http://www.bulletproofblog.com The blog on crisis communications Fri, 12 Mar 2010 18:16:36 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 http://www.bulletproofblog.com/2010/03/08/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-todd-lang-on-the-2010-proxy-season/ http://www.bulletproofblog.com/2010/03/08/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-todd-lang-on-the-2010-proxy-season/#comments Mon, 08 Mar 2010 14:01:22 +0000 Larry Smith http://www.bulletproofblog.com/?p=2259 Each week, Bulletproof Blog™ features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, as corporations embark on a 2010 proxy season that promises to be as challenging as any recent in memory, we interview Todd Lang, a Senior Partner at the law firm of Weil, Gotshal & Manges LLP with more than 50 years of experience in matters of corporate governance.

Mr. Lang has served as chair of the Committee on Corporate Governance of the American Bar Association’s Business Law Section and has been extensively involved in the activities of the Section’s Committee on Federal Regulation of Securities. He also serves as Chairman of the Board of Advisors for the Center for the Study of Corporate Law at Yale Law School. A leading authority on how a torrent of investor and regulatory activity has affected the 2010 proxy season, Mr. Lang shared his thoughts on the matter with Bulletproof™:

What do you expect will be the most striking feature of the 2010 proxy season?
 
Todd Lang: Executive compensation and corporate governance are both front and center in terms of investor and regulatory attention. The role of the compensation committee is necessarily expanded because the corporation will need to focus on the relationship of risk to the compensation program and the use of clawbacks and other measures to minimize or recover compensation upon the occurrence of defined adverse events. The committee will need to use independent consultants and relate the compensation program to corporate strategy. The allocation of compensation between stock and cash and the deferral of payments have become an integral part of the structure of these arrangements.
 
The proxy rules have been amended to require enhanced disclosure as to compensation programs as well as such governance items as the qualification and experience of directors and nominees and the leadership structure of the corporation. While these are separate requirements, they are substantively intertwined as a governance matter.
 
All of this amounts to a significant amount of preparatory work by the corporation, including its board of directors and committees, and the development and implementation of policies that are consistent with disclosure on the particular subject matter. The quality of disclosure will be subject to close examination by the staff of the SEC.

Given all that the SEC has on its plate currently, is there more for the Commission to do with respect to shareholder access to proxies? If so, what would that entail?
 
Todd Lang: The SEC proxy access proposal consists of 250 pages and propounds over 500 questions. The subject matter is complex and highly controversial. Proxy access will, when adopted, apply to more than 10,000 publicly-held corporations.
 
It is time to reach a decision on access given the seven years it has been under discussion. Final rulemaking, which is anticipated for early spring, requires resolution of a number of issues, including:

• Providing a clear definition of purpose, which would serve as a guideline to the content of the rule;


• Providing a reasonable transition period during which corporations, through director or shareholder action, can establish or conform to the terms of the rule;


• Defining the extent to which shareholders have a choice, including an opt-out right;

Outlining the means by which the corporation, through its directors or shareholders, can adapt the access right to the corporation’s governing documents and arrangements and deal with future events and opportunities;

• Offering guidance on shareholder use of the corporation’s proxy materials, under the shareholder proposal rule, to propose an access bylaw assuming that the director election exclusion is eliminated or modified; and


• Defining the workability of the process, which involves – in part – the extent and nature of its prescriptive terms.

On adoption, proxy access will enter a new phase with significant activity by corporations, their shareholders and the SEC.

How do you expect that the investor/regulator anger that still exists toward Corporate America will play out during this proxy season?
 
Todd Lang: The past couple of years have been characterized by scandals, joblessness, foreclosures, and other events that have raised serious concerns and a lack of confidence in the management of many companies. While these problems are essentially systemic in nature, there has already been impact on the amount and terms of executive compensation, the rewarding of effectiveness for participating in activities which involve meaningful risk to the enterprise, and the enhanced proxy disclosure requirements with respect to corporate leadership, compensation, risk and other governance matters.
 
The very human premise is that while many people suffer, others receive excessive rewards for activities which involve untoward risks and insufficient business judgment.  Most corporations have started to adopt measures to deal with these issues, and the SEC and other regulators have prescribed enhanced disclosure and other means to deal with them. If the efforts to effect change from the past are real, credible to investors and the public alike, and carefully implemented in a transparent manner, confidence can be restored. This is a year of transition, but by next year, investors, regulators and others should be in a position to make the judgment as to the effectiveness of these measures.

Does proxy access necessarily constitute a “best practice?”  Should it be a matter of shareholder choice?
 
