday, May 6, 2009
Time: 1:00 PM (EDT)/10:00 AM (PDT)

Given the marked increase in economic and business risk anxiety, it's no surprise that in-house counsel are scrutinizing litigation costs and, in many cases, seizing control of much of the discovery process. This webinar will explore the changing relationships and roles of in-house and outside counsel around what often is the single largest cost in a legal proceeding - electronic discovery. In this webinar you will learn about:
Well, it's finally happened.

After months of speculation and conjecture, President Obama has announced that Chrysler has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in New York, becoming the first major US auto manufacturer to declare bankruptcy since Studebaker in 1933.

The news of the bankruptcy filing comes in spite of Chrysler's recent breakthroughs with the United Auto Workers and Fiat, and the decision to file for bankruptcy came after a group of Chrysler's creditors broke of restructuring talks after rejecting the government settlement proposal.

Federal Government to Provide Relief for Second Mortgages

Homeowners who are facing foreclosure because of second mortgages on their homes received a piece of good news from the Obama Administration on Tuesday.  Financial institutions will receive subsidies from the federal government out of the Troubled Assets Relief Program fund to modify the terms of second mortgages.

About half of all at-risk borrowers have second mortgages.  The previous mortgage modification program paid lenders to reduce rates on primary mortgages, but did not address second mortgages.  These second mortgages can make staying current on payments difficult, even when homeowners received assistance under the previous foreclosure alternative program.

In this post, guest authors Mary Mack and Dennis Kiker examine the implications of an eDiscovery decision suggesting that authentication of electronically stored information will soon become a major issue during litigation.  The authors predict that this opinion will take on great importance in future eDiscovery cases.

Authenticating electronic evidence in civil trials is coming into its own. In May 2007, Magistrate Judge Paul W. Grimm, in Lorraine v. Markel Am. Ins. Co ., set down persuasive parameters for authenticating evidence. Lorraine, which is getting more traction by the day, establishes guidelines for admitting electronically stored information (ESI) into evidence. It goes beyond the "breathalyzer" standard of In re Vee Vinhnee. If, as Judge Grimm predicts, the bar in civil court for ESI authentication is about to be raised, his opinion could take on landmark proportions. That's why it's imperative to understand the practical and strategic implications of Lorraine.

GM, Chrysler Try to Put the Brakes on Bankruptcy

Two members of Detroit's Big Three automakers had big announcements today regarding their attempts to secure more federal bailout money. 

GM confirmed several aspects of its massive restructuring process, and Chrysler released news of a tentative concession agreement with the United Auto Workers union and a ratification of its deal with the Canadian Auto Workers.

The announcements come at a time when the auto manufacturers are attempting to meet the demands of the US government in order to qualify for more federal assistance and stave off bankruptcy filings.

Banks Get Results of Stress Test

It's a day that could dictate the direction of the stock market for some time to come, and could even radically reshape the nature of the relationship between the United States Government and the banking sector.

Stress Test Day.

The Federal Reserve has begun privately releasing the results of the so-called "stress tests" it performed on the 19 largest US banks.  The purpose of the tests was to determine which of the financial institutions required government assistance, which could be saved, and which must fail.

Some top regulators have written that there is a strong chance that the US government could end up acquiring significant stakes in banks according to how the stress tests go and the rate of economic recovery.

InsideCounsel's 9th Annual SuperConference (May 5-6, Chicago)

InsideCounsel's annual SuperConference is happening on May 5-6 in Chicago.  The program looks interesting, and I'm interested to hear Robert Bauer, Perkins Coie partner and general counsel for both Obama for America and the Democratic National Convention, give a keynote address.

Also worthy of note is the fact that both in house and outside counsel may attend the meeting, which makes it a great place to meet law firm partners and possibly find ways to reduce legal costs in these tough times.

