Sunday, November 7, 2010

Veterans Old and New: Let's Not Forget

In the last three weeks, I have traveled out of town to Phoenix for a mediation and to our home office in Indianapolis for my law firm's Partners meeting.

On the way back from Phoenix, I was seated next to a young man with very closely cropped hair, who appeared to be traveling with two other young men. We struck up a conversation. He and his buddies had just joined the Army and were on their way to basic training. The young man's story was interesting. A Navajo, he had grown up on the reservation  in a house that did not have running water until he was about ten years old. This would have been in the past decade.

My young acquaintance decided that he wanted to make something out of his life. He told me that he and his buddies had been hanging out and going nowhere. Some had been drinking too much. He wanted to learn skills, see the world and be successful, so he joined up. The Army was honest with him: After basic training, he would go back to a base in Arizona for a short period and would then deploy to Afghanistan.

The other fellow on our row -- a guy who looked to be a few years older than me -- joined the conversation. It turns out that he was an Air Force veteran who had served in Vietnam. He is now a military contractor, assisting the Air Force with logistics. He was returning home to Florida, but had done multiple stints in Iraq and Afghanistan as a contractor. The older fellow offered words of encouragement to our young friend.

As our young friend prepared to leave the plane in Atlanta with his buddies, I thanked him for his service and wished him well. I said a silent prayer for the success and safe return of this young man and his buddies.

Yesterday, I was sitting on another plane next to a young man in an Army uniform. Although he was a young guy, the look in his eyes suggested he had a lot of experience under his belt. Unlike my young friend from the earlier flight, he was not talkative. I asked him where he was headed. He said he was on his way back to Afghanistan, having previously done tours in Iraq and Afghanistan. I thanked him for his service. He did not appear to want to talk more, and I respected that.

Veterans Day is next Thursday. On this day -- which seems to receive so little publicity -- we should certainly remember the many sacrifices our fellow citizens have made during the history of our country to preserve freedom at home and abroad. The sacrifice is not just of lives lost or physical wounds received. It is a sacrifice of families being separated and lives and ambitions put on hold.

It should also be remembered -- as my two recent acquaintances reminded me -- that the sacrifice continues. Young men and women are still serving their country, and are still being sent into harm's way, enduring separation from their families, and putting other ambitions on hold. 

On the other hand, it is also worth remembering the considerable achievements of our men and women in uniform. Without their service, the world would be a very different place, and not for the better.

It is also worth remembering that military service has proven to be a life long honorable career for some, and a springboard to success in the civilian world for others.  My acquaintance from Phoenix volunteered because he felt that military service would allow him to "be somebody," and to lead to a better life. I wish him all the success in the world.

If you see a veteran next Thursday, or if you see a man or woman in uniform, thank them for their service. It's the least we can do.

Saturday, October 30, 2010

Barnes & Thornburg Cloud Computing and Cyber Security Blog

My law firm, Barnes & Thornburg LLP, one of the top 100 largest law firms in the U.S., has just launched its Cloud Computing and Cyber Security blog. The firm also just formed a Cloud Computing and Cyber Security Practice team. The team is composed of lawyers in the firm's various offices, and cuts across many other practice areas, including information technology, intellectual property, business, litigation, insurance coverage and international law.

Roy Hadley and I co-lead the team. Roy is an information security and technology lawyer, and deserves the lion's share of the credit in organizing the new team. Right now, Roy and I are also monitoring and contributing to the blog, although we hope and expect other team members will contribute in the near future.

To access the blog, click here.

Saturday, October 23, 2010

Thinking About Cloud Computing and Cyber-Security?

By John L. Watkins

Many businesses are thinking about using cloud computing providers for all or part of their IT infrastructure. Cloud providers promise scalability, off-site IT management, availability and security. As with all new technologies, there are many legal issues.

My law firm, Barnes & Thornburg LLP, has recently established a Cloud Computing and Cyber-Security practice team that cuts across many legal disciplines. My partner, Roy Hadley, and I are the leaders of the new team.

Roy is a true information technology specialist. Roy has practiced for many years in the technology space, including serving as general counsel and chief privacy officer of technology companies. I bring the litigation, insurance coverage, and general business perspective. We have many other members on the team specializing in different disciplines, including intellectual property (which is very strong firm-wide at BT), information technology, insurance coverage and recovery, international law, tax, and general business, among others. The collective experience our colleagues bring to this initiative is pretty amazing. The firm will be launching a blog on cloud computing and cyber-security topics shortly.

Roy and I were recently asked to write a primer on the legal issues for the Georgia State Bar’s Technology Section. Click here to read the article. I hope you find it useful. Caveats: This is a general overview written from a general U.S. point of view. There are additional issues in Europe. As a general statement, Europe seems to be ahead of the U.S. in dealing with these issues.

Saturday, October 16, 2010

This One's for Casey, Jr.

