August 29, 2007
"Meat Is the No. 1 Cause of Global Warming"
My wife and I have been a little baffled by the newfound attention paid to global warming and reduced footprints following An Inconvenient Truth. As consumers, we have been encouraged to take a wide variety of steps that have relatively small beneficial net effects--changing lightbulbs, buying carbon offsets, etc. Meanwhile, there is an obvious option that no one seemed to want to talk about--if we really want to reduce our footprint on the Earth and help reduce global warming, one of the single most effective steps people can take is to reduce their consumption of meat. Yet, this option--which requires no large outlays of cash like buying a hybrid car--is virtually ignored in the discussion, even though the science suggests that it would be more effective than changing cars. As a PETA rep says, "Environmentalists are still pointing their fingers at Hummers and S.U.V.’s when they should be pointing at the dinner plate." So why isn't vegetarianism/veganism getting the attention it deserves?
A recent NYT article discusses this phenomenon. According to the article, in response to a UN report concluding that the livestock industry produces more greenhouse gas than all types of transportation, animal rights groups are (IMO, belatedly) embracing global warming as a reason to go vegetarian/vegan. In contrast, many environmental groups continue to sidestep the issue. As the Sierra Club rep says, "we do not find lecturing people about personal consumption choices to be effective." I agree that lecturing isn't good, but consciousness-raising could work spectacularly, especially given how much attention and money is being allocated to the global warming issue right now.
Meanwhile, if you're buying carbon offset credits, you might consider saving your money and instead offsetting your impact by adding some extra vegetarian meals to your diet.
August 27, 2007
Contract Signing Protocol
[This is part of my serialized materials from my talk on Ethical Issues in Contract Drafting and Negotiation]
We focus so much on deal substance and style that we often lose sight of the problems that can arise at the most critical time of all—when pen is hitting paper. If a lawyer mishandles contract execution, it can lead to a malpractice claim, professional discipline and a very angry client (or, more likely, former client). Therefore, this document proposes a step-by-step protocol to make sure that the contract signing stage is handled correctly.
Step 1: MAKE SURE YOU GET THE RIGHT VERSION OF THE CONTRACT. This can be particularly challenging when a number of drafts were swapped at the 11th hour; it may not be entirely clear which draft everyone is officially blessing.
Step 2: If you haven’t had drafting control over the last version, read the version to make sure it reflects all changes accurately. If you are the lawyer presenting the contract to the client for signature, everyone expects to ensure that the client is signing the right version with all negotiated changes. Stated differently, I don’t think a lawyer can credibly blame the other side if the signed draft has errors, even if those errors didn’t show up on the redlines. As a result, when I was in-house counsel, I typically read the agreement from top-to-bottom to make sure that the draft didn’t have any unexpected changes that didn’t show up on the redline. This was time-consuming and usually a little painful, but I did occasionally mistakes in the supposedly execution-ready draft.
Step 3: Make sure all internal signoffs have been procured and ensure availability of person with signing authority. This is especially critical when the parties are rushing to get the deal completed by a fast-approaching deadline. It can be embarrassing at best, and deal-killing at worst, to find that the proper signatory or internal gatekeeper cannot be found by the stated deadline.
Step 4: Prepare a clean version.
Step 5: Decide which side is going to sign first. Of course, this is unnecessary if the agreement is being executed in counterparts.
Step 6: One approach: send 2 copies of the final version to the other side
• include a cover letter with instructions
• include visual cues (such as flags) indicating where they need to sign
• include return envelope if you want an original back
Originating the signature copy has the advantage of ensuring that the right version is prepared for signature. Otherwise, you may need to reread the half-executed agreement you get from the other side before blessing for signature.
Step 7: When returned, get your client to sign and return one copy to the other side.
A DEAL ISN’T “DONE” UNTIL YOU SEE A FULLY SIGNED AGREEMENT
(or, better yet, cash in the bank)
As a great example of this, see International Telemeter v. Teleprompter, 592 F.2d 49 (2d Cir. 1979). Kirsch’s client told Kirsch that it had signed a settlement agreement, but Kirsch didn’t get the signed copy into his possession. Kirsch then relayed the alleged good news to the other side. However, Kirsch’s client had a management change before delivering the signed copy, and the new management balked at the settlement. This left Kirsch in the middle—he had told the other side that the agreement was done (and had authority to do so), but his client had reversed course and was saying the deal was never signed. Not only did Kirsch’s eagerness cost Kirsch a client (he resigned), but he has very few defenses if his former client sues him for malpractice based on being committed to a deal they didn’t want.
