Corporate officers and directors need to confront the serious risks they and their companies face in the current environment. Who says so? The famous Marty Lipton of Wachtell Lipton. See this September 19, 2019 post at Blue Sky Blog.
As Purdue seeks refuge in chapter 11, a conservative economist articulates a point I’ve also been discussing in various contexts: prepare for material reductions in or a complete end to “respect” for corporate veils. In a September 19, 2019 blog post, Mr. Cowen framed the topic around social media, famous corporate leaders and societal pressures. The expanded version of the argument was published on Bloomberg on September 16, 2019.
My framing focuses on the prevalence of holding companies with pooled capital and cash, relatively minimal insurance, and growing numbers of “mass torts” involving widely distributed products that create large financial problems for governments already facing deficits. Another factor arises from SCOTUS’ decisions on “foreign claims” and in personam jurisdiction. The lines drawn by SCOTUS may have pleased some short term thinkers, but they are forcing plaintiff’s firms to create global litigation structures, and are forcing them to take discovery on and acquire detailed knowledge of relationships between and actions of various entities and executives involved in national and international corporate families. Meanwhile, the financial community is ramping up litigation funding for claims around the globe, and logically prefers to invest when acquired knowledge can be reused in thousands of claims for very large amounts of money.
Back in the early 2000s, the Fifth District appellate court in Illinois was composed of 6 Democratic judges and 1 Republican. That appellate district sits above Madison and St. Clair Counties, which were then and still are famous venues for mass tort claiming.
Today, things are very different. Now, the count is six Republican judges and 1 Democrat. There are many reasons for the changes; some of them are described in this September 3, 2019 article in the Madison-St. Clair Record.
The overall point is larger. The point is that judicial change can occur when there are concentrated efforts over time in a few key places.
Interesting times became even more interesting when the Financial Times published an August 21, 2019 article asserting that a sex tape took on a role in Burford Capital pursuing litigation. According to the article:
“A senior executive at Burford Capital has been accused of unlawfully trading confidential documents for a sex tape in a $91m lawsuit filed at the High Court in London… In the lawsuit, Daniel Hall, co-head of Burford’s global corporate intelligence, asset tracing and enforcement business, is alleged to have supplied “sensitive” documents obtained while working for a shipping client. Mr Hall is alleged to have exchanged the documents for “video material of a sexual nature” relating to American oil billionaire Harry Sargeant III, whose assets he was investigating for another client.
In Burford’s defence, filed at the High Court, the company said it was not liable to Novoship for any loss or damages and said “the relevant information was in the public domain and was otherwise not private and confidential”.
Meanwhile, prior US litigation appears to have involved the same sex tape and disputes between Mr. Sergeant and a brother, as described in a June 26, 2018 article at Courthouse News Service.
How will the ILR handle this news?
Usually, the Institute for Legal Reform (ILR) subpart of the U.S. Chamber of Commerce attacks class action securities suits as bad things, as illustrated by this February 25, 2019 article. And, litigation funders such as Burford Capital extol the value of litigation.
Ironically, the ILT is now regularly pushing out news that rather breezily points out that Burford is the target of speculation and now a securities class action. In fact, ILR seems not far away from praising “shorts” attacking Burford for overstating its financials, an attack lead by the usually successful team of researchers, investigators and financiers at Muddy Waters.
These are indeed interesting times.
Lexis/Nexis is a poster child for a new WSJ article: “Everyone Hates Customer Service. This Is Why. Technology lets companies see how badly they can treat consumers, right up until the moment they bolt.” See WSJ article, August 3, 2019, by Sharon Terlep. For those who do not subscribe, I posted a copy online under the fair use doctrine.
The article explains the knowing failures of many tech companies who knowingly provide awful service to save money. It’s disgusting to read how precisely they can and do measure how bad they are, but well worth the time to read.
A premise of the article is that companies figure out how far they can fail before customers quit. From recent personal experience, I can say that RELX – Lexis/Nexis has not figured out the line for its online caselaw services to law firms. That’s why I recently canceled the $6,000 per year online caselaw contract my small law firm had for the last several years.
In short, they knew their online service offering (Lexis/Nexis Advantage) had an online sign in problem existed because their web site refused to play well with/ coordinate with password keeping software (Dashlane) of the sort we are forced to use because corporate America bolixed cyber security. The company, however, did not warn customers, put up useless error messages, took hours to respond to emails, and had endless voice prompts on calls, followed by useless advice. After they finally admitted the problem, they delayed fixing the problem.
So, I went out looking for an alternative. I found a much cheaper service that’s equally good on caselaw and statutes. Sadly, it means I also lose an actually valuable service (Mealey’s Litigation Reports ) but I refuse to pay $6k per year to such an awful company. I expect “cord cutting” ultimately will ruin Lexis/Nexis because, other than Mealey’s (which it bought), its people have not figured out how to do anything new and valuable unique and valuable now that caselaw and statutes are commodity items.
Knowledge spreads at different paces. A July 2019 article from Clyde & Co. notes a January 2019 medical review article on prostate cancer and links to asbestos. Interestingly, the Clyde & Co. article mentions epidemiology but says nothing about genomics or plausible mechanisms of action.
It’s great to see lawyers writing about scientific article. That said, in my view, it’s important to go beyond epidemiology by also thinking about genomics and mechanisms of action as related to asbestos and as related to prostate cancer. Those other factors can make epidemiology seem more or less logical. That’s why PhD colleagues and I created ToxicoGenomica.
Avoiding liability for fraudulent conveyances may have just become tougher. Why? Because this week, Kirkland & Ellis explicitly announced it is now seeking out plaintiff’s side contingent fee commercial cases, such as fraudulent conveyance cases. According to the firm’s press release, this move is motivated in part by its massive win in the chapter 11 case of Tronox. There, Kirkland took the plaintiff side in a fraudulent conveyance case involving many years of carving risks and assets out of a large company facing billions of long term legacy liabilities from environmental pollutants and tort claims. According to K&E’s July 10, 2019 press release:
“We took a look at the historical results we’ve achieved on the plaintiffs side over the last one or two decades for plaintiffs, and we’ve had some huge wins,” said partner Andrew Kassof, who co-led the team that represented Tronox Litigation Trust in winning $14 billion in damages in 2013 against Kerr-McGee in a fraudulent conveyance suit.”
A July 5, 2019 book review by Tyler Cowen at Marginal Revolution describes in a glowing terms a book that sounds interesting with respect to opioid issues. Among other things, the review states the following:
“The slightly misleading subtitle is How Rogue Chemists are Creating the Deadliest Wave of the Opioid Epidemic. Why misleading? So many substance abuse books are a mix of hysterical in tone and a disappointing “paint by numbers” in their execution, but this one really stands out for its research, journalism, and overall analysis. To give just one example, it is also a great book on China, and how China and the Chinese chemicals industry works, backed up by extensive original investigation.
Definitely recommended, this will be making my year-end “best of” list for non-fiction.”