If It Can Happen To Ellen Pao . . . It Can Happen To You

Ellen Pao, the former BigLaw associate who sued her venture capital firm, Kleiner Perkins Caufield & Byers, for sex-discrimination, now owes the firm its litigation costs and possibly its attorney fees according to the abajournal.com June 19, 2015 article titled Judge says Ellen Pao owes $276K to venture capital firm in sex-discrimination case. Why?  Because sometime before the trial, the firm made her a million dollar settlement offer in the form of an “offer of judgment,” and she lost at trial.  In California, where the lawsuit was pending, Rule 68 governs offers of judgment:

imagesIf the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.

Because Ms. Pao did not accept the firm’s million dollar offer, and because she lost at trial, under Rule 68, she must pay the firm’s costs that were incurred after they made the offer.   Citing the disparity between the resources of Ms. Pao and the firm, the judge reportedly reduced the firm’s costs from $972,814 to $276,966.

Offers of judgment can be very effective tools for the defendant in a case, because it puts pressure on the plaintiff to settle.  And, since offers of judgment can be made early in the case, should a defendant prevail, or get a verdict that is less than the offer of judgment, the plaintiff can end up paying most of the defendant’s costs.

If you receive an offer of judgment, take it seriously and critically analyze the strength of your case in light of all the factors that can affect the outcome.  After all, if it can happen to Ellen Pao . . . it can happen to you.

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Watch What You Say . . . The Little Blue Man Might Be Listening

Have you ever noticed while watching TV or movie courtroom scenes when the attorneys sitting at either the plaintiff or defense table covers the microphone with their hands when talking with their clients?  That’s because in most courtrooms there is an audio recording of the proceedings.

blue_manBut what you may not realize is there are often microphones throughout the courtroom, and they may be on even while the court is in recess.  “Shhh, the little blue man is listening!” Often, our founder said that to her clients and to witnesses. In one of the jurisdictions where she practiced, there was a lucite light panel with the outline of a man that was backlit in blue when the court microphones were on.  Hence the reference to the little blue man.

Not heeding this advice was New Jersey family law attorney William Laufer when he reportedly told his opposing counsel during a court recess that the prosecutor was in his pocket: “Whatever I ask he does.”  A June 17, 2015 abajournal.com article titled Courtroom mic, left on during recess, picks up lawyer’s assertion that prosecutor ‘is in my pocket,'” reported on the matter.  As noted in the article, unfortunately for Mr. Laufer, the courtroom microphones were on when he made this statement.  This led to an allegation by an opposing litigant that Mr. Laufer was responsible for the prosecutor not pursuing stalking charges against Mr. Laufer’s client.  Certainly Mr. Laufer was embarrassed, as was the prosecutor who denied the allegation.  Whether there will be professional repercussions is yet to be seen.

So to all legal consumers who might someday find themselves in a courtroom, LPR shares the following tip.  Always remember to be careful what you say . . . the little blue man, or some other audio device, may be listening.

 

 

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Best Practices? Look Across The Pond

This weekend, the ABA hosted the 2015 London Sessions commemorating the 800th anniversary of the Magna Carta, with a series of presentations including a panel discussion titled What can US and UK lawyers learn from each other about best practices?

UKThere were a number of best practices discussed, but of particular interest to LPR was how discovery is handled in the UK.  In the US, discovery is based upon requests in a search for the truth.  The discovery process can take years depending on the court and the size of the case.  In the US, if an attorney fails to request certain relevant documents or information, the opposing attorney has no disclosure obligation.  The result has been blanket requests in an effort to not miss anything and substantial fees to review all of the documents and information produced.

In the UK, attorneys are required to conduct a reasonable search and produce all documents that directly support the positions of both sides.  And they must do so at the outset of the case.

If the US were to adopt the UK’s disclosure practice, the life of lawsuits would be shortened, litigation costs would go down, the “truth” would be more transparent, and perhaps there would be less litigation.  That would be best practices indeed.

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Is Justice Determined By What The Judge Ate For Breakfast?

