Law And More

Lordstown Motors, Great Tech Hope of Northeast OH, Not Out of Woods

"Lordstown Motors Corp.’s ability to stay in business for at least another year remains in doubt until it secures more funding and its market value rises, its finance chief [Adam Kroll] said after the electric-truck maker sold its factory to raise cash." - The Wall Street Journal, May 16, 2022.

The gap is about $150 million by the end of this year. It had raised $230 million by selling its production facility to Foxconn. Also, the latter reimbursed it $27 million.

This warning just reinforced an earlier warning about the threat of running out of money. 

Another challenge Lordstown Motors faces is that the EV is crowded. Established players such as Ford already have developed EVs which are getting good reviews. 

On the bright side, the EV startup plans to go beyond producing its planned EV pickup truck. It will develop other products with Foxconn.

Meanwhile, the economic hopes of Northeast Ohio are directly linked to the success of Lordstown Motors. It had been hit hard when GM ended the production of the compact Chevy Cruze. That became a poor seller in the era of SUVs. 

In general, the region never made it back after the collapse of steel. In contrast, Pittsburgh, Pennsylvania had diversified its economy to include healthcare, technology, and higher education.

I had lived in Northeast OH for three years. Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com.

Lordstown Motors - (a bit of) Hope Restored For Northeastern Ohio

"Wednesday evening, Lordstown (ticker: RIDE) announced the company closed its deal with Hon Hai Precision Industry (2317.Taiwan), which is better known as Foxconn. Lordstown is selling its Ohio plant to Foxconn. Foxconn will operate the facility and build Lordstown’s EVs." - Barron's, May 11, 2022.

This development brings much needed funds to Lordstown Motors. And Northeastern Ohio has its hope restored. At least somewhat.

After GM shuttered the Chevy Cruze plant, which had run on three shifts, the region was economically devastated. Unlike Pittsburgh, Pennsylvania, the Youngstown Metro area didn't diversify after the collapse of the steel industy. In contrast, Pittsburgh nurtured three niches: higher education, tech, and healthcare.

If EV startup Lordstown Motors caught on it could keep creating jobs. However, it has been hit hard with problems, including government scrutiny. In terms of the market, the EV one is crowded. And established auto companies such as Ford have a distinct advantage over a small inexperienced player such as Lordstown Motors.

Time will tell if Lordstown Motors is an economic savior or another disappointment in the Ohio Valley.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. 

"ESG" As the Second Language of Business, Politics, and Law

Job number-one in parachuting into a career or starting a new position is this: Picking up on the language. That is, acquiring linguistic literacy.

TALKING THE ESG TALK

As ESG (Environmental Social Governance) values dominate the business, political, and law-related conversation, it’s necessary to have the terminology down cold.

Law firm Paul Weiss provides a comprehensive free guide for every aspect of that. Here is that lexicon.

PAUL WEISS WALKS YOU THROUGH THE LANGUAGE OF ESG

And here are the major categories covered by Paul Weiss in its unique ESG lexicon:

ESG Terminology

Topics Commonly Covered

General Investment Considerations

Environmental Terms

Reporting on ESG Metrics

Financing

Legislative Initiatives

LEGAL SECTOR’S FIRST SUSTAINABILITY – ESG PRACTICE

Two-plus years ago Paul Weiss Chairperson Brad Karp envisioned the challenges business would have navigating ESG values. He became the early mover in designing a specialized law firm practice for that. That is Paul Weiss’ Sustainability & Environmental, Social and Governance Advisory Practice. Since then, as Law360 reports, other law firms have adopted that model.

HERE BUSINESS IS

It’s uncertainty which is among the major challenges for business in 2022. To inflation, surging labor costs, inability to raise prices enough to absorb expenses, stock price, and geopolitical tensions have been added ESG issues.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. Now and then she does freelance assignments for professional services firms such as Paul Weiss.

Corporate Fear of Becoming the "Next Disney" - Beyond the Scary Talk

Most Chief Executive Officers recognize that they may be one high-profile social or political issue away from being the “Next Disney.” The angst is palpable. So is the confusion.

NO GOING HOME AGAIN TO MILTON FRIEDMAN

Yet, as The Wall Street Journal reports, they also recognize that in these volatile ESG times there is no circling back to Milton Friedman’s “shareholder theory.” That Friedman concept defined the CEO job as primarily returning value to the shareholders. The social responsibility of the corporation was to increase profits.