By John L. Watkins

Yesterday, Margaret and I lost Casey, Jr., our 21 year old black and white Manx cat. He was a stray in the neighborhood, probably about a year old, when we moved into this house many years ago. He looked a great deal like a black and white Manx cat from our former neighborhood named Casey who liked to "make the rounds" and get fed by many, including us. Thus, we took to calling the new cat "Casey, Jr.," and our old friend became "Casey, Sr." Casey, Jr. seemed destined to be our cat.

Anyway, it took a bit of an effort to adopt Casey, Jr. He was perfectly willing to come on the porch and accept food, but was quite feral, and was not about to let anyone pet him or pick him up. Once I finally coaxed him into the house, an almost instant transformation took place. He decided he really liked regular meals and attention, and became quite the Southern gentleman. He was always dapper -- at least until his last year -- looking like he was wearing a tuxedo. He loved being petted and purred on contact. His favorite spot was on Margaret's lap or sitting beside her on the couch.

It's always difficult to lose a pet, but losing this one was really hard. Twenty or so years is a long time to have a pet. Casey was a link to a different time in our lives, when we were young and things seemed a lot simpler.

Casey enjoyed his life and he had a great heart. You really do not expect an animal to reach such a Methuselah-like age, but he just kept on going. Over five years ago, our vet told us he probably had three to six months to live. The vet was wrong, and Casey still had great years ahead of him. In the past year or so, however, he got old and creaky, and, as old animals tend to do, just could not keep on weight despite having a healthy appetite. Even at the end, Casey's heart and spirit were willing, but the rest had just worn out. We miss him and always will.

If this has touched you, there are two things I would like you to consider doing. First, if you have been thinking about adopting a dog or a cat, do it. And if you are considering a pet, please adopt one from a shelter, or take in that dog or cat your kid brought home. We support Furkids, a no-kill shelter in our part of town. A few weeks ago, we visited its open house. I cannot tell you how many wonderful cats and dogs were there waiting for homes. Trust me, that free "DSH" (domestic short hair) or friendly mutt will make just as good a pet as a purebred.

Second, please consider giving to a shelter in your area. It doesn't matter if it is just a few dollars. Any amount helps. In these lousy economic times, the shelters are really struggling to keep open. If you need a suggestion, the previously mentioned Furkids is a great organization, as is the Atlanta Humane Society.

Thursday, October 14, 2010

What About Clients?

By John L. Watkins

One of my favorite legal blogs is What About Clients, written by Dan Hull and others from the Hull, McGuire firm. The key point of the blog is that the focus of what we do as lawyers should always be the client. A great reminder for all of us.

Dan is another guy with Midwestern roots and an international outlook. He "gets it." With great content written in a pithy and entertaining style, the blog is a must read.

Sunday, October 10, 2010

Trade Secrets, Green Technology and Protecting What You Think You Own

By John L. Watkins

According to a press release from the FBI last month, green technology is an increasingly attractive target for "would-be information thieves looking to make a fast buck." The Economic Espionage Act is a federal law that makes trade secret theft a federal crime. The language of the Act is very similar to the Uniform Trade Secrets Act, variants of which have been adopted by most states. The state acts provide for civil remedies (damages and injunctions), and sometimes criminal penalties.

Many companies -- large and small -- seek to protect important information as trade secrets. It is often impractical, for example, to maintain a large patent portfolio. The Copyright Act can provide some protection, but is limited in its scope. A trade secret, in contrast, can potentially be almost any information that has economic value and that is subject to reasonable efforts to maintain its secrecy. Examples can include customer lists, supplier lists, business plans, computer programs, formulas, and financial information, all depending on the particular circumstances.

The Need for Protection

A key element for protection under virtually any trade secret law is that the owner took reasonable steps to protect the information. Companies or individuals with trade secrets -- from start-ups to the largest companies -- need to make sure they have acted to maintain the secrecy of their information. This requires legal help, preferably from the beginning.

The vision of recent college graduates (or dropouts) writing software or developing other technology in a storefront office or a garage is a modern variant of the American Dream of rising from rags to riches. Such efforts are not necessarily mere pipe dreams. In fact, modern technology and decreasing barriers to entry probably make it more possible than ever for an entrepreneur to become successful, if not becoming the next billionaire.

This same technology -- thumb drives that hold gigabytes of information and portable hard drives that hold terabytes -- make it easy for anyone with access to the information to copy it. More and more trade secret cases are being brought against former employees who used such technology to take company information.

The start-up is particularly vulnerable. In many instances, friends will work together in developing technology or another invention. Sometimes, entrepreneurs will “partner” with another company for a particular purpose. In some instances, an investor will come into the mix. In each instance, if intellectual property rights are not documented properly, the possibility of a future dispute becomes very real.

Further, the possibility of a future dispute or lawsuit increases in direct proportion to the success of the venture. Put more bluntly, it is not likely that anyone will fight over worthless technology. It is very likely, however, that disputes will develop over valuable technology.

When inventors or entrepreneurs believe they have developed, invented or written something valuable, it is critically important to consult with an experienced attorney. All employees should sign a written non-disclosure agreement. It is also important to enter into a non-disclosure agreement before entering into any relationship with a third-party business “partner” or an investor. It is equally important that persons working together document their respective rights and obligations regarding the technology, writing or invention. (In addition to trade secret protection, it is also important to consider whether to seek additional protection, such as a patent application or copyright registration).

