Law And More

Pre-RI SC Ruling: Lead Paint Watchers Let It All Hang Out

Maybe it's the frustration of wating for the Rhode Island Supreme Court to release its ruling.  Maybe it's just the silliness of the whole thing, the two trials, pile on of motions, and the possibility of a third trial.  Whatever, lead paint watchers have reached the tipping point of verbal indiscretion.  Here is some of it.

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Wall Street Guru:

"Well, there's not much the paint companies can do about the prices of the raw materials.  But their whole problem was when they decided to not put on any defense.  I still don't understand that thinking.  Maybe they thought if we show how unconcerned we think this suit is the jury will figure it's frivolous and dismiss it.  I'll quote another person: This was the worst decision since Queeg decided to after Moby Dick."

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Ohio Resident:

"I wonder if those jurors lose sleep at night.  Jane, you said that they were going to follow the post-verdict in the newspapers.  Their heads must have snapped backwards when they read how the Justices at the Rhode Island Supreme Court seemed to view the plaintiff's case."

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A Second Wall Street Guru:

"Right now the stock for Sherwin-Williams is at around 46, which means it's closing at about where it was 2 years ago.  If the Rhode Island Supreme Court ruling is bad, it's deja vu all over again.  If it's good, the stock will have a nice bounce.  Probably will wind up around 50, after the dust settles.

"But forget all the above if the oil prices keep going up.  All bets are off on what stocks will do in general or what the paint companies' stocks will do.  The oil is killing us all and the Asians and the Indonesians are finally getting it and cutting subsidies which will cause some demand destruction.

"Two problems remain. If Europe raises rates this week the dollar tanks even more and oil gets more expensive.  The other is the almost certainty that somewhere in the Mideast or Africa there is going to be major unrest and cause an oil shortage. I think those are the 2 biggest triggers right now.

"If Iran said today they were going to forgo nuclear weapons and allow inspections and play nice, it would drop the iol $20.  If Nigeria made peace with the rebels and Iraq got some major world oil companies in there to get production up where it should be, that would be another $10-15 down and if the Saudis got their new field on line and increased to 11 million barrels a day we could bery easily go back to $100 barrels and that's with the weak dollar. Now get the dollar back and all the above happen and we are back at $80.  The chances of that happening is 100-to-1. 

"Of course, if Israel goes and blows up Iran's Nuclear facilties, there will be war in the area for years and Saudia Arabia will have to take sides, in my opinion.  Then we shall see what we are made of.  If we finally do what we have to do to get off the reliance on foreign oil.  I think actually that will be the least of our worries if the whole Mideast blows up."

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A MatchMaker from Eastern Europe:

"I predict you will propose to one of those smart defense attorneys and settle down ghostwriting briefs for him." 

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Recently Axed Partner from a Washington D.C. Law Firm:

You were right.  Don't bring in new business and you're gone.  I thought my work would count for everything.  I remain in shock."

 

Legal Systems of EU, UK, Far East Give Competitive Advantages, asserts attorney Joseph K. Hetrick of Dechert

We're coming to see how a nation's legal system helps shape its economic success.  Back in 2000, "The Mystery of Capital" by Hernando De Soto documented the link between laws recognizing and protecting private property and thriving forms of Western capitalism.  Since then, a UN report on developing nations confirmed De Soto's findings.

Now, as globalization makes for a dog fight among competing economic powers, we in the U.S. are comparing our own legal system with those of the EU, UK and Far East.  Unfortunately, we have been discovering that our litigous approach to resolving disputes and remedying wrongs puts us at a global competitive disadvantage.

"What keeps General Counsels of U.S. companies up at night is litigation," asserts defense attorney Joseph K. Hetrick, partner with Dechert, headquartered in Philadelphia. Hetrick spends extensive time outside the U.S. counseling clients, lecturing, and studying global legal trends in law.  In September he will deliver a major address in the UK on federal pre-emption.  His special areas of litigation expertise include pharamaceutical and biotechnology.

Here Hetrick provides us with an exclusive interview on how different most of the rest of the world's approach to law is from that of the U.S.  Earlier, Hetrick gave this blog exclusive interviews on Central Europe as the new Silicon Valley and how to manage risk at the front-end in biotechnology. 

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Joseph K. Hetrick of Dechert on legal systems and global competitiveness:

JG: Can you give us the big picture on how the U.S. legal system is different from most of our competitors and the implications of that.