This issue also comes up with press releases—no public announcements of a completed deal until you see the fully signed contract.
Step 8: Make sure the signed version gets filed properly. A signed contract that can’t be found when needed isn’t very useful. I can’t tell you how many times I looked in the files for a signed contract and instead found a mess—signature pages with no contract attached; a contract with only one signature; or contract drafts without any signature at all. I’ve even had a couple of situations where both sides could not find a signed contract—posing a fascinating ontological problem as well as some intensely practical ones. As outside counsel, you may not always see the final signed contract (though I would usually ask for one, if for no other reason than to confirm that no further work was required on my part), but if you do, it should stored for easy retrieval. As inside counsel, it’s essential to maintain comprehensive files of all binding contracts.
Step 9: Do a post-mortem with your client to see what you learned from the deal. If you and your client are likely to do future similar deals, it may be worth investing some time after the first transaction to recap any lessons learned.
Step 10: Send a congratulatory note to other side/attorneys. Often, in the course of working on a deal, a lawyer develops a rapport with opposing counsel. The lawyer can reinforce the good feelings and extend his/her network by celebrating a successful closure to the deal. Good professional relationships can also help if and when the parties renegotiate the deal post-signing.
Step 11: Get the client to calendar significant dates and develop implementation plan. Often there are post-signing obligations to the contract, and the lawyer may need to help the client understand and implement those obligations to avoid breaching the contract.
Step 12: If deal has subsequent conditional dates, make sure those conditional activities get documented when they occur. For example, in web development and hosting agreements, usually some contract obligations are triggered upon “launch” of the website, such as hosting might run 12 months from the website launch. Unless the parties document the launch date, in the future it will be difficult to determine when the contract expires. Therefore, when reaching a milestone contemplated by the contract, the lawyer should (if involved at that point) record the event in the files (and, as applicable, the contract tracking software) to make sure the contract can be interpreted properly in the future.
August 26, 2007
How to Review and Comment on a Contract
[Note: this is a serialized component from my materials on Ethical Issues in Contract Drafting and Negotiation]
In a transactional practice, procedural choices can substantively affect the ultimate deal. In particular, a poor procedural choice can lead to the loss of future procedural privileges in ways that disadvantage the client; and in extreme cases, a lawyer’s poor procedural choice can tank the deal altogether.
Despite this, many lawyers transgress basic norms when generating and delivering feedback on a transaction. Most such transgressions are unintentional, so to help cure that information gap, this document mechanically details the steps that a lawyer should follow when receiving a document from the other side.
Step 1: Make sure you have the right documents that were meant for your review. I can’t count the number of times I’ve received the wrong draft of a document, such as a draft that hasn’t actually changed from a previous iteration or that was used for internal comments (so, for example, it contains comments between the other side and his/her lawyer). Few things are more irritating than to spend significant time reviewing the wrong document, especially when the transaction is on a fast track.
Step 2: Make sure that the other side did the redlining accurately. This should be self-explanatory, but far too often, the redlining is botched (usually unintentionally), and that can lead to a big waste of time—or worse, missed changes.
Step 3: Read the document from top to bottom. Unless time is critical, I usually read the document in its entirety and not just the redlines, because it’s easy to forget how the redlined changes might affect other aspects of the contract that aren’t changed.
Step 4: Mark all of your desired changes and comments. I know it’s a little silly, but I have developed a color-coding system for making notes—blue pen reflects my internal notes, red pen reflects any changes agreed upon with the other side. This color-coding speeds up my subsequent review of the document circulated by the other side or my editing when I’m making the changes (I just look for my red notes). Further, because I use these colors consistently, I can revisit transactions from months or years ago and still sort through my notes.
Step 5: Cross-check old notes/documents to make sure all prior feedback was addressed.
Step 6: THINK ABOUT WHAT IS MISSING. If I have time, I usually set the document aside for a little while to get some space, then I come back to it with a clear head to see what should have been in the document but isn’t. Identifying missing provisions is one of our toughest jobs as lawyers (there is plenty of psychological literature explaining why), but we must look beyond the other side’s text.
Step 7: Talk with your client about issues before speaking with other side. Ultimately, lawyer and client should speak with a single voice, and this requires you to coordinate your feedback with your client’s feedback.