This is definitely not a situation where inventors, entrepreneurs or investors should try to go it alone or use Internet forms. Prospective clients should also not assume that every lawyer has the necessary experience or expertise to prepare proper documentation or to provide the proper advice.

Having proper non-disclosure agreements and other contracts in place is only the beginning. Adopting procedures and practical measures to maintain the secrecy of the information is also very important. This includes limiting access to the information to those who really need to have such access, monitoring usage, and being diligent in reinforcing the need to keep the information secret. Experienced legal counsel can offer practical advice on this subject.

This is an area in which experienced counsel can provide substantial value at a low cost. Management looking to cut a few corners by avoiding legal fees or who think they can go it alone (frankly, a common attitude among entrepreneurs and engineers) often find that failing to invest a little in initial legal advice later leads to costly legal bills, a loss of any protection for their technology, or both.

Trade Secret Litigation

If a company expects that there has been an information breach, it is extremely important to consult immediately with counsel. It may be necessary to engage forensic experts to determine whether there has actually been a breach and the likely extent of the breach. Ideally, forensic experts should be engaged with the assistance of counsel. The failure to act promptly may compromise potential legal and equitable remedies.

Given the FBI's stated interest, it may be tempting to turn the investigation over to the criminal authorities. This should be done only after consultation with company counsel.

First, and most importantly, the authorities are probably not going to be able to secure any direct relief for the company. Damages and injunctive relief will need to be sought directly by the company. Second, involving the government also involves a loss of control. The authorities, not the company, decide whether to proceed and how aggressively to pursue the matter. In contrast, the company can decide how it wishes to pursue possible civil remedies. Third, if the government is to be involved, their involvement is typically best handled through company counsel.


Trade secret statutes provide substantial civil and criminal remedies for the misuse of proprietary information. Not surprisingly, green technology and other cutting edge technology provide attractive targets for those seeking to profit from the work of others. It is critically important to involve counsel as early as possible in protecting confidential and proprietary information. If there is a breach, the early involvement of counsel will help achieve the best possible outcome.

If you do not know how to find a business attorney and need a resource, my book, An Insider's Guide on Hiring a Business Attorney, provides a step-by-step guide for finding, evaluating, hiring, and working with a business attorney. It is available on for $15.99.

Sunday, July 25, 2010

Why I Moved to Barnes and Thornburg LLP

By John L. Watkins

This week, Tom Chorey, Tom Gallo and I left Chorey, Taylor & Feil, P.C. to join the Atlanta office of Barnes & Thornburg LLP. Barnes & Thornburg is an Am Law 100 firm with about 540 attorneys with offices in Atlanta, Indianapolis, D.C., Chicago, Minneapolis, Columbus, OH, Wilmington, DE, and other cities.

BT's Atlanta office is quite new. The Managing Partner in Atlanta is Stuart Johnson, a corporate attorney who was formerly a partner at Bryan Cave Powell Goldstein. With our addition, the Atlanta office will have about 20 attorneys in many disciplines.

Many of our friends and colleagues in the legal community will no doubt be surprised by our move to BT. Tom C. and Tom G. undoubtedly have their own reasons, and I will not try to address them, but I can address mine.

After practicing for large law firms (Hansell & Post, then Long Aldridge & Norman/McKenna Long & Aldridge) for over 25 years, I joined the field of "small law" in 2007. I was briefly a shareholder of Wagner, Johnston & Rosenthal, P.C., which is an excellent small firm in Atlanta, and a place where I have many friends. In December 2007, I had the opportunity to join CTF as a shareholder.

CTF truly has exceptional attorneys. Two of these exceptional attorneys are Tom Chorey and Tom Gallo. Tom Chorey is an amazing corporate attorney with tremendous experience, a tremendous work ethic, and incredible compassion for his clients. Tom Gallo is an outstanding litigator, combining great technical skills and experience with common sense. Tom G. is also just an incredibly nice guy.

When it became apparent that CTF, as it had been constituted, was not going to stay together, a priority for me was to keep practicing with Tom C. and Tom G. Although we had a number of excellent alternatives, we chose to come to BT. There are several reasons BT proved very attractive.

First and foremost, BT presents an extremely unique opportunity. I have known about BT for many years, having used the firm as local counsel in a matter a number of years ago. The firm was very impressive in acting as local counsel, and I have always had a great deal of respect for BT as an excellent firm.

In learning more about where BT is today, I became even more impressed. The firm has grown, even through the Great Recession. This appears to be the result of combining great lawyers and great capabilities with a rate structure that conveys value and is consistent with the firm's Midwestern roots.

The firm also has great depth and covers almost every discipline of law. Chorey commented to me the other day, "Do you know the firm has a nanotechnology department?" I replied that I did know that, but that it was very small. Tom did not get the joke right off the bat. Bad joke aside, the fact that the firm covers nanotechnology is extremely relevant, because we have a new client in that industry and having expertise in the area will only help us provide greater value to that client.