What if your chances of a judge ruling in your favor depended on whether he or she had recently eaten? And what if a judge was more likely to rule in your favor shortly after eating but was less to do so before lunch time?

PNAS, Volume 108. Issue 17, April 26 2011

PNAS, Volume 108. Issue 17, April 26 2011

Shai Danziger and Liora Avnaim-Pesso of Ben Gurion University in Israel and Jonathan Levav of Columbia Business School published an article on Proceedings of the National Academy of Sciences (pnas.org) titled “Extraneous factors in judicial decisionsaddressing this exact issue. The article discusses the results of their empirical study of Israeli judges and the effect of the timing of food breaks on their decisions:

We test the common caricature of realism that justice is “what the judge ate for breakfast” in sequential parole decisions made by experienced judges. We record the judges’ two daily food breaks, which result in segmenting the deliberations of the day into three distinct “decision sessions.”

The authors found a correlation between favorable rulings and recent food consumption.  So, what does this mean for legal consumers?  Well, for starters, timing may be important:

We find that the likelihood of a favorable ruling is greater at the very beginning of the work day or after a food break than later in the sequence of cases.

Ultimately, this study reinforces the idea that the outcome of any lawsuit, even a “slam dunk,” is not predictable.  It appears that the outcome can depend on a number of extraneous factors including judicial snacks.

Nevertheless, our results do indicate that extraneous variables can influence judicial decisions, which bolsters the growing body of evidence that points to the susceptibility of experienced judges to psychological biases . . . . Finally, our findings support the view that the law is indeterminate by showing that legally irrelevant situational determinants—in this case, merely taking a food break—may lead a judge to rule differently in cases with similar legal characteristics.

We have blogged before that justice is not always just, and that the judge who presides over your case can have an enormous impact on the outcome.  Now it appears that whether the judge has recently eaten can have an impact as well.

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Post-Law School Residency Program? It Works For Doctors

According to a recent press release, UnitedLex, “a global, full-service provider of technology-powered legal and business services,” has launched a legal residency program with four law schools: Emory University School of Law, the University of Miami School of Law, The Ohio State University Moritz College of Law, and Vanderbilt Law School. 

The residency program runs two years, and like a medical residency, the recent law grads chosen for the program will be employed by UnitedLex full-time to work on its client projects.  The legal residents will also receive instruction from senior attorneys and hands-on training.

‘There is much that we can learn from medicine, in particular, from the large teaching hospitals where teaching, research, and clinical work is fully integrated and undertaken under the one roof. Central to this teaching is offering students direct access to patients,’ explains Richard Susskind, author of The End of Lawyers? and Tomorrow’s Lawyers, as well as the Larry Hoffman/Greenberg Traurig Distinguished Visiting Professor at Miami Law.

The program seeks to give law graduates relevant, real world experience.

[They will] learn to use cutting-edge legal technology and processes . . . and work directly with clients to deliver legal services in such practice areas as litigation management, e-discovery, cyber security, contract management, patent licensing, IP management and immigration law.

In addition to the legal residents being paid, the law schools will receive a portion of UnitedLex’s proceeds to fund scholarships and other student programs.

In 10 years, the wisdom of this approach will look obvious. . . . ‘UnitedLex has created a unique solution to a range of systemic challenges in the legal ecosystem,’ said Bob Grossman, partner at Greenberg Traurig.

LPR applauds UnitedLex and the four law schools that are participating in this program. Hopefully, legal residency programs will catch on.  The legal field needs more practice ready young lawyers, especially ones trained to do cutting edge legal work.

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Memorial Day Gratitude

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We at LPR morn those who perished while serving in our country’s military.  We are so grateful for their service.

LPR will be closed on Monday in observance of this national holiday.

 

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Life Of A Bar Complaint – At Least In D.C.

So what happens when a legal consumer files a bar complaint?  Are the attorneys ever really disciplined?  Recently, the Washington Lawyer magazine ran an article titled Q&A With Eric Yaffe: Chair of the Board on Professional Responsibility, addressing these and other questions.  In short, the bar complaint process can be involved, and sometimes attorneys are disciplined.