Todd Lang: It is not axiomatic that the shareholders of every corporation favor the federal adoption of a right of proxy access. There are other alternatives, such as reimbursement by the corporation of solicitation expenses. Some believe that access establishes the basis for divisive action on the board of directors which could impede its effective functioning. Others are not convinced that access would be used for non-control purposes and suggest that the SEC proposal establishes a means of “access creep” –meaning that over time, directors elected through access may be inclined to act together with major control and influence implications.
 
In order to create confidence in the use of the right of proxy access, its purpose needs to be defined so that clear parameters are established to prevent its misuse. Principally, the proxy access right could be exercised by long-term shareholders with no-control intent or effect who have a meaningful interest in the corporation. Further, the shareholders of one corporation may have a different view on access than the shareholders of another corporation and, therefore, an “opt-out” right could be adopted to enable shareholders of each corporation to make their own choice.  An alternative is to establish access by providing shareholders with the right to “opt-in.”

With the economy beginning to improve, would you forecast an increase or a decrease in proxy fights in the coming year?
 
Todd Lang: There is a great deal of initial activity which suggests that there may be a substantial number of proxy contests in the coming year. This is based on economic opportunity, the increased ability of shareholders to seek and obtain board representation, and the number of issues which may favor change. While a proxy access rule would not be operative for the current year, depending on its terms, it certainly will encourage this kind of activity and, particularly, an increased use of the short slate. For practical purposes, a proxy contest means an election where there are more nominees than director slots to be filled and, therefore, this does not necessarily involve control.

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Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.]]> http://www.bulletproofblog.com/2010/03/08/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-todd-lang-on-the-2010-proxy-season/feed/ 0 http://www.bulletproofblog.com/2010/03/03/whats-next-the-plaintiffs-perspective-law-firm-faces-new-spate-of-overtime-wage-cases/ http://www.bulletproofblog.com/2010/03/03/whats-next-the-plaintiffs-perspective-law-firm-faces-new-spate-of-overtime-wage-cases/#comments Wed, 03 Mar 2010 16:53:40 +0000 Larry Smith http://www.bulletproofblog.com/?p=2237 In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to employment lawyer Anthony Lazzaro of The Lazzaro Law Firm, LLC in Cleveland, Ohio, who specializes in wage and hour cases. Mr. Lazzaro is currently representing some 40 legal secretaries against their employer, Turocy & Watson, an intellectual property law firm.

The employees claim the firm misclassified their job status so that they would not be entitled to overtime pay under the professional exemption to federal overtime laws. The plaintiffs say they have never performed work requiring knowledge of an advanced type in a field of science or learning. While not the first such case of its kind, it could well represent a growing trend, particularly in the current economic environment. In fact, soon after the case was filed, similar action was taken in Washington, D.C. by an employee of Drinker Biddle & Reath.

Is there a reason law firms or other professional service firms might be more susceptible to these kinds of cases?

Anthony Lazzaro: On the one hand, I’d say no – that all industries employing workers are susceptible to misclassification problems. Law firms, you’d think, might even be less exposed because lawyers know the law.

On the other hand, there are factors that do indeed particularly expose law firms. Legal secretaries tend to work more hours than secretaries in other industries. They don’t necessarily go home when the lawyers do. Quite to the contrary, they can be up filing all night, or manning the phone on behalf of their attorneys.

With paralegals, the temptation to misclassify status can sometimes be greater because they bill out their time. A firm can, of course, fully realize those billings if it doesn’t have to pay for extra hours at an increased rate.

Do you see any impact from cases like yours on how law or other professional service firms might adjust their employee classification practices?

Anthony Lazzaro: I do anticipate that law firms will start paying more attention to how they classify employees. But there will always be the start-up firms that don’t know what they’re doing or that, as new ventures, feel pressured to contain costs even as they feel pressured to pile up more hours.

In some cases, there’s a tendency for employers, including law firms, to simply assume that the overtime hours are de minimis. So they get sloppy in their practices or they figure that no one will gripe about these supposedly trivial amounts. Of course that kind of thinking is pretty silly at a law firm, where the overtime potential is never trivial by normal labor/employment standards.      

What other industries are on your front burner in terms of wage and overtime cases?

Anthony Lazzaro:  Any industry that employs lower-wage hourly workers bears watching. But if I had to single out any industry, the one that occurs to me right away is the food business, both restaurant and food production employees. In some parts of that industry, holding back on fair wages is considered to be standard, even acceptable practice. You sometimes find a veritable culture of exploitation.  

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/03/03/whats-next-the-plaintiffs-perspective-law-firm-faces-new-spate-of-overtime-wage-cases/feed/ 1 http://www.bulletproofblog.com/2010/03/02/six-six-6-tips-for-law-firm-marketing-online/ http://www.bulletproofblog.com/2010/03/02/six-six-6-tips-for-law-firm-marketing-online/#comments Tue, 02 Mar 2010 21:46:15 +0000 Larry Smith http://www.bulletproofblog.com/?p=2232 The top six social media tips to know before you leave the office.