The way the firm has gone about building the Atlanta office is also very impressive. The lawyers in the Atlanta office have great resumes and experience. One of the partners the firm just added is Roy Hadley, an excellent corporate attorney who focuses on technology companies, and an old friend and colleague from Long, Aldridge & Norman. The depth and experience of the lawyers in the Atlanta office alone -- which covers some key areas we did not cover at CTF -- should help us serve our clients more efficiently.

Another key factor was that the firm has a nationally recognized insurance recovery practice for business policyholders. BT's insurance coverage practice for policyholders is ranked in the top 10 nationally. A large part of my practice focuses on insurance coverage. Although I have represented insurance companies in the past, my current practice focuses on representing only policyholders. It was thus important for me to find a firm that represented policyholders and not insurers. BT's depth in this area can only help serve business clients with insurance coverage issues.

The final factor, and a very important one, is the ability to focus on practicing law. When I left the large firm world in 2007, the allure of the small firm world was freedom: The ability to practice law the way you want to practice. After over three years in the small firm world, this has proven to be highly overrated, at least for me.

Although the small firm world provides freedom, it also comes with the distractions of trying to run a small business. I will certainly not miss attempting to manage the firm's website, dealing with vendors, trying to do the firm's public relations and marketing with no resources, and the countless other tasks that come with a small law firm. BT has the resources to deal with these issues and to allow me to focus on the two things that I believe are most important: Serving clients and finding new ones.

In December 2009 and January 2010, I wrote An Insider's Guide on Hiring a Business Attorney, a book written for business owners and executives about finding, evaluating, interviewing, hiring, and working with a business attorney. One of the chapters of an Insider's Guide deals with evaluating large firms vs. small and medium-sized firms. I tried to look at the issue objectively, but assumed that, since I had at that time joined the small firm world, I would end up favoring small firms.

That is not how the chapter turned out. In looking at the issue objectively, it was simply undeniable that large firms possess some advantages (generally, excellent attorneys and breadth of coverage). Although excellent small firms also can possess advantages (generally, personal service and a lower rate structure), I concluded that clients generally hire lawyers and not law firms.

In thinking about the large vs. small firm issue, it dawned on me that, if a firm could put together the resources of a large firm with value and personal service, it might be the best of both worlds. In looking at the options, it seemed that BT might just have achieved this happy medium.

It was extremely important for us that BT's rate structure is consistent with the rate structure at CTF. This means that we can continue to serve our clients with all of the resources that BT offers without the need of a large rate increase. I also felt that BT's Midwestern values seem to fit well with our desire to provide our clients with personal service. I grew up mainly in the Midwest, so maybe BT's approach just seemed intuitively right.

There is always a risk in changing firms. In this case, the resources and opportunities offered by BT seem to outweigh the risk of changing. I hope to practice at BT for many years to come.

Sunday, July 18, 2010

National Malaise, Unread and Hidden Legislative Mandates, and What to Do About Them

As should be obvious, what follows is a statement of opinion. It is my opinion alone, and is not meant to be (and is probably not) the opinion of my law firm, its shareholders, or other employees.

Maybe it’s just, as one of my favorite legal blogs suggested, the Dog Days of Summer, but I’m not feeling too good about our country right now. As the President heads out for yet another vacation in a G3 paid for by the taxpayers, with the First Dog Bo arriving in another private jet, President Carter’s National Security Adviser tells CNN that he senses a growing “malaise” among various segments of the American people. Certainly, no prior administration knows more about national malaise, so these remarks should be taken seriously.

The cause of my personal malaise is that we are living through an unprecedented encroachment on liberty through the enactment of legislation affecting tens of millions of individuals and huge segments of our economy when our elected officials, not to mention the public, do not even know what is contained in the legislation. The clearest of legislation adopted for the best of reasons can have negative unintended consequences. When stealth legislation with unknown provisions is adopted, unintended consequences (at least unintended by those who did not slip the provisions in the bill) are guaranteed. For many Americans, the stealth legislation and unintended consequences lead to feelings of frustration, anger, disenfranchisement, and an ever growing realization that D.C. has become an elitist Never Never Land. Malaise for many is an understatement.

All of this is compounded by the fact that the vast majority of our legislators seem to lack even the most basic understanding of economics. Politicians, including the President and Vice President, believe that government spending creates jobs. In reality, most jobs are created by small businesses (many of them subchapter S corporations or LLCs). These businesses, and their “rich” owners, are in fact (or at least have been) the backbone of our economy.

Instead of creating clear rules and fair and reasonable taxes on small business owners, which would in turn encourage those businesses to hire and spend on new capital equipment (which would in turn multiply employment through out the economy), small businesses and their advisers are left trying to ascertain the effects of national health care and other legislation that was not even read in its entirety by our elected officials before they voted for it. In fact, only now are our elected officials finding out what they enacted. It all brings to mind the old joke about a politician asked to explain his position on a particular issue: "How do I know what I think until I hear what I say?" Some of the recent revelations (and there are bound to be more) will be discussed below.