DC-bar-logoThe article begins with Mr. Yaffe’s response outlining D.C.’s Board on Professional Responsibility’s mission:

The board’s central mission is to protect the public, the courts, and the legal profession by ensuring that the rules that govern all lawyers are abided by in the District of Columbia. We are trying to make sure that there is a fair process, that attorneys and complainants have an opportunity to be heard, and that a fair decision is ultimately rendered.

According to Mr. Yaffe, there are four levels to D.C.’s attorney disciplinary system: Office of Bar Counsel; a hearing committee; the Board on Professional Responsibility; and the D.C. Court of Appeals.

Reportedly, when a complaint is registered with the bar, the Office of Bar Counsel investigates and decides whether the complaint should be dismissed or proceed.  If the Office of Bar Counsel decides the matter should be swiftly resolved with an informal admonition or diversion, it must be approved by a hearing committee member. Sometimes a Board member is required to review and approve a diversion agreement (meant to rehabilitate or re-educate an attorney on their ethical obligations).

If Bar Counsel decides to proceed, termed “specifying charges,” the hearing committee holds a hearing to review the matter.  The hearing committee is made up of three volunteers: two lawyers and one non-lawyer.  After hearing witnesses and considering evidence, the hearing committee makes an initial determination, which is submitted to the Board in writing as “findings of fact, conclusions of law, and any sanctions it recommends.”

If the decision is appealed by either party, the Board holds oral arguments, reviews the hearing committee’s findings, and submits a report and recommendations to the D.C. Court of Appeals.  The Court of Appeals is the ultimate decider and can agree with the Board, disagree with the Board, or remand the case for further proceedings.

At this point, there is a short list of disciplinary measures that can be taken.  Least serious is a public letter of informal admonition from Bar Counsel, which is published in the Washington Lawyer and on the D.C. Bar’s website.  The next, slightly higher level of discipline is a Board reprimand.  For the next level of discipline, the D.C. Court of Appeals can publicly censure the attorney.  For all of these forms of discipline, the attorney can still practice law and is not suspended.

More serious infractions can result in a suspension from practicing law for 30 days to three years.  Suspensions can include probation or forms of monitoring and can be imposed with a fitness requirement, where the attorney must prove fitness to practice after expiration of the suspension.  The most serious is disbarment, which amounts to a five-year suspension with a fitness requirement.

The article does not address the number or percentage of legal consumer complaints that are dismissed or that proceed to a given stage.  Nor does the article address the types of alleged infractions that are dismissed or that proceed to a given stage.

Regardless, for any legal consumer who believes that an attorney has acted unethically, at least with respect to the D.C. Bar, the article provides some insight into the bar complaint process.

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If It Can Happen To BB King . . . It Can Happen To You

Rock and Roll Hall of Famer BB King is currently in hospice care in his home, while his long-time manager and certain of his children are fighting over control of his affairs.  As reported by the BBC in a May 8, 2015 article titled, BB King: Musician’s family lose bid to control his affairs, three of Mr. King’s children filed a lawsuit claiming that his manager, who has power of attorney, was neglecting Mr. King’s medical care and stealing his money.  The court held a hearing, which Mr. King did not attend.  The judge found no evidence of abuse and ruled in favor of Mr. King’s manager:

BB King

BB King

Mr King has counsel. I don’t have anything here that says he lacks capacity. He has some serious health issues. But he has counsel. If he feels like he’s being taken advantage of, he has remedies.

It appears that Mr. King appointed his long-time manager to look after his finances and welfare when he was no longer able to do so, rather than appoint any of his children.

There are so many stories of this type of elder abuse and of children, friends and counsel fighting over who is best to look after elders, especially when the elders have money. Unfortunately, there is no sure way to know whether those in control are taking advantage.  Even the judges don’t know for sure.

When deciding who will have control over your affairs when you are no longer able, it is important to consider that serious consequences can result.  It’s an important decision – your very life could depend on it.