Step 8: Where appropriate, schedule a conversation with the other side.
• At the beginning of the conversation, clarify who will prepare the next draft
- Usually, the person who received the prior draft will prepare the next draft
• Then, before getting into substance, ask the other side if anything has changed on their end. Not infrequently, things have changed since they sent the draft to you, and it’s best to hear about these changes before you start delivering your comments.
• If you are preparing the next draft
- When circulating the draft, include a cover sheet explaining any deviations from the discussions and outlining all open issues. Not only does this provide a helpful instruction manual for the other side, but it makes it easier for you to pick up the transaction when it comes back (especially if the deal goes on hold for a while)
- Prepare a clean redline. Always accept all redlined changes before editing it. Never edit a document that already has redlining in it.
- Watch out for metadata
• Never forget that you are both a representative of your client and an agent of your client. Your actions and words can affect your client’s reputation and economic prospects. If your client wants you to pound the table and act intransigently, then go ahead (so long as it otherwise comports with the Rules of Professional Conduct). But if not, your behavior may harm the client both in this deal and for subsequent deals. Further, in many cases, your words can legally bind your client, so make sure your client can stand behind everything you say.
August 23, 2007
Law Firm Partner Pay Transparency
New York Lawyer has a good article on the different ways that law firms handle the transparency of the amount paid to partners. At most firms, partners can learn what their peer partners earn (although, in some cases, this information isn't easy to get); at other firms, compensation information is not shared publicly. According to the article, partners at the opaque firms are often strong advocates of their model, which may not be surprising given that in most of the business world, compensation is not publicly disclosed. Compensation may be one of those topics where people *think* they want to know more about what their peers make but additional disclosures often lead to more misery than joy. See, e.g., Katherine Strandburg, Privacy, Rationality, and Temptation: A Theory of Willpower Norms, 57 RUTGERS LAW REVIEW 1237 (2005) (discussing situations where people should resist being exposed to information they will later regret); Patrick Schiltz, On Being a Happy, Healthy, and Ethical Member of an Unhappy, Unhealthy, and Unethical Profession (discussing how lawyers use money to keep score in a game that ultimately makes them unhappy).
August 20, 2007
Ethical Issues in Contract Drafting and Negotiation
I gave an updated presentation on Ethical Issues in Contract Drafting and Negotiation. I got some pushback from the audience on the "Negotiations--Telling the Truth" and backdating slides; and the anti-contact rule slides produced a near-meltdown! The latter is hardly surprising as those rules are so inconsistent with day-to-day transactional lawyering.
Also, I've posted some written materials from the talk. Later this week, I will serialize a couple of parts for your convenience.
August 19, 2007
Lawyer Professionalism and Potted Plants
As part of our orientation, the school arranged a lunch for incoming 1st years and judges/lawyers/professors. The agenda was to discuss professionalism with the incoming students, and we were prompted with a cheat sheet of questions. One question asked us to think of a time when we saw professional/unprofessional behavior by another lawyer and how we responded.
Of course, I had plenty of source material to draw from, but it reminded me of an incident that I don't recall having shared publicly. In the late 1990s, I was on a telephone call to negotiate on behalf of my client with another lawyer from a well-known Silicon Valley firm. As usual, both of us as lawyers were operating on incomplete information, but the parties were determined to get a deal announced quickly. Opposing counsel suggested that we help the parties by jointly agreeing to some deal points between the two of us. I told opposing counsel that I couldn't do this as neither of us were in a position to agree to new business points. After some back and forth on this, opposing counsel then said:
"Oh Eric, stop being such a potted plant."
Now, it's clear that we as lawyers can't exceed our authority as agents for our principals, so there's really not much to discuss. It's also fairly clear that name-calling is generally out-of-bounds among lawyers, but this is a rather bizarre name to be called.
I asked the incoming 1Ls how they would respond in this situation. Curious what I did? Read on...
I gave opposing counsel the equivalent of a time-out. I didn't say a word for 1 minute. (At the law firm, our phones had timers on them so we'd know how long to bill the client). I just held the phone silently and watched the clock tick 60 seconds. I can assure you this felt like a very loooonnng time. At the end of the time-out, I reiterated that I could not do what opposing counsel was asking and suggested that we'd best be served by suspending this discussion and reconvening when we had more input from our clients.
