In House - The FindLaw Corporate Counsel Blog

March 2012 Archives

Does your company offer a finder's fee for locating investors? If so, you may find that your finder's fee agreement may not be enforceable, a new article at Inside Counsel warns.

Companies that seek to raise money through a private securities offering routinely dole out finder's fees, attorney Randy Johnson writes for Inside Counsel. Finder's fees are usually determined by how much money the finder's efforts bring in for the company.

But a legal issue arises when the finder is not properly licensed as a broker-dealer. In that case, the finder's fee agreement "is an illegal contract and is likely unenforceable," Johnson writes for Inside Counsel.

Should You Disclose an Ex-Employee's Improper Conduct?

Providing an employment reference for a former employee is always a sticky situation. If the person responding to the request discloses too much information, the employer can end up being sued for defamation or tortious interference with prospective business relations.

But what if that person has disclosed too little information? What if the reference request is for a dangerous former employee? Is human resources obligated to disclose violent or other improper conduct?

Quite possibly yes.

A financial adviser's alleged LinkedIn fraud is calling attention to the growing use of social media for securities scams. General Counsel for who deal in securities matters may want to take note.

The Securities and Exchange Commission accuses Anthony Fields of Lyons, Ill., of trying to hawk more than $500 billion in fraudulent securities via posts on LinkedIn and other social media sites, the Chicago Tribune reports.

The SEC's action against Fields coincided with two investor alerts released back in Jan. The alerts warn that criminals are increasingly using social-media sites like LinkedIn to commit fraud, and suggest that financial professionals should set strict guidelines for social-media use.

What Every General Counsel Should Know About ICANN

There a few things that every general counsel should know about the Internet Corporation for Assigned Names and Numbers (ICANN).

After all, the corporation is at the Internet's helm. It drives policy which may ultimately impact businesses and corporations.

Here are some things you should know about the organization and its new policies:

Companies Going After Ex-Employees' LinkedIn, Twitter Accounts

Who owns a company employee’s Twitter, LinkedIn, or Facebook account? It may seem like an easy question. After all, an individual’s name is attached to his or her social media account.

It’s thought of as “Jane Doe’s Twitter,” or “Jane Doe’s LinkedIn Page.” Unless it has the company’s own name on it, the case of ownership seems simple. But maybe it’s really not.

And it’s something corporate attorneys might need to address.

Conde Nast Intern Reforms an 'Empty Gesture'?

First, Fox Searchlight was sued by an unpaid intern. Then came the lawsuit against Hearst Corporation. In what is probably an attempt to avoid an unpaid intern lawsuit of its own, publishing giant Condé Nast has decided to reform its internship program.

The decision sounds good in theory, but critics of the reforms say they are an “empty gesture” and do nothing to protect unpaid interns. They say the Condé Nast intern reforms aren’t reforms at all.

Why Silicon Valley Doesn't 'Like' Yahoo's Facebook Lawsuit

Yahoo has sued Facebook over 10 of its patents, some of which cover methods for webpage customization, content sharing, ad placement, sending messages to friends, and social photo optimization. The lawsuit comes a month after the search company threatened legal action against Facebook if it did not license the technology.

These sorts of suits are par for the course in an industry known for its ongoing patent wars. But Silicon Valley seems to think Yahoo's suit is a different sort of beast.

What General Counsels Can Learn From Rush Limbaugh's Empty Apology

The country is still talking about Rush Limbaugh and his statements about Georgetown law student Sandra Fluke. Besides calling her a prostitute, he encouraged her and her fellow students to post online sex videos. She warranted these words solely because she believes birth control should be a mandatory part of insurance coverage.

Limbaugh's statements garnered criticism from the right and left, from women and men. It was so bad, he apologized. Except, it wasn't an apology at all. In fact, it was so not an apology, his public statement is a good example of how general counsel should not respond to criticism of corporate action.

Laying off employees is never pleasant, but how you break the news can be just as important as the layoffs themselves. So what's the best way to draft a legal layoff letter?

First, keep your audience in mind. The employee you're laying off will want to know why, when, and how your company plans to implement layoffs.

Disgruntled employees who receive a layoff letter may also be looking for reasons to sue. That's why it's so important to draft a legally sound layoff letter.

In general, experts say your layoff letter should include:

Your reason for the layoffs.

Tell your employees what led you to decide on layoffs -- for example, tough economic times, a merger, or increased competition, suggests. You don't have to go into too much detail, but giving no explanation probably won't stand up in court.

Black Man Settles with Steakhouse Over N-Word Slur on Receipt

What would you do if you found out your employee put a racist slur on a receipt? That is exactly what happened in an Orange County steak restaurant.

African American businessman Mark McHenry frequented Landmark Steakhouse. He thought he was developing a friendly, joking rapport with the wait staff.

But it seems the restaurant's employees may have crossed a line. McHenry discovered that several of his receipts called him by different variations of the N-word. That is when he sued.

The case has since settled. It's unclear how much the business settled for. But a federal employment discrimination lawsuit is certainly something that most businesses would want to avoid.

Top 3 Employment Actions You Should Take in 2012

As spring is now upon us, it's time for General Counsels to make some moves for 2012.

The Equal Employment Opportunity Commission kicked it up a notch in the fourth quarter and there are no signs of a slowdown. Complaints are up and regulators have responded with aggression.

You should respond with equal vigor -- take the following employment actions before the EEOC comes down on you.

More In House Lawyers Are Taking Up Social Media

Are you using social media? Your colleagues are.

Inside Counsel has followed up on its 2010 survey with the 2012 In-House Counsel New Media Engagement Survey, and the results are pretty interesting.

Researchers talked to 334 GCs, chief legal officers and other corporate counsel, and 86% of them reported using some sort of new media. Most of them preferred LinkedIn, too.

Glaxo, Apotex Can Sell Generic Paxil, 3rd Circuit Rules

Generic Paxil may soon be headed to the Third Circuit Court of Appeals. A federal judge in New Jersey has ruled in favor of GlaxoSmithKline, giving it permission to sell generic Paxil to Apotex, a Canadian pharmaceutical company.

The ruling comes in a 2010 lawsuit filed by generic drug manufacturer Mylan. The company accused Glaxo of breaching a licensing agreement that gave it an exclusive right to market and sell generic Paxil.

The judge has ruled that right only lasted for two years.