Further showing their lack of knowledge (or, if not, their blatant willingness to deceive the public) politicians (mainly Democrats) continue to speak of the “rich”not paying their “fair share” of taxes, when the reality is that almost 50 percent of Americans pay no federal income taxes (although they pay other taxes) and households making $366,400 paid about 73 percent of income taxes. Small business owners already pay a huge portion of the tax burden.

Why does unemployment remain stubbornly high? Why does the economy remain stagnant? Because the only certainty is that taxes are bound to increase in 2011. Although this fact may spur a bit of economic activity in the rest of this year, the scheduled tax increases have caused one notable economist, Arthur Laffer, to predict in the Wall Street Journal that a double dip recession next year is all but inevitable. Why? Because people respond rationally to the economic environment in which they find themselves. Laffer explains it better than I can.

In any event, here are some of the recent revelations regarding the healthcare bill or the “financial stimulus” bill that I bet you (and many legislators) did not know about when they voted the measures into law:

First, a 3.8 percent tax on some personal real estate transactions. This was apparently slipped in one of the last versions of the bill. Predictably, it targets the “rich” (individuals making $200,000 per year or married couples making $250,000). It is true that there are substantial exemptions for the sale of a primary residence, but this tax would hit investment property or vacation homes.

This tax has been the subject of substantial publicity from Republican and right leaning news sources in the past few weeks. Some appear to have exaggerated its application.

Democrat politicians and apologists have responded by pointing out that it applies to relatively few real estate transactions.

Nevertheless, the two key points to me are as follows:

a. Why would anyone support any tax increase on real estate transaction in midst of the worst housing-induced recession in history? This tax increase will only serve to further depress the economy in mountain and seaside communities where vacation homes are popular, and where seasonal residents support the local economy and where people are already hurting, particularly on the Gulf coast.

b. Why was this rather blatant tax increase hidden in the minutiae of the Obamacare bill? If it was such a good idea, why was it not out in the open and subject to public scrutiny before it was enacted into law?

Second, tax reporting on all Purchases of “Goods” Over $600. As reported in the Wall Street Journal, beginning in 2013, businesses will have to report any purchase of goods over $600 from any single vendor, including for such mundane items as office supplies.According to the article, National Taxpayer Advocate Nina Olson, who operates inside the IRS, estimates this provision will “will hit some 30 million sole proprietorships and subchapter S corporations, two million farms and one million charities and other tax-exempt organizations.”

This provision is also reported to apply to the purchase of
gold and silver in either coins or bullion. This has caused concerns among coin collectors, in addition to concerns about why the government would be collecting this information.

Again, why was this provision hidden in the bill? Why is it just now coming to light?

Third, an indoor tanning tax. Persons who use indoor tanning salons will be subject to a ten percent tax for each session. This was a legislative hash that was a substitute for the “Botax” (a tax on plastic surgery) that was successfully defeated by lobbying by the medical industry.
This tax has been opposed for the obvious reason that it will probably cost jobs in the tanning business (probably true, see prior link) to implausible claims of racism.

This tax was less under the radar than other hidden tax issues (apparently “tanners” are passionate). Frankly, if someone wants to make themselves look like a tangerine, I find it silly. Nevertheless, one has to wonder which business will be singled out in the next piece of massive social legislation.

Fourth, a mandated obesity calculation for every American. HHS recently issued regulations under the economic stimulus bill that require each American’s BMI (body mass index) to be included on a citizen’s mandated electronic medical record. The electronic records are required to be available on a national exchange – supposedly with adequate security measures – by 2014.

To be accurate, this measure was not hidden in a bill, but was adopted in a regulation. This regulation, however, shows the incredible power that Congress regularly delegates to unelected bureaucrats to adopt regulations that affect all individuals and businesses.

Is the government possessing this information troublesome? To me, it is. First, one has to wonder why the government needs this information. I certainly do not need the government to tell me I need to keep exercising and to lose weight any more than the President needs to be told to stop smoking.

Second, the President just appointed a his former private chef as a “Senior Policy Adviser” (dubbed by one publication as the “
Food Czar”). Is the next initiative telling everyone what to eat? It kind of makes one wonder when the President also recently made a recess appointment of Donald Berwick as Administrator of Medicare and Medicaid Services. Berwick is known as an admirer of the British health care system and for his statements that health care rationing is inevitable. Another effort to avoid scrutiny and to fly under the radar.

If all of this bothers you, the next question is what can you do about it? The first step is to vote out of office the politicians responsible for these legislative power grabs. Politicians of both parties are in the ranks, although the Democrats have more than their fair share.

The second step would be to adopt a “single subject” rule. What is a single subject rule? Many state constitutions, including Georgia’s, have a rule that any legislative bill may only have one subject that must be reflected in the title of the bill. Why do so many states have this rule? The short answer is to avoid the excesses we have witnessed at the federal level in hidden taxes, hidden provisions, and earmarks. Single subject rules also help inform the public of what is being considered and, most importantly, force politicians to vote in the open on what they are imposing on the public.