NO CONSENSUS

The exploding number of comments to that WSJ article underscores the wide range of points of view about everything from what is the function of the corporation to what should be taught in grade school. Among both the Republicans and the Democrats there is no longer an “official party line.” Both, which used to respect the role of business in society, have become unpredictable in their policy decisions about commerce. In Florida, the Republican Governor Ron DeSantis turned on the business of Disney.

IN-HOUSE LEGAL AS MULTI-DIMENSIONAL POWER CENTER

Meanwhile, no surprise, research by the Rock Center for Corporate Governance at Stanford found that those same corporations’ in-house legal departments have major concerns about the CEOs’ public stances on non-business matters. In addition, they are equally concerned about employee activists. Here is my analysis of those findings which O’Dwyer Public Relations published. Of course, as happened at Disney, the two – CEO official social/political positions and those of workers – can clash. With disastrous outcomes.

Obviously, in-house legal’s concerns are in the right place. They are, as Wall Street would put it, on the money. And the corporation can put its money, metaphorically speaking, on that internal power center.

In-house legal departments can transform the internal fear and chaos into a challenge with possible and doable solutions.

Last January in in Corporate Counsel, Wall Street law firm Paul Weiss outlined how that could be done.

Essentially the takeaway is: In-house legal can create the new mindsets and tools for identifying and implementing what corporate leadership needs to navigate the ESG ongoing upheaval. 

APPROACHING AND DOING LAW VERY DIFFERENTLY

Paul Weiss Chairperson Brad Karp and the law firm's Chief Sustainability-ESG Officer David Curran provided a 4-point guide for much of that. The 4 are:

Reinvent Playbooks. The conventional ways are no longer adequate. That is primarily because ESG issues spill over to multiple corporate departments and lines of business. 

They recommend:

"Legal teams must be involved with HR, investor relations, finance, and business units to encounter ESG issues. Lawyers are in an ideal position to coordinate disparate parts of an organization and fill important gaps."

Make Sure Department Members Understand the Unique Aspects of ESG. Because there are so many gray areas in ESG, traditional methods of conducting legal business have become anachronistic. Those old approaches, of course, are: researching precedent and applying law. What is needed is the ability to have an interdisciplinary mindset and experience leveraging that. Among other competences in-house lawyers need, hammer Karp and Curran are to:

" ... make sure public disclosures align with ESG goals, structure board committees to oversee ESG risks and opportunities, and develop systems for monitoring and measuring ESG progress."

Validate ESG Data. So much depends on that, ranging from conformance to ESG metrics to the criteria required for Sustainable Investments. The growth of that investment niche depends on how that data is configured.

 Karp and Curran posit: "Lawyers can pressure test their data using many of the same models and compliance frameworks developed to ensure that companies are in compliance with anti-corruption laws."

Be Aware of ESG Risks in Mergers and Acquisitions and IPOs. Much of ESG is still new to lawyers. Therefore, it is all too easy for them to "not look" where the risks can be to corporations in this new era of ESG values. They could miss what might not have been a red flag in pre-ESG times. Essentially, so much has changed. 

They warn:

"All it takes is one weak link in a supply-chain agreement or a board member's past bad behavior - to break the chain and put the company's reputation at risk."

SHIFTING THE NARRATIVE OUT OF SCARY

Usually business blames the media such as the WSJ for hyping a situation. However, when it comes to the impact of ESG issues on business, there isn’t much hyperbole. Not much is unthinkable.

However, the conversation can be reframed from crisis talk. Few institutions in America have the resources of a corporation. Among them is the in-house legal department. That power came through in the decisions at Coca-Cola and Starbucks to change the leadership of their legal departments. For those corporations that seemed to signal a fresh start.

Over the years Jane Genova has covered major corporations. Now and then she does freelance communications assignments for Paul Weiss and a number of other law firms, both defense and plaintiff.

"Crossing the Line" in ESG Times - Disney's Chief Corporate Affairs Officer Geoff Morrell Steps Down After Less Than Four Months

"... Florida Republican Gov. Ron DeSantis attacked the company [Disney], saying it 'crossed the line' with its criticism [of 'Don't Say Gay’ legislative bill] ... if the past repeats itself, the bark will likely be worse than the bite." - Hannah Sampson, Yahoo, April 18, 2022. 

And things haven't calmed down since. 

THE “LINE” KEEPS CHANGING

But what had been that “line?” That’s the profound challenge business is encountering in navigating ESG.

The raw reality is that the line keeps changing. While that is in play so are careers. Disney announced late this week, reports Deadline, that the Chief Corporate Affairs Officer Geoff Morrell has stepped down from that position for personal reasons. Morell had been in that job less that four months. During those four months Disney has gone into upheaval and it remains reeling.

