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Jason Mendelson at Mendelson's Musings discusses his frustration about start-up lawyers and raises many significant issues that start-up companies and in-house counsel have been trying to address for many years - the high cost and opportunity lost of traditional law firm services. The General Counsel offers a solution to these frustrations by providing cost-effective, value-based, full and part-time general counsel services to start-up, fast-growth and mid-size companies. We provide industry proven, senior level general counsel attorneys to companies for a monthly retainer well below the cost of a traditional hourly rate law firm and with none of the overhead of adding a new department which makes it possible for companies to enjoy all of the advantages of having an experienced in-house attorney, on-site, contributing to the success of the management team.
Jason is correct when he says, "the entire business model of law firms is going to have to change or it's going to get uglier." Today, many small and mid-size companies are being priced out of the law firm market and are looking for alternative ways to get legal services. The General Counsel is a cost-effective solution to this problem.
In an article published in its May 27, 2008 edition, the Los Angeles Daily Journal discussed various ways law firms and clients are working to cut fees, an especially relevant topic during this economic downturn. The General Counsel was prominently mentioned and details of its unique business model were described. Anyone looking for high quality legal services at reasonable rates should review this piece.
My wife and I attended a Memorial Day ceremony this morning. The local Veterans of Foreign Wars chapter conducted the program. The keynote speakers were a Marine Lt. Colonel from Camp Pendleton and a 92 year old man who commanded a landing craft during the invasion of Iwo Jima. Following the ceremony, we were privileged to speak with one of the legendary Tuskegee Airmen (the highly decorated Army Air Force unit comprised of African American servicemen).
Such moments remind us of the cost of the freedom that we enjoy. I give thanks for everyone whose sacrifice has made it possible for me to be typing this message.
As I mentioned in my previous post, I served on a panel at at the Risk and Insurance Management Society's 2008 Annual Conference on 4/30/08. The program was titled: "50 Tips on Business Litigation Coverage That Every Risk Manager Wants to Know." Steven Brower, the leader of the panel, has kindly granted permission for me to use several of his tips in upcoming blog posts.
Steve is the best technology litigator I have ever known. You might ask: "What has that to do with business litigation coverage?" Well, it so happens that Steve is also an expert on insurance coverage issues. He issued coverage opinions and handled litigation for insurance companies from 1982 to 1998, and he has provided such expertise to individuals and businesses since 1992.
Please visit Steve's website at http://www.sbrower.com
Tip #1 from Steve: Insurance Policies Are Negotiable.
Steve notes that: "Insurance policies are virtually always subject to modification (often without charge) upon negotiation. It is important to consider not only the price of coverage, but the terms."
Experienced counsel, working with a savvy insurance broker, can get excellent coverage that is tailored to your company's needs. Don't just pick up the phone and ask a broker to get $5M of D&O coverage. Use the right professionals to get the best protection available.
Watch this space for more tips!
I am going to serve as a panelist on a program at the Risk and Insurance Management Society's 2008 Annual Conference in San Diego on Wednesday, 4/30/08. The program is titled: "50 Tips on Business Litigation Coverage That Every Risk Manager Wants to Know."
Information on the Annual Conference can be found at http://www.rims.org//template.cfm?Section=AnnualConference1&Template=/Conference/AdvanceProgram/SessionsByDay.cfm&Year=2008
I'll post a "post-mortem" after the panel.
In this Legal Update from Jackson Lewis http://www.jacksonlewis.com/legalupdates/article.cfm?aid=1263, we learn that:
"A California appellate court has ruled that a broad employment severance agreement, including a release of claims under "any other federal or state law," was unenforceable under the Uniformed Services Employment and Reemployment Rights Act ("USERRA") to the extent the release sought to cover claims for wrongful termination based on the plaintiff's military service. Perez v. Unline, Inc., No. G036939 (Cal. Ct. App. Dec. 6, 2007)."
Here in California, the basic principle is that certain employee rights cannot be waived, even if the employee gets consideration and signs a separation agreement containing a specific waiver of those rights. A classic example is entitlement to payment of all wages earned. At first blush, it seems to me that USERRA rights are being added to that category.
Rather than try to get departing employees to waive those involate rights, employers must make sure they have fulfilled their obligations and can prove they have done so. A separation agreement can then have the employee recite that she has received all of her wages, rather than state that she is waiving her claims to get paid her wages.
As with so many aspects of employment law, this is a tricky area. Consult with expert counsel and get help crafting a separation agreement that doesn't try to accomplish the impossible!
My friend Barrie Gross, an employment and human resources expert in San Francisco, has written an article http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/23/BU78UJP1I.DTL for the San Francisco Chronicle that gives employers good guidance on the tricky subject of Compensatory Time Off (known as "Comp Time" or "CTO"). CTO is the practice of giving an employee time off in lieu of extra compensation or overtime pay. CTO is also a risky proposition. To summarize Barrie's advice:
"If you are considering offering CTO to nonexempt employees, be sure to work closely with your human resources department or with legal counsel to review your specific situation.
Compliance is complicated, and you'll be glad for the help."
The Chronicle article is an excerpt from a larger article Barrie wrote and you can link here http://www.allbusiness.com/government/employment-regulations-overtime-pay/802-1.html to read the whole thing and as well as other articles she has written about many different HR related topics.
