The Intersection Among Torts, Science, Corporate Law, Insurance & Bankruptcy

“Standing Up to Patent Trolls” – Will It Happen?

Posted in Litigation Industry

Now that the litigation industry is just another business, there are problems with low end claimants in various specialty areas of litigation. For example, the asbestos litigation industry went through a period of mass filings involving persons who were not sick. Some insurers and defendants stood up and defended aggressively. Others rolled over and paid, saying it was cheaper in the long run. Yet others paid some nominal money to drive down their overall averages for asbestos settlements.

Similar low end claimant issues exist in the patent world. One result is a new article in Corporate Counsel arguing that “small business” owners should stand up to “patent trolls.”  One might also ask if insurers will do the same, when coverage is triggered. Time will tell.

Financial Benchmarks Manipulation – Are Regulators and Litigators Looking at the Wrong Activities?

Posted in Liability Standards, Securities

What happens when financial regulators are trying to look at and regulate the wrong subject? Even more financial fraud? The point is raised by an new article on the various “benchmark manipulation” cases, such as LIBOR.    The thesis is outline in an August 27, 2104 Blue Sky blog post by Andrew Verstein, and the article itself is on SSRN.  The article

Manipulation is all too common in financial markets. Reports of brazen schemes have rocked the markets for gold, aluminum, foreign currency, and interest rates, to name just a few from the last twelve months. These scandals are surprising in light of substantial scholarship that has long argued that market manipulation is impossible. Perhaps you can bid up the price of an asset by buying a large amount, but the price will fall as you try to sell it. Taking into account of your trading costs, you should not even break even. Regulation of manipulation is unnecessary since it cannot be profitable.

This Article challenges orthodox understandings of manipulation, showing that they reflect an obsolete view of markets. While manipulation skeptics discuss prices, markets focus on benchmarks of price – and so do the manipulators who prey upon them. Benchmarks such as Libor or the S&P 500 summarize market prices, and they have become essential to contemporary markets. They are written directly into industrial contracts, financial derivatives, statues, and regulations, and so their accuracy affects the economy every bit as much as the prices themselves. They are also are much easier to manipulate than underlying prices, because such benchmarks are typically derived from only a small slice of the market. For example benchmarks of exchange rates – the price of Euros and Yen – reflect only trade prices in a single venue, during a two-minute period of trading. If a manipulator can strategically position trades – placing aggressive purchases on that venue and aggressive sales elsewhere – she can bias the benchmark and therefore project influence over the market as a whole.

This theory – that market manipulation is increasingly synonymous with benchmark manipulation – has many important implications. It shows that the recent push by regulators and courts to require fraud in manipulation cases is fundamentally misguided since benchmark manipulation does not depend on anyone being “defrauded.” Likewise, recent proposals to extensively regulate the creation of benchmarks are shown to misunderstand the mechanics of benchmark manipulation.”

Obtaining Access to Underlying Data for Medical Studies

Posted in Litigation Industry, Science

Can/should lawyers be able to use subpoena power to access underlying data from medical research studies at issue in litigation?  The subject is reviewed under the Illinois Medical Studies Act  in an August 2, 2014 post by Nathan Schactman at his Tortini blog. As he notes, the case law leans towards requiring production, and one can say that current trends towards open access data suggest that data should be subject to production. 

Delaware Jurists Write on Contracts and Alternative Entities – Presumably Many Will Listen

Posted in Law Review Articles, Liability Standards, Securities

“No brainer.” That phrase often was used when I was a baby lawyer.  It’s an apt phrase regarding whether to read a new article from leaders of the Delaware court system.  Francis Pileggi at his blog on Delaware law offers a different set of words to explain the situation (his post is where I learned about the new article).   In an August 23, 2014 post, he explained:

“To paraphrase a former tag line for a former investment management firm, when Delaware Supreme Court Chief Justice Leo Strine, Jr. and Vice Chancellor J. Travis Laster of the Delaware Court of Chancery co-author an article on a cutting-edge topic of Delaware law, those lawyers who practice in the relevant field need to “pull up their socks”and take notice.”

Obviously Francis right. It’s a no-brainer.  See his post for more specifics.  The bottom line is that the new article focuses on whether its a good idea to have absolute freedom of contract for alternative entities. The article is online, and is titled: “The Siren Song of Unlimited Contractual Freedom“, available on SSRN.

Modern Day Debtor’s Prisons – Towns Such as Ferguson

Posted in Uncategorized

Law is about economics. Therefore, Alex Tabarrock and others are writing about towns that impose heavy fines against the people least able to pay. Ferguson, Missouri is an example, according to Tabarrock and others, as described in an August 21, 2014 post at Marginal Revolution.

I hear similar stories from a friend who frequently defends DUI cases. He explains that Cook County and various local towns typically impose fines of $2,000 or so to retrieve a car after a DUI arrest.

Tabarrock and others provide the following example, among others:

If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of:

“For a simple speeding ticket, an attorney is paid $50-$100,
the municipality is paid $150-$200 in fines and court costs, and the
defendant avoids points on his or her license as well as a possible
increase in insurance costs. For simple cases, neither the attorney nor
the defendant must appear in court.

However, if you do not have the ability to hire an attorney or pay
fines, you do not get the benefit of the amendment, you are assessed
points, your license risks suspension and you still owe the municipality
money you cannot afford….If you cannot pay the amount in full, you must appear in court on that night to explain why. If you miss court, a warrant will likely be
issued for your arrest.