Initially progressives were the front lines pushing for ESG (Environmental Social Governance) values. Then onto the playing field ran conservatives - as well as shareholders and many more.

IN THE MOMENT …

Currently, the leadership at not only Disney but also Coca-Cola, Starbucks and a growing list of public corporations is coming undone in what might be described as "anguished confusion." What public stances should leaders take? What constitutes the line or line which shouldn't be crossed? So much of the interpretation of that depends on where power is most intense in that particular moment in time. 

The risk involves agitating, alienating, and/or generating organized opposition from myriad constituencies. They include government officials, the media, communities, employees, business partners, investors, universities, and recruits for jobs. 

IN-HOUSE LEGAL

Meanwhile, their in-house legal departments are also caught in the turmoil. Research by the Rock Center for Corporate Governance at Stanford University documented that the political and social positions taken by the chief executive officers are a major concern for the chief legal officer. Here is the analysis I published in O'Dwyer's Public Relations about that development. 

DECODING

Last January there had been a decoding of these forces in an article published in Corporate Counsel. That had been by law firm Paul Weiss.

Essentially the takeaway is: In-house legal has to create new mindsets and tools for identifying what constitutes the new lines being drawn. 

APPROACHING AND DOING LAW VERY DIFFERENTLY

Paul Weiss Chairperson Brad Karp and the law firm's Chief Sustainability-ESG Officer David Curran provided a 4-point guide for how in-house legal can get a handle on and actually manage the continually mutating issues. The 4 are:

Reinvent Playbooks. The conventional ways are no longer adequate. That is primarily because ESG issues spill over to multiple corporate departments and lines of business. 

They recommend:

"Legal teams must be involved with HR, investor relations, finance, and business units to encounter ESG issues. Lawyers are in an ideal position to coordinate disparate parts of an organization and fill important gaps."

Make Sure Department Members Understand the Unique Aspects of ESG. Because there are so many gray areas in ESG, traditional methods of conducting legal business have become anachronistic. Those old approaches, of course, are: researching precedent and applying law. What is needed is the ability to have an interdisciplinary mindset and experience leveraging that. Among other competences in-house lawyers need, hammer Karp and Curran are to:

" ... make sure public disclosures align with ESG goals, structure board committees to oversee ESG risks and opportunities, and develop systems for monitoring and measuring ESG progress."

Validate ESG Data. So much depends on that, ranging from conformance to ESG metrics to the criteria required for Sustainable Investments. The growth of that investment niche depends on how that data is configured.

 Karp and Curran posit: "Lawyers can pressure test their data using many of the same models and compliance frameworks developed to ensure that companies are in compliance with anti-corruption laws."

Be Aware of ESG Risks in Mergers and Acquisitions and IPOs. Much of ESG is still new to lawyers. Therefore, it is all too easy for them to "not look" where the risks can be to corporations in this new era of ESG values. They could miss what might not have been a red flag in pre-ESG times. Essentially, so much has changed. 

They warn:

"All it takes is one weak link in a supply-chain agreement or a board member's past bad behavior - to break the chain and put the company's reputation at risk."

CONVERSATION ISN’T ABOUT “ANOTHER COUNTERCULTURE”

So much of this comes down to talk. ESG is evolving into so many aberrant forms. No longer does the analogy of "Another Counterculture" apply. That has become downright misleading.

The language thought leaders use about ESG has to also change.

With a shift in language, soon enough will emerge the recognition that we may not know what we are dealing with in the moment. So, there will have to be fresh paradigms.

Over the years Jane Genova has covered major corporations. Now and then she does freelance communications assignments for Paul Weiss and a number of other law firms, both defense and plaintiff.

Law Schools and ESG - Paul Weiss' ESG & Law Institute Fills that Knowledge/Research Gap

" ... he [David Curran] says the biggest challenge is the lack of law school education surrounding ESG.
'We had to put this whole curriculum together at our firm that didn't exist, and the same is true
everywhere else,' Curran said. 'There is no course at a law school about this, but we're hoping that in the next 18 months that changes.'" - Anna Sanders, Law360, April 13, 2022.

It had been two years and one month ago since David Currant had become The Chief Sustainability and ESG Officer at law firm Paul Weiss. That was for its newly launched Sustainability – ESG practice. The innovation had been the first-ever in the US legal sector. Its mission has been to guide corporate leaders through the landmines of ESG (Environmental Social Governance) values. Here is how Paul Weiss puts it:

“We advise on matters such as stakeholder engagement, corporate governance, crisis management, corporate social responsibility, sustainability, diversity and inclusion, ethics and compliance.”