In today’s digitally-dominated marketplace, where 93 percent of Americans feel that a strong social media presence is essential to top-notch customer service, companies across all industries are wrestling with how to best infuse marketing and public relations efforts with fresh online approaches.

In the legal services industry, engaging with key constituencies via social media platforms provides powerful thought leadership opportunities; alerts firms to client crises at the earliest possible point; and virally disseminates marketing messages in real time.

Clients today are demanding that their law firms “partner” with them in increasingly closer business. Not just legal, relationships. The social media represent an important way to begin such relationships.

In this week’s Six @ Six, we outline how law firms can best leverage today’s online tools. Are you using social media to promote your firm online? Share your success stories on Twitter at @Levick.

1. Monitoring

Digital media monitoring provides lawyers with a heads-up on public and professional perceptions before they are reported by the legal press, which itself increasingly relies on the Internet for story ideas and substantive insights. The advantage for savvy firms is twofold. First, attorneys are immediately apprised of any public commentary or development that exposes their clients. Second, by participating wherever appropriate in the social media space, lawyers become go-to sources for reporters as well as experts sought after by sophisticated online readers. Firms can always use free social searches on Google or Bing, but a number of paid subscription tools, such as Radian6, Techrigy, and Filtrbox, make it easy to monitor coverage of multiple issues and identify trends.

2. Online Advertising

Certain social media and online marketing tactics may seem too esoteric, but most are actually quite straightforward, user-friendly, and relatively inexpensive. As with traditional advertising, the online space offers opportunities galore to purchase ads that influence target audiences. Online advertising usually costs less and targets better than traditional advertising as the many plaintiffs’ firms – who already use digital tactics to recruit class members – have learned. Meanwhile, advertising on social networks provides unprecedented micro-targeting capabilities by utilizing the information network members post about themselves (e.g., geography, health conditions, occupations, etc.). At the same time, contextual banner ads can attract visitors to your efforts from sites publishing related news stories.

3. Social Media for Recruiting

Even in today’s job market, law firms are always looking for talent. There is no better way to attract the next generation than by focusing on the venues they live in: namely, social networks such as LinkedIn and Facebook. LinkedIn, the leading professional social networking site, makes it easy for job hunters to research open positions as well as firm profiles and relevant news. LinkedIn offers scalable options for advertising open positions. There is even a group for Legal Recruiters that your firm can engage to fine-tune searches. Facebook is another great recruiting medium. With more than 400 million active users, including hundreds of thousands of law students, Facebook has a nonpareil pool of candidates. Some law firms use this platform to establish Facebook groups, where young attorneys can connect and learn more about the benefits of working for a particular firm. Others use Facebook’s hyper-specific targeting capabilities to reach only those meeting certain criteria.

4. Social Media for Marketing

There’s no place like the social media for fostering relationships, expanding your network of contacts, and re-connecting with old colleagues or clients. LinkedIn, with more than 1 million members who self-identify as part of the legal profession, makes it easy to enhance traditional relationship-building efforts. LinkedIn also allows for greater reputational control by enabling firms and individual lawyers to publicize areas of specialty, awards and honors, and professional endorsements. Pay particular attention to setting up and customizing a company profile on the site, as those seeking to connect with your employees will usually click to learn more about the firm. You can easily incorporate your firm description, logo, specialties, location, and link your website or blog.

5. Social Media for Thought Leadership

While many law firms share legitimate concerns about proactively pushing out content via blogs or Twitter, careful and deliberate activity in this space can still provide great opportunities to showcase expertise. You needn’t discuss your current or past cases. Instead, consider using Twitter to send messages explaining the implications of a new ruling or tips for how to avoid potential legal problems. Fulbright & Jaworski LLP has amassed hundreds of followers on Twitter by sharing news about its awards and seminars as well as sharing legal insights. Blogs can be an even more powerful medium for lawyers to showcase expertise and publish online op-eds.  SCOTUSblog, published by Akin Gump, publishes commentary on recent rulings that non-lawyers, including clients and prospects, can understand.

6. Search Engine Optimization (SEO)

So prospects can find your firm sooner rather than later, be sure your website is fully optimized for search engines. Content should be formatted so that it is easily readable by Google, Yahoo, and Microsoft Bing. Even sophisticated legal service buyers turn to search engines to initially identify and research law firms. If you’re not a top listing, your competitors will be.  For successful SEO, focus on your firm’s niche areas of law. Start by building out detailed descriptions of each practice area, bulleting even the simplest tactics or areas of expertise and incorporating key terms (e.g., “top M&A attorneys” or “largest Washington, D.C. IP law firm”) as much as possible. Use additional content such as case studies to further highlight expertise and past success. Specific client names are not as important as information for diverse industries, practice areas, and scenarios important to legal service buyers. It really comes down to a repeated use of important key terms in key locations throughout each page.