Single subject rules have been criticized as inhibiting the ability to legislate and compromise. This criticism can be easily answered. What a single subject rule prevents is slipping sleazy back room deals, wholly unrelated to the subject at hand, into the fine print of legislation. Further, many would dispute that less legislation is a bad thing. Few would debate, however, that clearly defined legislation, made in the open and subject to input from the public, is good thing.

Single subject rules have also been criticized as often having been observed in the breach by state courts. There may well be truth to this observation, but that is a flaw more in the application of the rule, not in the substance of it.

Of course, a rule would not be necessary if our politicians acted responsibly. That, I fear, is not likely to happen. It is almost comical how, when a party comes into legislative leadership, the speaker or majority leader announces an intention to run the most open and ethical Congress ever. Unfortunately, the words politics, open and ethical often do not go together.

Admittedly, I am looking at these issues from my own political views, which can be summarized as liberal on social issues that do not involve spending, fiscally conservative, and internationally oriented. Nevertheless, anyone should be concerned. Political winds change. During my lifetime, we have had both parties in the White House multiple times, and control of the Senate and the House has also changed both ways.

If you are happy about how things are going now, you should reflect on how you will feel when and if the opposing party rams through a hidden agenda. Regardless of which change you believe in, it ought to be out in the open when our representatives vote on it.

Sunday, June 27, 2010

Emerging Legal and Insurance Issues from the Gulf Oil Spill

Last week, courtesy of my friends at LEXIS, I attended the HB Litigation Conference in Atlanta on litigation and insurance coverage issues arising from the BP oil spill disaster in the Gulf of Mexico. The presenters included extremely well-known plaintiffs' attorneys (including the guys you see on CNN and MSNBC). Presenters also included well-known and credentialed insurance coverage attorneys, both for policyholders and insurance companies. Here are a few somewhat random thoughts following this experience.

1. There is lots of posturing, but there is also, with reason, lots of anger. The plaintiffs' attorneys, predictably, ranted and raved about BP, Haliburton, the Bush Administration (particularly Dick Cheney) and corporate America in general, coupled with generally favorable references to what one plaintiffs' attorney called "our administration." All of this largely partisan and self-interested rhetoric could not, however, mask the very real anger that rightly exists for the millions of Americans affected by this tragedy. Quite simply, this is a situation that simply does not require exaggeration to understand that, whatever its final scope may be, it is of great magnitude.

One of the younger plaintiffs' lawyers from Pensacola was supposed to talk about how to file a claim under the Oil Pollution Act ("OPA"), the federal statute that is the focus for addressing this issue. Because others had covered pretty much all of what he had to say, his speech instead was much like a jury argument on how the spill had affected the fabric of the way of life for people on the Gulf coast. On a day following photos and videos of oil washing up on the beaches of his hometown, it was very understandable. His anger appeared completely genuine and without doubt reflects how millions on the Gulf are feeling.

2. Right now, there is lots of uncertainty about the extent of the damage. No one really can assess the extent of the damage to the Gulf other than to say that it is really bad. The total damage will depend on unknown factors such as when the flow is finally stopped and whether there will be hurricanes in the affected areas. There was general agreement that a hurricane could make the situation much worse.

The plaintiffs' experts claim that the use of dispersants has made the environmental situation worse. There was no opposing view on this issue, so it was difficult for me to assess if this is correct, but it will certainly be an issue in claims and litigation.

The plaintiffs' attorneys are clearly gearing up for personal injury claims (including asthma and breathing problems allegedly caused or worsened by the oil) that may extend to residents many miles inland. Some of the experts claimed that chemical reactions related to the dispersants have resulted in the release of a carcinogenic substance. I have no idea if these statements are correct or whether the claims will have any merit, but they will be coming.

There will also be national resource damages claims pursued by State governments (and perhaps the federal government). The extent of this damage is not known, and could take years (if not decades) to resolve.

Finally, a number of the participants raised the possibility of criminal prosecution, particularly of BP. There will probably be a public hue and cry, at least in some circles, for criminal prosecution, notwithstanding the many legal issues that can result from parallel criminal and civil proceedings, including possible delay of the civil proceedings.

3. There is some uncertainty about how the claims process will proceed. The $20 billion fund that BP agreed to establish following jawboning from D.C. is without precedent. Although the money is undoubtedly welcomed by those affected, it creates a veneer of uncertainty about how to proceed. OPA, for example, has claims procedures. One of the attorneys said that he was advising his clients (claimants) to comply with OPA even if it may not be required for the fund. This seems sensible. Those affected should definitely seek legal advice from an attorney familiar with handling these claims, and who will keep on top of the situation, which could change rapidly as the claims process ramps up in the coming weeks.

There was general agreement that, to date, BP's claims process (the one that BP discusses in its public relations campaign on television) is still quite fragmented and that the claims BP has paid to date are quite small (speakers said largely under $5,000). The consensus seemed to be that resolving larger claims would require quite a bit longer.