JH:  Essentially, there are three key differences.

One, is that the U.S. believes that the people are entitled to a risk-free life.  There should be zero exposure to risk.  That's now embedded in our national ethos.

But that wasn't always how it was.  It became a fixed idea when strict liability decisions were being made.

And, this is certainly not the way most other nations think.  Maybe other nations such as Europe had been through too many brutal wars and revolutions on their own land to ever embrace the idea that risk can be prevented from a life.  In Japany, if you state that zero risk is your goal, they would laugh out loud.

Therefore, in the U.S. - a nation which believes in litigation not regulation or codes - we are willing to see as individuals or in a class-action format for every risk that wasn't labeled as such and explicitly warned against.

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"In Japan, if you state that zero risk is your goal, they would laugh out loud," Joseph Hetrick

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That imposes layers and layers of new kinds of oversight on designers, developers, manufacturers, marketers and retailers.  Just think of pharmaceuticals.  Because U.S. courts have taken this as far as they can under the Constitution, we could soon witness whole industries just not engaging in any innovative risk-taking, not entering certain markets, and pulling out of others.

Clearly, the implication of that is that our competitors have the innovation advantage.  They also have free choice of markets.  For example, in Europe certain European companies sell medical devices that they wouldn't in the U.S. because of liability fears. 

But let me clarify something, Jane.  It's not that other nations are naive or believe all businesses do their ethical and legal best.  Not so.  In fact, most causes of action begin in those countries as criminal matters.  And in the Far East the owners of businesses found negligent or unethical lose face.  That can be much worse than losing money or even their whole business.  It's that other nations do not have the utopian goal of a risk-free or perfect-product society like the U.S. does.

JG:  Okay.  Now for the second difference.

JH:  The second difference is that other nations are more comfortable with fault than the U.S. is.  Actually, Europe is a negligence-based system.

JG:  Could you say that much of the rest of the world recognizes: Stuff happens.

JH: Yes.  If a worker in Holland is injured, there is no great shock.  As you say, stuff happens.  That worker will be taken care of in two ways.

One, most of the infrastructure of those societies contains government funded and administered services ranging from complete medical care to workers compensation. Therefore, the worker doesn't have to fight to have medical treatment, financial support when off the job, and longer-term rehab.

Two, that worker will appear before an administrative board operated by the government for anything else that isn't already being addressed by government policies and procedures in-place.  The situation is not blame-based, so is not adversarial. As I indicated in a previous interview, Europeans trust their government.  Trust itself makes for a form of competitive advantage.

In the U.S., if there is an injury, there will be a cause of action.  And that lawsuit, as filed, could allege multiple parties responsible, including the product designer, material vendor, manufacturer and marketing chain all the way to the retailer.

But, the liability status quo is changing some in other countries. Some.  Not a lot.  A consumer movement, for instance, is being introduced into Europe.  You can see the beginnings of that especially in Germany.  We could see some forms of class-action lawsuits there. 

JG: But, from what you say, the class-action litigation in Europe will never mutate into anything like ours which came up with the novel theory of public nuisance and applied it to a legal product like lead paint which hadn't been manufacturered for more than a quarter of a century.

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"Europeans trust their government.  Trust itself makes for a form of competitive advantage," Joseph Hedrick

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JH:  No, lead paint public nuisance litigation won't happen in Europe. 

JG:  The third difference.

JH:  In Europe, there are no special damages, Jane.  People go to court mostly for the principle of "justice" or for some moral cause, not primarily to seek a financial remedy.

That's why in the UK and Europe there is no discovery, no parade of expert witnesses, no jury and loser pays.  If there is need for expertise, the barrister has both parties agree on who that expert will be.

With loser pays, there is a powerful deterrent not to file causes of action with little merit.  In the UK, for instance, legal services just as here are expensive.  The losing party could wind up being responsible for millions in pounds for fees.

JG: So, outside the U.S. you probably won't find "Jackpot Justice."

JH: No.  Most nations are conservative about what law should be used for.  It should not be a tool to transfer wealth.  Of course, that conservative stance prevents business from being burdened with undue concern about going bankrupt in a lawsuit.  Business can attend to business.

Here too, though, there could be some change.  But not much.  The subprime crisis has also hit Europe.  There could be angry class-action suits there as a result of that.  But I don't anticipate the level of aggressiveness that is part of our approach to class-action suits.  You have to remember: Most suits in Europe begin as a criminal matter.