Can a defendant recover attorneys' fees under an attorney fee provision in a contract if the plaintiff voluntarily dismisses the lawsuit without a settlement? The Fourth Appellate District Court of Appeal answered no in a recent case, Mitchell Land and Improvement Co. v Ristorante Ferrantelli 2007 DJDAR 18950 (12/27/07). The ruling was made even though the attorney fee provision defined the prevailing party as the party who "substantially ... defeats the relief sought ... by the abandonment by the other [p]arty ... of its claims ..."
The case involved the new owner of a strip center, who made no secret of the fact that he wanted a restaurant tenant to vacate. The restaurant had occupied the premises since 1985 and with options, could stay until 2022. The tenant had made some improvements to the outdoor seating area (a tent and fire pit). The landlord complained to the city that the restaurant lacked the necessary permit. The city inspected the improvements and advised the restaurant to apply for the permit after the fact. The landlord refused to consent to the permit application and instead gave the restaurant a 30-day notice to "cure the breach or quit the premises".
The restaurant removed the non-complying improvements. However the landlord filed an unlawful detainer action. When the tenant moved for a summary judgment, the landlord voluntarily dismissed the case without prejudice. The tenant sought attorney fees under the lease, which were around $123,000.
The Court based is denial of the attorney fees awarded by the trial court on Civil Code Section 1717(b)(2), which reads as follows:
"Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section."
Interpreting this language, the Court, citing Santisas v Goodin (1998 17 Cal 4th 599), stated:
"When a plaintiff files a complaint containing causes of action within the scope of Section 1717 ... and the plaintiff thereafter voluntarily dismisses the action, Section 1717 bars the defendant from recovering attorney fees incurred in defending those causes of action, even though the contract of its own terms ... authorizes recovery of those fees."
The decision is consistent with a literal reading of Section 1717(b)(2) and prior case law. However it reduces the risk to a well funded plaintiff who pursues a weak claim to intimidate or coerce a defendant into foregoing or modifying its contract rights.
Jerry Bloch
I grew up in the San Francisco Bay Area when Barry Bonds' father, Bobby, was playing for the SF Giants. Bobby and his teammates, including legends such as Willie Mays (Barry's Godfather) and Willie McCovey, were great sportsmen. I can't believe that young Bobby didn't learn the fundamentals of life from his Dad, his Godfather, et al. One of those fundamentals is: Tell the truth!
Now Barry has been indicted. For what? Using steroids? NO! For lying to the Grand Jury about using steriods. Scooter Libby and Martha Stewart were each sentenced to prison (Libby was spared the incarceration only by a Presidential pardon) for lying to the investigators, not for the conduct the investigators were investigating.
Yes, I know that Barry is entitled to the presumption of innocence. The public reports, however (see http://howappealing.law.com/ for a summary) paint a bleak picture. Barry has been indicted because, at the very least, he looks to the Feds as if he lied.
The moral of the story is that one must NEVER lie to government investigators. Don't even give them a reason to THINK that you are lying. If they ask you questions about things you don't want to disclose, just keep your mouth shut. Don't get cute. Don't try to finesse. Don't think you can tell only part of the story. The investigators are professionals who know how to trap you. Tell them you don't want to talk to them. If they persist in their questioning, tell them you are not going to say anything else until you have conferred with counsel. Period!
A recent white paper from Tatum, LLC describes today's CFO as being under "intensifying performance pressure", at "high risk, and with a job "virtually impossible for one person to do". In the face of these ever growing burdens, Tatum calls for the CFO role "to be redefined, requiring a fundamental paradigm shift by the CFO in the management of the entire financial function."
The challenge for today's CFO is to outsource the non-core tasks to others so he can focus on core functions.
An Entrepreneur.com article recommends that the CFO hire a controller so he "could spend a little less time bean-counting and a little more time on strategic, growth oriented issues". In the article Cynthia Jamison of Tatum says, "There are a lot of things that get swept under the CFO's role that take them outside their comfort zone".
One such function that falls to the CFO by default is legal. Many CFO's are reluctant to phone outside counsel, knowing that the call may lead to thousands in legal fees. So they spend some of their time reviewing real estate leases, negotiating software licensing agreements, dealing with employment law issues and managing litigation. Not only is this a poor use of the CFO's time but it may expose the company to significant risks and liabilities.
A better, more cost-effective legal solution would be to retain a part-time general counsel. A part-time GC visits the company on a regularly scheduled basis. She becomes a part of the CFO's team. She develops a deep understanding the company's on-going business. She cultivates relationships with other members of the management team. The CFO can punt all of the company's legal and quasi-legal matters over to the part-time GC. The GC becomes responsible for getting problems solved, documents reviewed, deals negotiated. Those matters get handled quickly and with the appropriate expertise. The CFO maintains oversight but is less actively involved.
Fees are fixed on a monthly basis based on the number of days the GC is scheduled to spend at the company's office. Unlike hourly rates charged by traditional law firms, fees are predictable and can be budgeted. The company gets the level of legal services that fit its unique legal needs at an affordable cost.
A part-time general counsel may not be the answer to all of the CFO's prayers but it can certainly answer some of them.
Jerry Bloch
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