Here is the event anouncement:

May 5-6, 2009. 
The Fairmont Chicago
Chicago, Illinois

Now in its ninth year, SuperConference is the premier event for legal executives seeking the latest tools, techniques, trends, and analysis on the most pressing issues in law. The two day, multi-track program will feature legal industry luminaries David Boies, Robert Bauer and Dick Thornburgh as keynote speakers, a world-class Advisory Board, and a diverse roster of speakers from some of the nation's leading companies and law firms.

The 2009 SuperConference will be open to both in-house counsel and outside counsel alike, providing you enhanced networking and learning opportunities. Don't miss out on an opportunity to attend the only conference that brings together the true leaders in our field!

Register Here

Webinar: Which firms made the Am Law 100 in 2009?

Date: Tuesday, April 28, 2009
Time: 1:00 PM (EDT)/10:00 AM (PDT)

Listen to the Am Law 100 results before they come out! Only this time, bring some tissues and a couple Xanax.

Please join Aric Press, the editor in chief of The American Lawyer, for our annual Am Law 100 web cast. He'll review the results, discuss the trends, and whet your appetite for the print and digital editions that appear the next day.

We all know that it was a difficult year. But the pain wasn't spread evenly and even in the wake of a very grim autumn there were firms and regions that made progress. Please join us for a lively 20-minute review of what happened and why, and a brief look ahead at some of the challenges of 2009.

Register Here

In House Counsel Tip: Don't Steal Food from Your Company

It's a lesson that Troy H. Ellis, former chief counsel for Invista, knows all too well, according to this article in the National Law Journal. 

Ellis was recently censured by the Supreme Court of Kansas after he was caught on film stealing food from Invista's onsite cafeteria.  The company claims on its website to be the world's largest producer of nylon and spandex.

Ellis tried to "stretch" his way out of the mess by claiming that the whole imbroglio occurred because he was working so hard that he simply forgot to pay for his meal.  He claims that he intended to cover the cost of the food after he returned from a business trip.

More Bad News for In House Counsel at Banks

After Bank of America bought Merrill Lynch, the markets responded with a resounding rejection of the deal.

It's a sentiment that the financial institution's own legal department might soon share.

A post at the JD Journal states that lawyers in the combined legal department of the two companies - about 700 attorneys in all - are being asked to reapply for their own jobs.  As the post points out, this almost always leads to layoffs.
Breaking Story:

Trading in Lender Processing Services Inc.'s stock was halted today around 10:30 AM EST after it came out that the Department of Justice had launched an investigation into the company's mortgage reporting systems.  The stock lost a quarter of its value, with prices dropping by over $9 at the time trading stopped.

Apparently, the DOJ is concerned that the company's automated mortgage reporting system may be passing on erroneous evidence to attorneys who rely on the service for evidence in court proceedings.

The company's stock had been doing relatively well, and had more or less recovered from an October low.  The shares started the day at $33.33. 

Then the news of the investigation broke, and prices fell through the floor.  At one point in the morning's trading, the company's shares had fallen to $20.81.  Trading ended with the shares at $23.56.

Check back for updates on this story as they come in.

General Growth Properties Stops Growing, Files For Bankruptcy

It's a question for the ages: What's in a name?  Well, in the real estate industry, it turns out that sometimes a name contains a heaping portion of irony.

General Growth Properties, Inc. - the nation's second-largest shopping mall owner - has filed the largest real estate bankruptcy in US history after racking up $27 billion in debt to finance its meteoric . . . growth.

Are In House Counsel Immune from Lawyer Layoffs?

A number of sites are writing about Wells Fargo's partial confirmation of its plans to lay off some of its legal department.  The company said in a statement to Above the Law that the firings are a result of the Wachovia merger. 

Apparently there weren't enough chairs for everyone, and $3 billion in profit just doesn't go as far as it used to.

The question this really brings up, though, is how in house counsel at other firms are faring if Wells Fargo, one of the rare bright spots among corporations recently, is forced to layoff members of its legal department.