Click here to receive Six @ Six in your inbox each week

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/03/02/six-six-6-tips-for-law-firm-marketing-online/feed/ 3 http://www.bulletproofblog.com/2010/03/01/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-nadine-hack-on-the-implications-of-corporate-spending-on-political-campaigns/ http://www.bulletproofblog.com/2010/03/01/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-nadine-hack-on-the-implications-of-corporate-spending-on-political-campaigns/#comments Mon, 01 Mar 2010 14:56:42 +0000 Larry Smith http://www.bulletproofblog.com/?p=2227 Each week, Bulletproof Blog™ features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, in the wake of the landmark U.S. Supreme Court decision on campaign spending by companies and other organizations, we interview Nadine B. Hack, the President and CEO of beCause Global Consulting, an international consulting firm that specializes in creating complex, multi-sector strategic alliances in a globalized world; reputation management in a socially-conscious society; and developing strong presences in new regions or market segments.

Ms. Hack is internationally recognized for her expertise in strategic planning, creative problem solving, insightful policy analysis, and politically sensitive negotiations – and has just been invited to be an Executive-in-Residence on Responsible Leadership and Corporate Social Responsibility at IMD. A savvy political insider who understands the myriad reputational implications of corporate campaign spending, Ms. Hack shared her insights on the recent Supreme Court decision with Bulletproof™:

How do you see the U.S. Supreme Court’s ruling in Citizens United v. FEC impacting the tone of political advertising during the 2010 election cycle?

Nadine Hack: I see the Supreme Court’s ruling in this case having the greatest impact on the independent expenditure groups – which also are known as 527s – that tend to be extremely partisan: most famously, MoveOn.org, on the left and the Swift Boat Veterans for Truth on the right. As such, the vitriolic messaging we’ve heard in past campaigns is likely to become even more caustic in coming election cycles.

Corporations likely won’t directly support specific candidate and issues – but they will support the 527s. A strong indication of that hypothesis can found by checking the U.S. Chamber of Commerce website. While the chamber was a major supporter of the decision for Citizens United in its case against the FEC, you won’t find a single word written about that at www.uschamber.com. You have to go to the Citizens United website to find quotes from the Chamber’s leadership extolling the virtues of the decision.

Individual companies will keep their distance from political campaigns in much the same way. They’ll channel their dollars through intermediaries with similar political goals – and do so for very good reason. While polls show that Americans say they despise negative advertising, they also demonstrate that negative advertising has a tremendous impact on electoral attitudes.

What are the most significant reputational liabilities that companies must consider before jumping headlong into political debates?

Nadine Hack: I think there are two key answers to this question. First, companies need to be very careful about supporting or opposing a specific candidate or issue because their consumer base is comprised of people who hail from all sides of the political spectrum. Michael Jordan was once asked why he never came out in support of Democratic candidates. His answer was simple.  He had made a lot of money through Nike endorsements and said, “Republicans buy sneakers too.” To me, his response crystallizes the idea that the political diversity of a company’s consumer base – whether for its goods or services – makes it not wise for private sector organizations to get involved in politics.

Second, with so many Americans feeling an economic pinch right now, lavish spending on political campaigns has the potential to alienate audiences across the board. When Michael Bloomberg ran for his third term as Mayor of New York City, he was predicted to win by a landslide because, with $90 million, he outspent his opponent by 14 to 1. The election turned out to be closer than anyone imagined – and when looking at the exit polls, a major reason why was the anger voters felt over the amount of money spent on the campaign.

With such public anger over the disproportionate resources that wealthy individuals and corporations have at their fingertips – which is manifested in calls to curb executive compensation and impose strict financial regulation – big corporate spending on political campaigns has the potential to draw attention to a company for all the wrong reasons.

How can companies best mitigate the risks that accompany political activism?

Nadine Hack: The best way to mitigate those risks is to avoid entering the political fray for now. Unless the corporate messaging is incredibly thoughtful, well-modulated, and so strongly-balanced that it doesn’t alienate anyone, I just don’t see it working in this polarized political environment.

There’s been an evolution in how America views corporations that has been underway for 200 years. With this ruling, companies have now come closer than ever before to being awarded the same rights as individual citizens. With legislation seeking to reverse the Supreme Court’s decision already making its way through Congress, Corporate America doesn’t want to make it easier for legislators to strip these newly-created and highly-controversial rights to political free speech. Given the market and societal risks at play, companies are best advised to tread lightly in 2010.