Of course, Paul Weiss anticipated turmoil. However, in the two years and more, ESG has mutated into a Towel of Babel for business, with competing special interests putting in play conflicting narratives.

Yet, during that time law schools have not been able to create value in addressing the multi-dimensional factors associated with ESG. That lack has implications for ESG Investing. Bloomberg estimates the value of ESG assets could total $53 trillion by 2025.

In response, Paul Weiss has established its ESG & Law Institute. Its purpose is to facilitate teaching, solutions-based research, and a dialogue among lawyers, business, and academic institutions about ESG issues. The higher-education focus includes law schools.

So far Paul Weiss has created partnerships with the schools of law at Howard University and the University of California at Berkeley. One aspect is funding student research on the intersection of law, business, and ESG.

It’s in the self-interest of law schools to accelerate the learning curve on ESG matters. Law firms not only have to manage ESG matters for clients. They themselves, as the Mayer Brown upheaval in China showcased, are being caught up in the disruption. In a Bloomberg Law interview, Paul Weiss Chairman Brad Karp had predicted the collapse of boundaries between law firm and client ESG matters.

Law and More has special ESG expertise. Now and then Jane Genova does freelance assignments for law firms such as Paul Weiss.

Anti-Green: U.S. Chamber Sticks to Stance, Backs Off from Monkeys

Despite defections by members such as Apple and Nike, the U.S. Chamber of Commerce stuck with its anti-green position.  Its only concession was that it indicated it wished it had worded its statements a little differently.  The organization seems to be backing away from its supposed plans to stage a Scopes Monkey trial to illustrate the error of judgment in green so-called science.

US Chamber, NAM v Greens - Things ain't pretty in Dodge

It's this bad: So many members could be persuaded to pull out of the US Chamber of Commerce and National Association of Manufacturers that the two old-line protectors of business could tank.  And also be known as very Non-Green, which is bad for branding.

In Politico, which doesn't miss a trick inside the beltway, Lisa Lerer reports:

"Environmentalists are ratcheting up the pressure on General Electric, Caterpillar and Nike to follow the example of several large utilities and quit the U.S. Chamber of Commerce [and the National Association of Manufacturers] to protest its stance against climate change legislation."

Already, Exelon Corporation, Pacific Gas & Electric and PNM Resources have left the US Chamber, which is the world's largest business federation.  Both it and the NAM are perceived as opposing aggressively and too cleverly by half climate change legislation.  Regarding the latter, what really irks environmentalists is, explains Lerer, the Chamber's call to have a type of Scopes Monkey trial regarding the science of climate change. 

Given the influence and power of the greens, I wouldn't have introduced that analogy.  Them are fighting words.

Labeling: Pressure for full disclosure in cleaning-products industry

Leaders in the cleaning-products industry claim that disclosing all the chemicals on labels would reveal trade secrets.  Currently laws require only the citing of chemicals "known" to be dangerous.  But society has been there before: It was the unknown dangers of chemicals in products that caused health and environmental threats and led to lawsuits.  In addition, certain chemicals may only present threats to certain people, for example, those predisposed to asthma or infertility.

Now society is demanding the whole chemical story, reports Leslie Wayne in THE NEW YORK TIMES. Advocacy groups such as the Sierra Club and legislators such as California State Senator Joe Simitian are supporting this,  The result could be mandatory disclosure of all ingredients.  With that kind of information available, consumers could do their individual due diligence on the risk to them versus the benefits.   It is this capability which is revolutionizing patient control over their treatment, including medication, options.

The problem for makers of brands such as Pine-Sol is that, in this era of the private label, competitors could take the brand formula and produce cheaper knock-offs.  Price is trumping brand mystique. 

Procter & Gamble is among the giants losing market share - and profits - to the private labels.  This has become so serious that P&G has lowered prices and created a downscale version of premium-priced laundry cleaner Tide.  

"Paint made from Olestra-like chemical could be environmentally safer," Matthew Herper, FORBES

Possible good green news for the paint industry.  In FORBES [8/24/09, page 30], Matthew Herper reports that a form of olestra, which bombed on the food market, might be a revolutionary product for paint.  

Sold by Procter & Gamble under the brand name Sefose, explains Herper, that form of olestra has "chemical chains of sugar and oil [which] would replace the volatile ketones and oxygenated solvents that vaporize from both oil-based and latex paint."