More CEOs Got Raises Than Pay Cuts in 2008

According to a survey by the AFL-CIO, more CEOs received increases in compensation than pay cuts last year.  This occurred despite increased scrutiny of executive pay and new rules imposed after the government began a bailout of financial companies.

The news is likely to cause some outrage since 2008 also saw the largest drop in employment in almost 30 years.  Politically, it will be hard to justify bailing out companies if CEOs are receiving more money than they did when the crisis began.

Express Scripts Buys WellPoint Pharmacy Benefit Unit, NextRx

Express Scripts has announced that it will acquire WellPoint's pharmacy benefit manager unit, NextRx, in a deal totaling just under $4.68 billion in cash and stock.  The deal includes a 10-year contract for Express to provide prescription management services to Wellpoint once the deal actually closes.  NextRx provides services to roughly 25 million Americans, and manages 265 million prescriptions per year.

The purchase will position Express to compete with its major competitors in the sector, Medco Health Solutions and CVS Caremark.  With the acquisistion, Express will become the second largest player in the pharmacy benefits management sphere, suprassing its rival CVS Caremark.

WellPoint remains one of the country's largest insurers.

Gov't Wants Banks to Keep Stress Test Results in the Vault

Is it a government cover-up?  Or is the Obama Administration just trying to avoid any unnecessary market shocks? 

The Administration has asked banks currently undergoing "stress test" evaluations to keep the results quiet when they report earnings.  The fear is that investors might punish those institutions that don't report positive outcomes.

Cisco Buys Tidal Software - Latest in a Wave of Purchases

Cisco Systems, the maker of networking equipment, has announced its intent to purchase Tidal Software for $105 million in cash and retention-based incentives.

Tidal Software, headquartered in San Jose, CA and Houston, TX produces software that helps companies manage, automate and coordinate their applications.  The company's products include tools to monitor application performance and schedule jobs across machines and platforms.

US Offers Life Insurance to . . . Life Insurers

The US government will extend money from the Troubled Asset Relief Program (TARP) to life insurance companies in the next few days, according to a report in the Wall Street Journal.

If the move does in fact happen, the insurance companies will join the financial services industry and the auto manufacturers as the three industries that the government has deemed important enough to the overall economy to warrant bailouts. 

GM Drives Itself Closer to Bankruptcy

GM is downshifting its hopes for staying out of bankruptcy and gearing up for a court-monitored reorganization if its current restructuring plans don't pan out, according to a Reuters report.  The report quotes an anonymous source as saying that the bankruptcy preparation is "intense" and "earnest."

The company is trying to avoid bankruptcy through a massive restructuring, according to another source quoted in the report, but Moody's Investor Service places the likelihood of a GM bankruptcy at 70 percent based on the difficulties inherent in restructuring out of court.

Apparently, in house attorneys and law firm representatives spent a lot of time at a recent meeting pointing their fingers at each other over the issue of support for flex-time and part-time policies designed to retain and advance women at law firms, according to the National Law Journal.

What's worse, the Project for Attorney Retention (PAR), who organized the event, invited the attendees because it considered them leaders in the field.  Which begs the question: If the leaders don't know how to do flex- and part-time policies right, what chance does everyone else have?

FASB Makes Mark-to-Market More Moderate

In a move that may help steady the collapsing economy (or hasten its eventual topple into the abyss), the Financial Accounting Standards Board (FASB), an independent body in charge of setting US accounting standards, is in discussions to ease so-called "mark-to-market" rules for financial institutions. 

As Reuters reports, the FASB's proposed changes will allow financial institutions to determine the value of the assets on their books during inactive markets based on what the company could get for the asset in an "orderly" transaction between market participants.  Companies previously had to value the asset according to its value on the current market (hence "mark-to-market), even if the demand for the asset was so low that it had only a minuscule market value.

The FASB is not considering this move entirely willingly.  A congressional panel told the FASB in mid-March to take action on the mark-to-market rules, or else Congress would step in and change the rules itself.  This new action by the FASB appears to be a calculated move to retain its independence and avoid more extensive changes at the hands of Congress.