The experts all agreed that anyone with a potential claim should do everything possible to document it and pursue all avenues of recovery. This would include providing records of financial performance (in the event of a lost profits claim), including records showing past performance and recent loss. In the event of any direct damage, documentation should include photographs and videotapes. A number of the speakers stressed that claimants need to understand that they will not be receiving compensation for gross revenues, but only net loss.

4. The insurers will attempt to deny or minimize their responsibility. Although there is a variety of first party and third-party insurance coverage potentially available, the lawyers for the insurance companies made clear that they would be carefully scrutinizing many claims. One of the insurance coverage lawyers said that, at present, he did not currently see the spill as a huge issue for the insurers, and that there would be "many hurdles" to insurance recovery. This speaker also suggested that claimants should look to the $20 billion fund, as it might be a far easier road to recovery. This observation (that it may be easier to get paid by the fund) may prove to have truth to it, but no one really knows.

There was general agreement that a bad hurricane could substantially worsen the potential losses for insurers, as the storm surge would result in many more claims.

The speakers generally agreed that parties most likely to achieve an insurance recovery would be larger businesses with relatively sophisticated risk management programs that use manuscripted policies (i.e., forms prepared, typically, by the insured's brokers, as opposed to insurer-generated forms). Many "mom and pop" operations are unlikely to have this type of coverage, if they have any coverage at all. Nevertheless, all of those potentially affected should review potentially applicable coverage.

The policyholder lawyers pointed out the importance of potential claimants carefully reviewing all possible coverage and putting all potential carriers on notice of a claim or of circumstances that may give rise to a claim. This only makes sense, as carriers routinely raise notice-based defenses. Coverage review is probably best done by an experienced insurance coverage lawyer.

Conclusion: No Answers Yet. Although the issues are emerging, there are no answers yet. Many of the speakers pointed out that legal issues stemming from the Exxon Valdez are still not completely resolved nearly two decades later. Given the known magnitude of the Gulf spill, this fact provides scant comfort for those affected.

Note: As stated by many of the participants at the conference, any views expressed herein are mine, and do not necessarily reflect the views of any clients of my law firm that may be affected by this event. Further, given the uncertainty of the circumstances surrounding the spill, the damage, and the legal issues, I reserve the right to change my views on any of these subjects as the circumstances develop and change.

Monday, June 7, 2010

D-Day: Why We Need to Remember

Yesterday marked the 66th anniversary of D-Day. The occasion seemed to go largely unnoticed by the major media outlets, who instead focused on the BP oil spill, European debt concerns, the NBA finals, or anything other than the anniversary of the beginning of the liberation of Europe. It is unfortunate that the sacrifice by so many U.S. and allied soldiers, a sacrifice that truly defines the geopolitical world we live in, including a free Europe, passed with little fanfare.

Bucking the trend, there is a commercial running on one of the cable channels that is running a series of shows on D-Day. In the commercial, a grandfather, a robust sort who appears to be about 70, watches the show and remembers, along with his pretty blond daughter, who appears to be about 40, and his 10 year old grandson. It's a very heart-warming scene, and it is good that at least one media outlet is remembering the occasion.

There's only one problem: The math doesn't work. The 70 year old veteran would have been four years old when D-Day occurred. My father was born in 1928 and, God willing, will turn 82 this year. He was sixteen and too young for military service, although just barely, when D-Day occurred. The reality is that three generations and nearly a lifetime have passed since D-Day. All of the veterans who participated and still living are in their mid-80s or older. Most have already died.

The Greatest Generation is passing into the sands of time. The fact that the anniversary of D-Day passed without much notice may indicate that our national recollection of this defining event is also fading. Let's hope this is not the case.

One of my friends posted a link in another forum to this speech by Ronald Reagan marking the 40th anniversary of D-Day. Whether you loved Reagan or not, the words are worth reading.

Monday, May 31, 2010

Some Thoughts on Memorial Day 2010

On this Memorial Day 2010, our country continues to be fighting two wars. Our leaders seem bent on apologizing to other countries for every misstep, real or imagined. We are in the midst of the worst recession in my lifetime. We are starkly divided over the policies coming out of Washington, D.C. About the only thing we seem to agree on is that Congress is doing a lousy job. Even then, we are certainly divided about the reasons.

Memorial Day provides a fitting and proper occasion to honor our fellow citizens who are serving or have served in the military, particularly those who paid the ultimate price. It is also a fitting and proper to reflect on what our service personnel are fighting for, as well as our country's place in the world.

As a young man, I visited Arlington National Cemetery in Arlington, Virginia, near Washington, D.C. Arlington is a sacred place that, unfortunately, will not be visited by the Commander in Chief today. More recently, a good friend from Germany took me and a colleague to visit the Luxembourg American Cemetery and Memorial in the tiny country of Luxembourg. In each instance, the monuments seem to stretch on forever.

In the peaceful setting of a cemetery, one often tends to forget that each marker represents a personal tragedy for a soldier and his family. A young life cut short. Dreams never realized. A telegram with the worst possible news instead of a joyous family reunion. In perhaps the saddest cases, the marker symbolizes a parent who never saw a child and a child who never knew a parent.