Jane, you have to realize that Europe is concerned, given all the wars there and the former Nazi menace, about maintaining a moral code.  We in the U.S. have no such collective memory.  So, our system is money-oriented.  We often read headlines in the U.S. of astounding jury verdicts of multi-millions awarded to plaintiffs.

As a result, here in the U.S. businesses play on the defense.  That can make their competitive offense rusty or non-existent.

JG:  Let's fast-forward to next January.  If the Democrats take the White House and the majority in both houses, will the U.S. shift to more regulation and less litigation - like its competitors?

JH:  No.  Americans believe in litigation.  Not regulation.  I don't see that changing for a long time, if ever. 

JG:  So, perhaps our focus should be on reforms within the legal system.  Maybe we should push to introduce loser pays in all civil litigation, eliminate contingency fees in suits brought by government entities as we have with the lead paint public nuisance lawsuits, allow expert testimony from parties both sides agree on, and work towards a less utopian mindset on risk.

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Joseph K. Hetrick, partner with Dechert, was selected among THE BEST LAWYERS IN AMERICA for product liability in the 2007 edition. 

He has headed or participated in defense teams for litigation involving Merck & Company, GlaxoSmithKline, West Pharmaceuticals, York International, Stryker, and Airgas.

In the fall he will be delivering a major address in the UK related to federal pre-emption.

You can reach Joseph K. Hetrick at Joseph.hetrick@dechert.com, 215-994-2250.

Fear of Getting Fired - What Rupert Murdoch Might Tell that 30% of Attorneys

About 52 percent of attorneys indicated in a Lateral Link survey that their work has slowed and of those about 30 percent actually fear firing.  In the ABA JOURNAL, Debra Cassens Weiss reports that all this represents a radical change in law firm organizational culture. For as long as many can remember - at least 15 or 16 years - law firm jobs were like academic tenure: No one got laid off.

Well, attorneys, welcome to the Rupert Murdoch era, one of wild change, failure, and breathtaking comebacks.  In his long career, Murdoch probably had more downs than ups but no matter what he managed to always move forward, not backward.  How does he do this? 

Insight into his way of looking at and approaching business comes from an unusual source: The 2001 biography of him by Neil Chenoweth.  Titled "Rupert Murdoch: The untold story of the world's greatest media wizard," it includes Murdoch's impressionable years, the ones in college.  Like most of us, he tried on different ideas, including Communism. 

What was in the air that proved more solid than left-wing ideology for Murdoch was game theory.  Murdoch was at Oxford and the best and brightest, maybe as an extension of their wanting to get an edge in poker and chess, were fascinated with a different way of understanding human behavior and approaching problem-solving. Across the ocean at Princeton, John F. Nash of "A Beautiful Mind" was developing the game theory which would win him the Noble Prize.

The free-thinkers in the crowd saw that game theory was taking on, says Chenoweth, "the classical doctrine that economic outcomes are attributed merely to impersonal forces."  Free-thinkers in law firms would likewise be challenging the notion that layoffs and therefore career chaos result from the impersonal force of demand and that one just got the ax and quietly disappeared.

In essence, those attorneys who drilled down into game theory could stand the system, modus operandi, and expected outcomes on its head.  Notes Chenoweth:

"Game theory seemed to turn everything around, with its implicit suggestion that the successful player in buisness or politics was the one who ignored convention and social expectations, who cut corners, who broke unwritten rules, who do what no one else in the game was prepared to do." 

And those of us who reverse-engineer Murdoch's career see just those principles played out.  He seems totally immune from fear, discouragement, social censure, slavish obedience to the rules of the profession, and what was, including relationships.  Bill and Hillary Clinton also seemed to embrace this approach but not with Murdoch's brilliant outcomes - or smoothness.

Can attorneys, who tend to be rendered risk-averse by the need for good grades and good jobs, learn to play the game more like Murdoch and less like someone operating on fear?  It's possible.  For those astute enough to recognize the old order in the business of law is going or if not gone, it's probable. 

There are many of us who saw the game differently during or after adversity. They includee Steve Jobs, Alan Dershowitz, Jeffrey Sonnenfeld, Jamie Dimon, and Charles Schultz.  The best appliers of game theory seem to treat hardship, loss and threat as leverage for the Next Big Thing.  