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BigLaw Firm’s Simple $1.5 Billion Mistake

How does a simple mistake by a law firm end up costing $1.5 billion?  According to the U.S. Court of Appeals for the Second Circuit, it happens when the law firm inadvertently includes an unrelated security interest for a $1.5 billion loan in the list of security interests to be terminated in the course of a different loan payoff.  

1And, it happened to behemoth General Motors’s counsel, BigLaw firm Mayer Brown, LLP.  GM had requested that Mayer Brown prepare payoff documents for one of two unrelated loans, including documents to release the security interests held by the lenders.  The Mayer Brown partner assigned the task to an associate, and the associate asked a paralegal to prepare a list of security interests held by GM’s lenders.  Apparently unfamiliar with the matter, the paralegal undertook the search for GM’s financing statements recorded in Delaware and identified three.  Two were relevant to the loan payoff at hand, and the other was a security interest in certain GM assets for the second loan from different investors.

The Mayer Brown associate failed to catch the mistake, as did the Mayer Brown partner who assigned the matter.  The GM representative did not notice the mistake, nor did JPMorgan (the administrative agent and secured party of record for both loans), the lender, or its counsel, Simpson Thacher & Bartlett LLP, all of whom were provided copies of the documents.  GM paid off the loan, and the security interests were released, all three of them.

Shortly thereafter, GM filed for chapter 11 reorganization in the bankruptcy court.  The mistake was discovered during the bankruptcy, and the Committee of Unsecured Creditors sued JPMorgan claiming that the mistake was irrelevant to whether the termination of the security interest was valid, and that without the security interest, JPMorgan was an unsecured creditor on par with the other unsecured creditors. JPMorgan took the position that the termination was unintended, unauthorized and thus invalid.  The Court did not agree.

Transactional law routinely involves numerous documents, often with tedious boiler plate language.  Clearly a number of attorneys and corporate representatives had the opportunity to review the termination documents.  Whether they failed to review them or glossed over language and the terms of the documents, not one of them caught the mistake potentially costing JPMorgan, the lenders, and possibly the law firms, $1.5 billion.  Let this be a cautionary tale to transactional attorneys and legal consumers alike.

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If It Can Happen To Playboy . . . It Can Happen To You

Playboy Enterprises recently filed a legal malpractice lawsuit against its attorneys for failing to settle an employee whistleblower lawsuit within the insurance policy limits, thereby exposing Playboy to a verdict in excess of the policy limits.  According to an April 20, 2015 article on Courthousenews.com, titled Playboy Sues Sheppard Mullin for $7.6M, Playboy claims that the law firm projected Playboy had a 75 percent chance of winning the employee’s lawsuit, and that even if the employee prevailed, her maximum recovery would be well within the $5 million employment practices insurance policy limits.  The firm’s projections were reportedly based upon a lost wage projection and a mock jury trial.

Image courtesy of pixabay.com

Image courtesy of pixabay.com

The employee’s case proceeded to trial, and the jury awarded her $6 million.

Playboy claims in its malpractice lawsuit that the firm’s evaluation failed to account for the employee’s emotional distress and punitive damages claims.  It further claims that had the firm conducted a more thorough analysis, it would have concluded that there could be a verdict in excess of the policy limits.  In other words, Playboy claims that the law firm should have recognized the possibility of an excess verdict and should have demanded on Playboy’s behalf that the insurance company settle the lawsuit within the policy limits.  That would have protected Playboy by preserving a claim against the insurance company for failing to settle the case within policy limits and exposing Playboy to an excess judgment.

[Playboy] claims that an ‘attorney of ordinary skill and capacity’ would have advised it to settle the case and ‘demand that [the insurer] settle within policy limits to protect its insured from both an excess and a potentially uncovered compensatory and punitive damage exposure.’

The law firm denies the allegations and “expects vindication and collection of [their] unpaid fees.”

This is a cautionary tale to both legal consumers and attorneys alike.  Cases need to be properly evaluated for exposure, which at times may warrant a second opinion.  And, when there is any possibility of a verdict in excess of the applicable policy limits, the insurance carrier should be put on notice and a settlement within policy limits demanded.

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