Click here to receive the Bulletproof Interview in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/03/01/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-nadine-hack-on-the-implications-of-corporate-spending-on-political-campaigns/feed/ 0 http://www.bulletproofblog.com/2010/02/26/this-month-in-high-stakes-%e2%80%93-the-2010-proxy-season/ http://www.bulletproofblog.com/2010/02/26/this-month-in-high-stakes-%e2%80%93-the-2010-proxy-season/#comments Fri, 26 Feb 2010 14:15:15 +0000 Larry Smith http://www.bulletproofblog.com/?p=2213 rules issued by the U.S. Securities and Exchange Commission (SEC) have set a new standard of transparency and accountability for the 2010 proxy season. But with investor confidence still reeling from global financial meltdown, the foremost challenge for public companies as annual meetings begin isn’t simple compliance; it is finding ways to go above and beyond what is required in order to articulate leadership at a time of drastic change.

In this month’s edition of Levick’s High Stakes™ e-newsletter, we outline how best to tackle the issues most likely to generate investor concerns during the 2010 proxy season and how best to prepare for SEC and congressional actions in 2011.

Of particular interest, this issue of High Stakes™ features an in-depth interview with top corporate governance expert Todd Lang of Weil, Gotshal & Manges LLP as well as a look at the best blogs covering proxy issues.

I invite all of you to check it out.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation’s top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.]]> http://www.bulletproofblog.com/2010/02/26/this-month-in-high-stakes-%e2%80%93-the-2010-proxy-season/feed/ 0 http://www.bulletproofblog.com/2010/02/23/big-business-can-always-benefit-from-a-small-business-mindset/ http://www.bulletproofblog.com/2010/02/23/big-business-can-always-benefit-from-a-small-business-mindset/#comments Tue, 23 Feb 2010 17:46:17 +0000 Larry Smith http://www.bulletproofblog.com/?p=2192 Zogby poll released last week show that public confidence in corporations, big banks, and Wall Street remains even lower than the confidence currently reposed in big government.

In a survey of 2,525 likely voters conducted in late January and early February, only 38 percent, 33 percent, and 31 percent of respondents reported high to moderate levels of confidence in corporations, national and regional banks, and Wall Street, respectively. To put those numbers in perspective, 41 percent of respondents reported such levels of confidence in the federal government – even as congressional and presidential approval ratings hover at unusually low levels.

Conversely, small businesses and local banks earned high marks in the study – with 83 and 73 percent of respondents reporting high to moderate levels of confidence, respectively.

What is it that small businesses have that big businesses don’t?

On the one hand, it’s well-nigh impossible to vilify or blame small businesses for the ills of the current marketplace. They cannot and do not act en masse in ways that endanger whole shareholder populations. Small business owners may be as crooked as anyone else, but the effects are localized. There is no negative “face” of small business a la Bernie Madoff.  If anything, small businesses and their employees are seen as the victims of global financial collapse and the ensuing credit crunch.   

But the ethos of small business is also built into the very fabric of the American character. Certain virtues are instinctively associated with this ethos: focus on customers, abiding concern with personal reputation, healthy energy and healthy ambition, and a connection to community at the most basic levels.

Historically, big businesses only benefit from a conscious and publicly conspicuous commitment to such values. Think Dean Witter earning money “the old-fashioned way, one investor at a time.” Think the paternalistic culture of J.C. Penney, internally protective and externally credible. They were Goliaths who adopted the moral syntax of David.

In light of the Zogby poll, big businesses might do well to consider strategy and training programs designed to identify a persistent laundry list of small business values – and, in the process, challenge managers at every level to identify how, size notwithstanding, companies can borrow some of that luster for their own.    

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/02/23/big-business-can-always-benefit-from-a-small-business-mindset/feed/ 1 http://www.bulletproofblog.com/2010/02/17/whats-next-the-plaintiffs-perspective-when-arbitration-clauses-are-unenforceable-multiple-claims-spell-class-action/ http://www.bulletproofblog.com/2010/02/17/whats-next-the-plaintiffs-perspective-when-arbitration-clauses-are-unenforceable-multiple-claims-spell-class-action/#comments Wed, 17 Feb 2010 14:07:05 +0000 Larry Smith http://www.bulletproofblog.com/?p=2154 In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Jonathan S. Selbin, who represents plaintiffs in a class action alleging that Dell shipped faulty laptops with defective cooling fans, power supplies, and other essential materials. At issue are the Inspiron 5160 and 1150 models sold between July 2004 and January 2005.

The case has particular relevance because it was dismissed by a district court in 2008 after Dell moved to compel individual arbitration. The company invoked a clause in its terms and conditions that requires all disputes to be "resolved exclusively and finally by binding arbitration administered by the National Arbitration Forum (NAF)." In February 2010, Judge Lyle Strom of the U.S. Court of Appeals for the Ninth Circuit reinstated the case.