 

OH AG Office - Alleged Freeing Up Slots for Friends

Of course, there will be plenty more to come out during the multiple investigations of the Marc Dann Administration in the Ohio Attorney General Office.  The most recent tidbit is harassment of another sort.

James Nash of the COLUMBUS DISPATCH reports that former investigator of crimes against the elderly David M. Kessler has stepped forward.  He alleges that he was forced out of his $76,6000 job in the AG office by harassment about his age [in his 40s].  He claims his supervisor called him "a [expletive deleted] dinosaur."  This month he filed a claim with the federal Equal Employment Opportunity Commission for alleged harassment and age discrimination.

American Association for Justice - 3 communications openings

From scouting the help-wanted, I've figured out where the law jobs are: Not in law firms.  In the broad field of communications, be it pure or faux journalism to public affairs, the demand is growing for those with a legal background.  Some actually require the JD.

Currently, the American Association of Justice [AAJ] has three communications openings:

• Legal Communications Writer, which you can access here
• Assistant Editor, here
• Legal Content Editor, here.

Reality 2008:  It's not the job, it's how we leverage the knowledge base, skills, and contacts we acquire during that experience on-a-job.  Newbie legal writers like Eric Tucker from AP and me The Blogger took that dry-as-watching-paint-dry experience of the Rhode Island Lead Paint Trial II and ramped it up into extreme opportunity.

Civil Litigation & People of Color

African-American Dr. Michael Shannon, MD, MPH, was the only person of color playing a key role in the Rhode Island Lead Paint Public Nuisance Trial II.  All the others who testified, the attorneys who represented the plaintiff and the defendants, and the jury members were, like me, white.  Why does this seem to be the default in civil litigation?  And, incidentally, Dr. Shannon dazzled the jurors, I found out in my interviews with four of them.

Someone besides me, such as an influential member on the jury, is going to notice this absence of people of color in corporate trials like lead paint.  That person could nudge the other members into perceiving the stagecraft of the trial as set for the wrong time and place in America. 

Advice to both sides, should there be a RI III or a lead paint trial in Santa Clara, California and Ohio, have all elements of the litigation, including jury selection, more representative of the increasingly heterogeneous society we've become.

"Legal practice has yet to come to grips with the information age," Benjamin Wright, Attorney/Expert on E-Discovery

The elephant in the room in the Rhode Island lead paint public nuisance trial II was that there was no e-evidence.  The novel theory of public nuisance threw out statue of limitations.  And back in the days when lead paint was a legal product - before the Feds banned it in the late 1970s - there was no email.

Well, now there is.  And E-discovery currently represents one of the highest costs of litigation. Plus, the process, as defense attorney Joseph J. Hedrick of Dechert explained, can become the full-time job of a company's key people.  Dechert also advises his global pharmaceutical and biotechnology clients to be aware when electronically communicating that these off-hand remarks could become evidence that is open to all sorts of interpretation.

Because of the role E-discovery plays in the U.S. legal system, I asked an expert on this topic to provide us with an exclusive interview.  He is Benjamin Wright, an attorney and popular blogger on technology law and policy.  Here is his blog http://hack-igations.blogspot.com,  It covers such digital-edge topics as privacy, E-discovery, and the use of electronic records as courtroom evidence.  Wright is also the author of mulitple books on information law such as "Business Law and Computer Society."  He can be reached at Wagonhitch5@yahoo.com.

In this interview, Wright will address E-discovery issues - the process under which electronic records like e-mail are disclosed between adversaries in litigation.  This have become a front-burner matter in tort reform.

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JG:  Why are E-discovery costs so high?

BW:  Legal practice has yet to compe to grips with the information age.  In the information age, the records relevant to a lawsuit or controversy are superabundant. 

Some lawyers view this superabundance from a narrow cost perspective and try to resist by destroying the records.  That's a dumb move.  Ask Arthur Andersen. Smart players, on the other hand, understand that the whole litigation game has changed and seek to capitalize on the change.  So, for example, I have argued that a wise enterprise is very generous in its retention of e-mail messages.  Those e-mail records help the enteprise navigate through many legal and political challenges, including lawsuits, regulatory compliance and political investigations.  For example, see http://hack-igations.blogspot.com/2008/04/reducing-volume-of-e-mail-archives.html.  

JG:  How can E-discovery costs be constrained or managed better?