People who are arrested on a warrant for failure to appear in court
to pay the fines frequently sit in jail for an extended period. None of the
municipalities has court on a daily basis and some courts meet only
once per month. If you are arrested on a warrant in one of these
jurisdictions and are unable to pay the bond, you may spend as much as
three weeks in jail waiting to see a judge.

Of course, if you are arrested and jailed you will probably lose your job and perhaps also your apartment–all because of a speeding ticket.

Memoirs of Former NCAA Commissioner Became Evidence for the Player Image Antitrust Suit Against NCAA

Posted in Antitrust, Litigation Industry

As any asbestos lawyer knows, the  writings of former executives often provide material evidence for litigation. It turns out the same is true for the antitrust suit against the NCAA regarding payment for use of player images.  The information is set out in an August  21, 2014 article in Bloomberg by Paul Barrett.  According to the article:

“Vaccaro gave Hausfeld a homework assignment: Read the confessional memoir of Walter Byers, the NCAA’s executive director from 1951 to 1987 and the man known as the governing body’s master builder. Published eight years after Byers left office, Unsportsmanlike Conduct: Exploiting College Athletes became a Rosetta stone for NCAA dissidents.

“Prosecutors and the courts,” Byers wrote, “should use antitrust laws to break up the collegiate cartel—not just in athletics but possibly in other aspects of collegiate life as well.” As Byers argued, “The college player cannot sell his own feet (the coach does that) nor can he sell his own name (the college will do that). This is the plantation mentality resurrected and blessed by today’s campus executives.” To Hausfeld, the memoir amounted to an invitation wrapped in a confession.”

Ken Feinberg Provided a Catalyst for the Player Image Antitrust Suit Against NCAA

Posted in Antitrust, Litigation Industry

Ken Feinberg draws lots of attention for his settlement broker role in mass tort situations. However, there is more – according to an August  21, 2014 article in Bloomberg by Paul Barrett.  Ken was an indirect catalyst for change at the NCAA. More specifically, the article explains that Ken arranged for a meeting between a plaintiff’s lawyer (Michael Hausfeld) and long-time  shoe person (Sonny Vacaro) who became a foe of the NCAA  after he retired. According to the article:

“After lucrative stints with Adidas (ADS:GR) and Reebok, Vaccaro retired in 2007, he says, “to do some good.” Whatever his mix of motives—redemption, attention seeking, maybe altruism—he began delivering speeches on how the college athletes he’d turned into human billboards deserved a share of the revenue. “I didn’t get very far at first,” he says. “Make a speech, one-day story, it disappears.”

That changed after he visited Howard University in Washington in 2008 to deliver one of his stemwinders about athletic inequities. An old friend in the audience introduced Vaccaro to Kenneth Feinberg, a prominent Washington attorney who oversees mass-disaster settlements. Feinberg, in turn, connected Vaccaro to Michael Hausfeld.

A professorial plaintiffs’ lawyer based in Washington, Hausfeld wears pastel bow ties and rarely speaks above a whisper. He has successfully challenged ExxonMobil(XOM) on behalf of Native Americans and Swiss banks on behalf of the survivors of Holocaust victims. “I have to confess that at first I didn’t understand a lot of what Sonny told me,” Hausfeld says, “both because he speaks so quickly and because I’m not a sports nut.”

Political Donations and Asbestos Litigation – a 2014 Update on One Side of the Coin

Posted in Asbestos, Elected Judges, Litigation Industry

Years ago, Joe Rice very correctly said something to the effect of:  ”Why would Congress ever end asbestos litigation. It’s the nation’s most consistently big fundraising and lobbying topic, ever.”

For 2014, Legal Newsline provided an August 15, 2014  report on contributions from some asbestos plaintiff’s firms to politicians. The numbers are impressive and telling in some ways. More or less the same report also was issued by the Madison-St. Clair Record.

As is typical, however, the two pro-insurer publications  failed to cover the other side of the topic, which of course is the corporate side of the political giving coin.


Exponential Change in Computing Power – Lawyers Beware

Posted in Litigation Industry, Science

How much faster and smaller is a 2014 supercomputer when compared to a 2011 supercomputer? The quick answer is:  24x faster, and 90% smaller.

Want proof? Consider the following excerpt from an American Lawyer article by Susan Beck regarding the extent to which computers will replace lawyers; the relevant part of the article focuses on Watson, the IBM supercomputer that played and won Jeopardy in 2011:

“Scott Ferrauiola is the lead lawyer for IBM’s 
Watson project and Stephen Gold is the company’s vice president of marketing and sales operations for Watson Solutions. In a discussion about Watson, they point out that the technology has made huge advances since it was displayed on “Jeopardy” in 2011. “On ‘Jeopardy’ it read 200 million pages of data in three seconds,” says Gold. “Now [the machine] is 90 percent smaller and 24 times faster.” Ferrauiola adds, “One way to think about it is that the machine used on ‘Jeopardy’ filled a room. Now it would fill three pizza boxes.”

Think about the exponential scale of some of  that change. 24x faster, in 3 years.  Are you 24x faster at anything you do today compared to three years ago? Are you 2x faster at anything you do? 5X?

Also not so bad is 90 percent smaller, in 3 years.

The scale and impact of exponential change is hard for humans to grasp. But it is happening.