Mr. Selbin is a partner at Lieff Cabraser Heimann & Bernstein, LLP, a national plaintiffs practice with offices in San Francisco, New York, and Nashville.

Why is this case a class action? What does the case say in terms of the utility and value of class actions, especially when the value of individual claims does not justify separate individual legal actions?

Jonathan Selbin: It is a class action because no individual with damages of $1200 or $1500 can afford to take on a big company like Dell in a lawsuit. That is especially true in a case like this that requires expert testimony. As a number of courts have explained over the years, no sane lawyer would ever take such a case.

What message does this case send in terms of jurisdiction to companies that do business throughout the world – or, as one blogger noted, that "some Texas laws do not cross state lines?"

Jonathan Selbin: In that regard, this case is nothing new at all. It has long been the reality that companies can be sued under the law of the states in which they do business. Doing such business is a privilege afforded corporations by states, and compliance with state law, especially including consumer protection law, is part of the deal.

If true as alleged, how might Dell’s effort to hide the problem with this product affect this case and/or public perceptions surrounding it?

Jonathan Selbin: Unfortunately, we have found over the years that, too often, corporations are not as forthcoming with consumers about problems or limitations of their products as they should be. Dell is no exception, but it is by no means unique in that regard.

No one is suggesting companies must provide consumers with a laundry list of every conceivable risk or downside, but a fair marketplace – where the seller gets a fair price for what he is selling and the consumer gets what she paid for – requires full disclosure of material information, and that is what consumer protection laws are supposed to encourage.

I have often thought that business schools ought to bring in plaintiff lawyers to teach a class on this issue.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.]]> http://www.bulletproofblog.com/2010/02/17/whats-next-the-plaintiffs-perspective-when-arbitration-clauses-are-unenforceable-multiple-claims-spell-class-action/feed/ 1 http://www.bulletproofblog.com/2010/02/10/whats-next-the-plaintiffs-perspective-post-claim-underwriting-the-worst-way-to-employ-a-controversial-practice/ http://www.bulletproofblog.com/2010/02/10/whats-next-the-plaintiffs-perspective-post-claim-underwriting-the-worst-way-to-employ-a-controversial-practice/#comments Wed, 10 Feb 2010 18:32:20 +0000 Larry Smith http://www.bulletproofblog.com/?p=2112 In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Marc R. Levy of Levy, Morse & Wheeler, P.C. in Denver.

A lawyer who usually defends insurance companies, Mr. Levy recently won one of the largest plaintiff’s verdicts in Colorado history against Time Insurance (also known as Fortis and Assurant Health). In late January, a jury found for his client Jennifer Latham after the company refused to pay medical bills after she was severely injured in a 2005 auto collision.

Mr. Levy had asked for around $7 million in combined economic and punitive damages. The jury awarded $37 million.

Ms. Latham’s car had collided with a meth dealer who was fleeing the police in his car. Her insurance coverage was rescinded as a result of “post-claim underwriting,” in which the original policy application was reviewed for false or misleading representations that would allow for revocation even if that information were unrelated to the claim at hand.

Time Insurance has been depicted as “notorious” for post-claim underwriting. Is this case therefore anomalous or does it have wider industry-wide repercussions?

Marc Levy: Post-claim underwriting is standard industry practice, although not uncontroversial. Congress has been investigating the practice for a few years now and the topic is naturally hotter today because of the current healthcare debate. Henry Waxman has led the chorus of inquiry, but he’s had considerable bipartisan support on this issue.

Yet this lawsuit is not exactly about the practice itself. In the case of Time Insurance, the company rescinds coverage without disclosure to the insureds. There is no prior open inquiry. The policy is simply rescinded and the burden of proof then falls on the insureds to show why they deserve to have it restored.

So the first message to the industry is that it ought to be prepared to publicly justify the whole practice of post-claim underwriting because the pressure on them to do so will only increase. So far their justifications have been pretty lame: mainly that they don’t pull medical records before issuing the policy because it is too expensive to do so.

But the more specific take-away from this particular case is that, to the extent that they do continue this practice, they must do so fairly and openly. These preemptive strikes of theirs will not stand, as this immense judgment shows.

Are you concerned about award reductions on appeal?

Mark Levy: Colorado is a tort reform state, so there will be some reduction. But it will not be by as much as one-third.

Will Time Insurance be able to change how it does business, or is post-claim underwriting too much an ingrained part of its business model?

It will be very difficult for the company to change because this is their business model. So I’m guessing they’re reassuring themselves that it was only an aberrant verdict.

Does the verdict reflect a deep hostility toward the insurance industry? If you were an insurance company, what would you do about that?