BW: For an enterprise like a corporation or a government agency, the real question to ask is not how to constrain E-discovery costs.  E-discovery is not an end in itself.  E-discovery is just part of a lawsuit. 

An enterprise can easily incur low E-discovery costs, while losing an expensive lawsuit.  The real question to ask is: How can I cope with electronic records so that possible legal disputes and controversies pan out in good results for me?

A good result includes an accounting for costs like E-discovery. My reply to the question goes like this: Technology is changing the world at lightening speed.  A wise enterprise can use technology pro-actively to seek good outcomes from the legal system.  The enterprise, for example, can cast a burden on its potential adversary, before a lawsuit is filed, to help the enterprise understand its mistakes, if any exist, and correct them promptly so that those mistakes are small.  To explain this idea I publish a video example at http://hack-igations.blogspot.com/2008/05/nix-smoking-gun-e-discovery.html.

JG: Has E-discovery become a strategy or tactic to burden opponents in a possible lawsuit?

BW:  Yes, Jane, it has.  Some parties have bullied their opponents into settling lawsuits early just so they can avoid the costs of E-discovery, i.e. the costs of sifting through all their e-mail records and turning copies of them over to the other side.

But such bullying is not the end of the E-discovery story.  We must remember that E-discovery is a two-way street.  Properly understood, E-discovery is a specific example of a more general exercise: That is, a technological investigation. 

In a lawsuit, technology investigations are available to both defendant and plaintiff.  Technology investigations furnish savvy litigants endless innovative options.  Smart people know how to demand and look for unconventional electronic evidence that will work to their advantage. See, for example, my discussion of software source code at http://hack-igations.blogspot.com/2007/09/endless-investigations.html.

JG:  What kinds of reform are possible and where will they come from?  Should we look to the executive branch, courts, legislatures, and professional associations?

BW:  The information age rewards intelligence and punishes bone-headed adherence to old-fashioned practices.  Those enterprises that adapt creatively to the new legal environment will fare better than those that don't. 

Meanwhile, the courts need to sense how the world is changing.  If judges don't understand change, then sharp litigants will hoodwink judges (about such topics as which E-discovery is needed and which is not) and abuse our system of justice.

JG:  Thank you so much for this insight and all the useful links.  I hope you will be an ongoing source of information on E-discovery for this blog.  As a niche marketer, I would say you're wagging the right long tail.

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Benjamin Wright can be reached at Wagonhitch5@yahoo and his popular blog is a must-follow for those of us searching for an advantage in using E-discovery.  Wright's book "Business Law and Computer Security" doesn't seem like a beach-read but I plan to take it along to Rhode Island this Fourth of July to get a better handle on how the information age and the law are intersecting.

RI SC Ruling - If favorable, "defendants' stocks should pop," predicts Wall Street Expert

Informed sources have it that the Rhode Island Supreme Court will rule on lead paint this Tuesday or Wednesday.  Those same sources anticipate that ruling to be favorable to the defendants Sherwin-Williams, Millennium Holdings and NL Industries.  Just how favorable is an unknown, right now.

If the sources are on the money, then, predicts this Wall Street expert, "the defendants' stocks should pop. Sherwin-Williams', for instance, could go upwards to a 53 to 55 range."

That's the good news.  The other news takes the defendants back to the fundamentals of this market.  And that, says this financial guru, is the chemical reality that they depend heavily on oil for their paints and coatings.  Any stock which does so in this market, as oil prices continue to climb, will probably be negatively affected.

My advice to paint and coatings companies: Make known green efforts, especially those involving technology, and tell the investment community about possible substitutes for oil in products.

RI SC Ruling & California

I asked a number of attorneys: If there's a favorable ruling for the lead paint defendants by the Rhode Island Supreme Court will that influence California? 

The answer was: Don't know.  Right now we're waiting for the CA SC to grant or deny the lead paint defendants' request for a review of the appeals court's ruling to allow contingency in the Santa Clara lead paint public nuisance case.  CA marches to its own drummer, as we saw with legalizing gay marriages.  So, I agree with the attorneys that there's no way of predicting if CA will back off the lead paint lawsuit or, if it does go forward, if similar suits will be filed throughout CA.

Scruggs gets five years

Those 400+ letters and the motion requesting 30 months didn't do any good.  Today Dickie Scruggs was sentenced to five years in prison and a $250,000 fine. Here is THE WALL STREET JOURNAL breaking news on this development.