Then, later that day, I sent opposing counsel an email saying "I realize that we haven't met in person, so I thought it might be helpful to see what I look like" and included some URLs like this and this.
August 10, 2007
WSJ on Internet Hunting
From the WSJ: the battle to outlaw Internet hunting rages on. The Humane Society has boosted the number of outlawing states to 33, and along the way, gotten some bonus coverage, like California's ban on "Internet fishing" (I'd love to see that technology). The Humane Society is pleased with its success; its representative says this is "one of the fastest paces of reform for any animal issue that we can remember seeing." Well, of course, given that no one lobbying against the law! As a result, according to the WSJ, of the 3,563 legislators who have voted on Internet hunting bills, only about 1% (38) have voted no. At least a few legislators have realized the stupidity of this initiative. As one of the naysayers, Gerald W. Hocker from Delaware, said, "Internet hunting would be wrong...But there's a lot that would be wrong, if it were happening."
One remarkable thing about the effort to ban Internet hunting--it has produced some of the most god-awful asinine quotes from our public officials. I've blogged many such quotes before (check my vegetarian category from 2005), but the WSJ adds a few more pearls:
* "Melanie George Marshall, a Delaware state representative who sponsored an Internet-hunting ban that passed in June, considers her legislation a matter of homeland security. "I don't want to give ideas to people," she says, "but these kinds of operations would have the potential to make terrorism easier.""
* "Ms. Marshall, the Delaware state representative, realizes that nobody is actually killing animals on the Internet, but thinks now is the time to act. "What if someone started one of these sites in the six months that we're not in session?" "
For more on this topic, see my Internet hunting editorial from 2005.
August 06, 2007
Public Law Schools Become Private
There is a lingering perception that public law schools are cheaper than private law schools. First, the accuracy of this perception is hard to measure because of the extensive price discounting (in the form of scholarships) used by private law schools (and some public law schools) to engage in price discrimination. Therefore, students generally can't infer very much on the published "sticker price" of a law school; the actual price can vary widely and can't be known until an individual student's financial aid package is prepared.
Second, I wonder if the era of "public" law schools is drawing to a close because many "public" law schools now derive trivial state support. This National Law Journal article gives an update on this development: University of Virginia Law School gets zero state support; University of Michigan and University of Minnesota get 3% of their budget from the state; and Illinois, Texas and William & Mary all derive 10% or less. Inevitably, this means the price discount for public law schools will narrow; and it challenges our notions about what makes a law school "public" in the first place.
Normatively, I don't think this development is inherently good or bad. Obviously, public law schools have played a key role in providing low cost access to a legal education, but diminishing state support doesn't automatically mean the end of that in an era of aggressive non-public price discounting. But the phasing out of state support should ultimately contribute to the decline of stereotypes of the benefits of public vs. private legal education. In the future, they will be indistinguishable.
August 05, 2007
Gary Rivlin in the NYT has a terrific article entitled "In Silicon Valley, Millionaires Who Don’t Feel Rich." The article discusses how a few million dollars of net worth doesn't go as far as they used to, especially in the Silicon Valley where there are tens of thousands of millionaires and perhaps you're not really rich (at least, compared to your peers) until you hit 9 figure net worth. It says:
Silicon Valley offers an unusual twist on keeping up with the Joneses. The venture capitalist two doors down might own a Cessna Citation X private jet. The father of your 8-year-old’s best friend, who has not worked for two years, drives a bright yellow Ferrari.
This is no joke. At my wife's former company, which had created hundreds of millionaire-employees, the talk at company parties often involved each person's personal jet. Those of us who didn't own private jets were awkwardly unable to participate in the conversation.
A side consequence of this competition, and the inflated housing prices, is that there are comparatively few single income families where we live. In turn, it's hard to arrange playdates during the middle of the week, and "mommy-and-me" classes frequently are more like "nanny-and-me" classes.
My wife and I expressly discussed these issues before we decided to move back to the Silicon Valley. Not only were we planning to live on a single salary in one of the most expensive housing markets in the world, but it's an academic salary at that, effectively ensuring that we would never be able to keep pace with our neighbors. This doesn't bother me in the least--it's a choice my wife and I made knowingly and for the right reasons--but I'm dreading the day when my kids start asking questions about why their classmates are doing things that we simply can't afford to do. Then again, like the birds-and-bees discussion (another conversation I dread), it will present a powerful opportunity to teach our kids some essential life lessons.