Mark Levy: Yes, it does reflect a distrust of the industry. That said, as a lawyer who does usually defend that industry, insurance companies can still win in courts of law and courts of public opinion by finding the right story and telling it well.

What happened here was that the defendant did not adjust its story to fit the facts of the case. The case was defended with the same template that would typically be used to defend typical accidents under more commonplace circumstances. But Jennifer Latham is a mother of four who was grievously injured by a drug dealer running away from the police….Hardly typical or commonplace.

Should the fact that you normally defend insurance companies have sent an additional warning to this insurance company that the allegations here might be unusually hard to defend?

Mark Levy: Yes, I would indeed say that that is another fact to which the defense strategy was inadequately attuned.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/02/10/whats-next-the-plaintiffs-perspective-post-claim-underwriting-the-worst-way-to-employ-a-controversial-practice/feed/ 1 http://www.bulletproofblog.com/2010/02/03/whats-next-the-plaintiffs-perspective-title-insurers-face-new-rico-exposure/ http://www.bulletproofblog.com/2010/02/03/whats-next-the-plaintiffs-perspective-title-insurers-face-new-rico-exposure/#comments Wed, 03 Feb 2010 18:27:03 +0000 Larry Smith http://www.bulletproofblog.com/?p=2043 In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Daniel Harris of The Law Offices of Daniel Harris in Chicago and Ann Miller of Ann Miller, LLC in Philadelphia, two of the lawyers representing plaintiffs in Coleman v. Commonwealth Land Title Insurance Co.

In late January, 2010 U.S. District Judge Joel H. Slomsky refused to dismiss class action RICO consumer suits alleging that defendants overcharged for title insurance by willfully ignoring mandated discounts. There have been numerous similar complaints in recent years, but this litigation marks the first time a court expressly affirmed that RICO claims are supportable in such cases.

Does this case make new law insofar as the agents and the insurers are being treated as distinct from one another, which is what the RICO statute requires? I don’t believe there was precedent for that with respect to the insurance industry.

Daniel Harris: This case neither makes new law nor does it expand existing law. The court’s decision simply follows existing law. Agents may be empowered to write coverage on behalf of the insurer, but they’re agents – not employees, as the Judge noted. They’re separate entities in an association-in-fact between insurers and title agents.

You’d have to ask the insurers what they think about the effects of this RICO dimension on their business and if it represents a developing industry-wide problem. I’d only emphasize that Judge Slomsky clearly said that we satisfied the minimum 'person' and 'enterprise' distinctiveness requirement.

Ann Miller: This case is about the systematic and willful overcharging of consumers and, therefore, exactly the sort of behavior that the civil RICO statute is meant to deal with. The defendants should be spending more time worrying about what they’ve done wrong, and how to rectify it in the future, rather than quibbling over technicalities. Theirs is a guilty man’s argument.

The actual cause of action was failure to disclose discount entitlements. Would such disclosure requirements impose a new burden on businesses to ensure that customers are fully aware of any discounts to which they might be entitled?

Ann Miller: What’s key here is that, under Pennsylvania law, title insurance rates are governed by a statute passed in August 2005 that calls for a 10 percent "reissue rate" discount under specific circumstances. It’s not as if the title insurance companies were offering some sort of a blue plate special and the waitress forgot to mention it. These title insurance discounts are part of the actual regulated cost.

Daniel Harris: It’s similar to how Medicare is set up, for example, where there may be a discounted price based on a particular schedule. People have gone to jail for willfully ignoring those discounts.

How would you sum up the message that this case sends to the title insurance industry?

Daniel Harris: Let me answer that in this way. The title insurance industry is part of the mortgage industry, which in recent years has been reckless, irresponsible, and lawless. The message is that we will continue to pursue these and other such causes of action until they start behaving prudently, responsibility, and lawfully.

Ann Miller: The problem with sending them a message is that they don’t usually hear it. They get sued and sued and still don’t change. You wonder what it takes, when litigation is apparently just a cost of doing business to them.

Click here to receive the Plaintiff's Perspective in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

]]> http://www.bulletproofblog.com/2010/02/03/whats-next-the-plaintiffs-perspective-title-insurers-face-new-rico-exposure/feed/ 0 http://www.bulletproofblog.com/2010/02/01/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-glenn-tyranski-on-the-compliance-challenges-of-being-listed-on-the-new-york-stock-exchange/ http://www.bulletproofblog.com/2010/02/01/what%e2%80%99s-next-the-bulletproof-interview-%e2%80%93-glenn-tyranski-on-the-compliance-challenges-of-being-listed-on-the-new-york-stock-exchange/#comments Mon, 01 Feb 2010 15:03:35 +0000 Larry Smith http://www.bulletproofblog.com/?p=2017 Each week, Bulletproof Blog features exclusive interviews with thought leaders on issues of critical importance to companies and countries. This week, as public companies continue to deal with the effects of the global financial crisis, we interview Glenn Tyranski, Senior Vice President for Financial Compliance at the New York Stock Exchange (NYSE), who is responsible for the financial reviews of prospective and existing listed companies.