I sometimes contemplate what the world lost in these seas of marble. Would one of these soldiers have gone on to find a cure for cancer or heart disease? Would some of them have invented new technologies that would have changed the world for the better, but are now lost to the sands of time? Surely some of them would have started successful businesses, employing their fellow citizens. Some would have become great leaders. We could sure use some leadership now.

My family has been, relatively speaking, pretty lucky. I never knew my uncle Don (full name, Gilbert Caudle, Jr.), who was my mother's brother. Don was killed in a helicopter crash or explosion under mysterious circumstances in Korea. So far as I know, my mother never knew the details. She did not speak about Don very much, but, when she did, tears would sometimes come to her eyes, and she was a pretty tough woman.

My uncle Bill served in World War II and Korea. I only remember meeting him once. Bill was a "lifer" in the service, meaning he stayed in until he reached retirement age. He drove trucks after that for a few years, but died young. Apparently, the service provided a structure to his life he literally could not live without. I wish I had really known him.

My father-in-law, Hubert C. Mott, who died in March of this year, served in the Signal Corps in World War II. He shipped out on the Queen Mary in 1944 as D-Day was beginning. So far as I know, "Hu" did not see much, if any, combat, but help make sure that communications were possible from Europe to the U.S., no small feat in that time. He was, quite rightly, proud of his service to the end, and proud of the sacrifice of his generation. He death was a stark reminder that the "Greatest Generation" really is coming to an end.

My wife's uncle, Henry Wehrfritz, also served in World War II. Henry was a unit accountant, showing that you have to keep track of what's coming in and going out in war, just as much as in peace. Henry's service literally took him all over the world, including Iran. Henry's wife Roberta (my wife's aunt) kept his letters from World War II to the end of her life at the ripe old age of 97.

We need to remember the sacrifice of every generation in serving our country. We also need to remember that our country has fought for some great causes. In the Twentieth Century, we helped save Europe from itself not once, but twice. After the unprovoked attack at Pearl Harbor, we beat the odds and beat back Japan when its empire was attempting to dominate Asia, including China.

Sure, we were late entrants into World War I, and the Soviet Union paid an even higher price than we did in defeating Hitler. It is safe to say, however, that the world would be a much different place if we had not been involved.

Often overlooked is the contribution our armed forces made during the Cold War. American military power kept the Soviet Union at bay, and, to some extent, does so even today with a resurgent Russia. Of course, Europeans deserve the primary credit for rebuilding their countries after the worst war in history. However, without the protection of the U.S. military, things would likely have been very different.

Having toured the beautiful cities of Prague and Budapest shortly after the collapse of the Berlin wall and eastern block, the difference between free Western Europe and the communist system could not be more stark. At the time, one could drive down streets that were restored to their original beauty on one side, and that still bore the grime of forty years of communist rule and neglect on the other. Even though this is very recent history, we tend to forget.

It is safe to say that there has never been a country more beneficent to its former enemies than the United States. Our country helped rebuild both Germany and Japan and also helped them to establish free governments. This approach certainly worked, because both countries are now among our strongest allies and trading partners. German and Japanese companies have invested billions of dollars in the U.S., employing tens of thousands of Americans and helping to rebuild our manufacturing base.

Since World War II, our country has tended not to be united regarding our involvement in wars and conflicts. Save for brief periods following the first Gulf War and 9/11, many have protested our involvement. Of course, the right to dissent is one of the bedrock principles of our country and is every citizen's right.

Nevertheless, our involvement in wars and conflicts has generally been for what were perceived, at least at the time, the right reasons. Even our most controversial war, Vietnam, was fought to oppose communism. Many forget that we were basically taking over for France in Vietnam, a country that has never been shy to criticize us.

In any event, I hope our service personnel will never again be treated as badly as those returning from Vietnam. Whether one agreed with the war or not, the men and women fighting the war were simply doing their duty. We have made some amends to them since the 1970s, but, for many of our fellow citizens who served in that war, the scars caused by their reception at home (not to mention the war) will never completely heal.

If there is one thing that bothers me more than anything else about our current leadership, it is the international apology tour: The bowing to foreign leaders with the assumption that all that is wrong in the world is somehow our country's fault. This goes hand-in-hand with allowing service personnel to be put on trial for highly questionable charges, and the lack of proper support for our soldiers in terms of both manpower and equipment.

No, we are not perfect, and, when we make a mistake, we should act promptly to fix it. But the world is a far better place with America than without it. I am an internationalist and have friends from many parts of the globe. We can learn from other countries and their citizens.

But apologize for our country? No way. It is an insult to those who serve and to every American remembered by those marble monuments. Instead of apologizing, our leaders ought to be saying they are proud to be Americans, are proud of our troops, and will support them at every turn. And when we make mistakes, we will try to rectify them and do better.

The one thing that gives me hope is that our country has been written off many times before and has always come back. I am betting we can do it again. I am also hoping that there is some future leader out there who will make saying "I'm proud to be an American" fashionable again.