As an expert in the financial standards that NYSE listed companies must meet, Mr. Tyranski shared his insights on NYSE compliance with Bulletproof™:

Tell us about your role at the New York Stock Exchange. How does financial compliance and oversight impact companies listed on the exchange?

Glenn Tyranski: The NYSE has a series of standards that companies must maintain once they are listed. We have both financial standards and corporate governance standards.

We work with the senior executives of the companies, their outside advisors, and other regulatory bodies in performing our oversight responsibilities both in their initial listing on the NYSE and then their continued listing.

Companies value their NYSE listing and we recognize the power of that brand and the public's perception of what it means to be listed on the NYSE.  We serve investors by ensuring that only those companies qualified to list on the NYSE are first admitted and then only those in compliance or otherwise working through our compliance process remain listed.

When a company faces delisting from the NYSE, how do you evaluate a company’s ability to get back to minimum levels? Are there non-financial metrics that play into the exchange’s decision?

Glenn Tyranski: We have a series of quantitative continued listing standards that companies must maintain. These standards involve minimum share price, market capitalization, and, in certain cases, stockholders' equity and revenues depending on the original listing standard under which the company was first admitted.

Additionally, we have a series of qualitative assessments that are made based on information disclosed by companies in their periodic Securities and Exchange Commission (SEC) filings as well as in their news releases. These qualitative assessments include but are not limited to matters involving liquidity concerns, audit opinions, reduction in operating assets, bankruptcy or liquidation, abnormally low selling price, authoritative advice that a security is without value, unsatisfactory financial conditions, public policy concerns, disclosure deficiencies and governance matters.

We have the ability to monitor and screen the entire NYSE listed company base on a daily basis against quantitative metrics, and we are also sensitive to corporate disclosures of a qualitative nature. When companies reach certain financial levels, they are provided an early-warning notice describing what the standards are and how they operate if noncompliance is triggered in the future. We regularly dialogue with companies as a result of their corporate disclosures in order for us to properly assess the impact of the information released. While the NYSE can remove a company at any time when investor protection is a risk, for the most part, companies are provided a recovery period of anywhere from six months to 18 months to regain compliance.

Companies are asked to respond in writing and will often visit to present their recovery plans.  These recovery plans are often a mix of operational and strategic initiatives and involve budgeting, financing, capital raising, risk analyses, investor and shareholder communication plans, and possible acquisition and disposal activities.

Our involvement is often with the executives of the companies but will also involve board members and company advisors from the financial, legal, and investor relations departments.  Engaged board members along with the assistance of quality outside advisors, if necessary, will help shape a company's recovery efforts. Well crafted internal compliance oversight and risk assessment activities will also assist a company in restoring its NYSE compliance. The NYSE will work through the recovery plan with the company and if the plan is accepted by the NYSE, the company will be monitored closely against the milestones and goals outlined in its materials. If the company is able to accomplish its strategic and operational initiatives and see a restoration of their share price, market capitalization, or other measurements, then the company will be deemed to be back in compliance no later than the end of the prescribed plan period.

In your estimation, what were the top issues affecting public companies in 2009? Do you see these issues having the same impact in 2010?

Glenn Tyranski: Clearly, we have been living through challenging if not unprecedented times over the last 22 months. The NYSE's listed company community, while not immune to these difficult times, has remained steadfast. While we have experienced higher than historical rates of noncompliance during these turbulent times, the overall quality of the NYSE list continues to exceed that of other global markets. Early 2009 gave witness to dramatic decreases in share prices and the resultant market capitalization of many companies along with numerous going-concern issues often raised by distressed-debt situations and substantial write-offs and impairments. The professional care and due diligence performed by the NYSE's financial compliance staff assisted companies through these difficult periods while providing regulatory oversight to maintain the integrity of the NYSE's list.

As we begin 2010, we have continued to see the overall relative improvement in share price and market capitalization levels as compared to the depths of last March with a cautious and perhaps fragile confidence continuing to develop. While many challenges remain for companies to return to their previous positions in the capital markets, the NYSE recognizes the value of its brand to the companies themselves and to the investing public and remains vigilant in its oversight responsibilities.

Click here to receive the Bulletproof Interview in your inbox each week.

Larry Smith is Senior Vice President of Levick Strategic Communications, the nation's top crisis communications firm, and a contributing author to Bulletproof Blog. Connect with Levick on Twitter: @Levick.

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