Green building is gaining momentum as a construction trend with widespread benefits, from environmental efficiency and resource conservation to human health and lifestyle improvement.  Several government entities have reacted to the green building movement, creating national and local standards and monetary incentives for developers to create green buildings.  In representing developers and others associated with green building, attorneys should consider how to contractually plan for risks that may not otherwise arise in ordinary development projects.I. What is “Green Building”?Green buildings are “designed, built, operated, renovated, and disposed of using ecological principles for the purpose of promoting occupant health and resource efficiency plus minimizing the impacts of the built environment on the natural environment.”[1]  The costs of green building as compared to ordinary construction are debatable.  One 2001 study found that green buildings cost “ten to fifteen percent more” than conventional buildings.[2]  To the contrary, a 2003 study found that green buildings incorporate less than a two percent premium on conventional buildings.[3]  Despite the costs, many developers think that green buildings enhance the occupant’s health and quality of life.[4]  Studies show that a building’s environment influences the productivity and performance of the building occupants and that connecting building occupants with the environment “reduces worker stress and improves overall psychological and emotional functioning.”[5]  It is predicted that eventually not only developers, but consumers themselves, will desire to live and work in green buildings because of such “health and lifestyle benefits.”[6]II. Government InitiativesThe momentum gained by the green building movement has not gone unnoticed by government entities, who have stepped to the forefront in promoting workable ways to construct green buildings.  The United States Green Building Council (“USGBC”) has created a Leadership in Energy and Environmental Design (“LEED”) Green Building Rating System.[7]  The LEED system “evaluates the design, construction, and operation of newly constructed or renovated buildings.”[8]  Additionally, it provides a “voluntary national standard” for green building.[9]  Following the initiative demonstrated by the USGBC, many states and cities have created their own standards and incentives for green building.For example, the City of Chicago has established a Green Permit Program though the Department of Constructions and Permits (“DCAP”).[10]  Application into the Green Permit Program requires meeting a series of green building certification requirements.[11]  For example, commercial projects must meet appropriate LEED certification levels, and residential projects “must meet or exceed EnergyStar requirements developed by the U.S. Environmental Protection Agency.”[12]  Additionally, green projects must incorporate certain DCAP “menu items,” such as a green roof, renewable energy, or extra affordability.[13]In addition to the environmental benefits, the Green Permit Program offers several incentives to developers.[14]  First, the Green Permit Program offers a shorter permit application and review process.[15]  Projects accepted into the Green Permit Program may receive permits “in as little as 15 business days.”[16]  Comparatively, ordinary permits issue in about four months.[17]  Second, developers of green projects can expect “cross-departmental coordination” among city departments responsible for reviewing the projects.[18]  Third, developers may receive fee waivers for services from green permit experts.[19]  For developers that are motivated by saving time and money, the quick issuance of a green permit and the savings from consulting green permit experts provide incentives to create green projects.  The costs savings of time and money may negate some of the purported premiums on green building, making it easier to rationalize costs of the bottom line against the added environmental and health benefits.III. Attorney ConcernsOne recent article lists several risks an attorney should consider in representing parties to green building projects.[20]  These risks include, among others, defining who is responsible for the green building process, ensuring adequate insurance coverage, and checking that green building techniques do not interfere with product warranties or intellectual property rights.[21]  In general, it seems that attorneys must ensure that contracts adequately and accurately document the obligations and responsibilities related to the green building process.In addition, attorneys must think about how novel issues raised by the green building process relate to an attorney’s traditional role in real estate development projects.  For one, an attorney should consider how green building projects relate to one’s ethical responsibilities as a lawyer.  For example, the Model Rules of Professional Conduct require that an attorney consult with the client about the means to achieve the client’s objectives.  It is therefore important that an attorney working with a developer discuss the green technologies and processes involved in the green building development so that an attorney can provide adequate representation.  Additionally, the Model Rules require an attorney to act with competence, or to act with the legal knowledge, skill, thoroughness and preparation reasonably necessary for representation.  Thus, an attorney should become familiar with the green building standards, permits, and processes in preparation for the representation.Another concern relates to representing a financial institution lending a construction loan for a green building project.  Conceivably, the lender will want to document how the green building construction processes and certifications relate to draw-downs on the construction loan.  The parties should discuss the green building process in detail, including what materials are to be used and when green certifications are to be obtained and by whom, to clearly and contractually establish guidelines for the lender to supervise how the green building process correlates to the money drawn-down to finance the project.  Ultimately the green building trend is bound to continue as it gains favor from developers and consumers alike.  In serving this trend, so long as developers and attorneys pay close attention to the unique concerns raised by green building projects, green buildings will provide positive benefits for all.[1] Charles J. Kibert, Green Buildings: An Overview of Progress, 19 J. LAND USE & ENVTL. L. 491, 491-92 (2004).[2] Stephen T. Del Percio, The Skyscraper, Green Design, & The LEED Green Building Rating System: The Creation of Uniform Sustainable Standards for the 21st Century or The Perpetuation of an Architectural Fiction?, 28 ENVIRONS ENVTL. L. & POL'Y J. 117, 133 (2004).[3] Id.[4] Id. at 136.[5] Id.[6] Darren A. Prum, Environmental Protection: What You Should Know About Green Building, 36 REAL EST. L. J. 239 (2007).[7] Del Percio, supra note 2 at 120.[8] J.R. Steele, Green Construction: Initiatives and Legal Issues Surrounding the Trend, BUS. L. TODAY, Nov./Dec. 2007, at 13.[9] Id.[10] Judith Nemes, Coloring the City Green, CHI. TRIBUNE, Nov. 4, 2007, available athttp://www.chicagotribune.com/classified/realestate/news/chi-cp-city_green_re_11-04nov04,0,3020579.story.[11] Green Permit Program Brocheure, http://www.cityofchicago.org/dcap (last visited Nov. 27, 2007).[12] Id.[13] Id.[14] Christopher P. Perzan, What You Should Know About Green Building, CBA REC., Nov. 2006, at 38, 42.[15] Id.[16] Green Permit Program Brocheure, supra note 11.[17] Nemes, supra note 10.[18] Perzan, supra note 14 at 42.[19] Nemes, supra note 10.[20] Steele, supra note 8 at 16.[21] Id.

Amongst the due diligence, negotiations, and deal making in crafting a merger between two companies, one issue that arises is what to name the new company.  A newly merged company’s choice of name may have much to do with how shareholders, customers, and other corporate constituents perceive the newly merged company.As one example of the importance of names, it has been previously estimated that among law firms “about half of the proposed mergers among equal-sized firms, with living, named partners, fail on the issue of firm name alone.”[1]  While this sounds drastic, choosing a name for a newly-merged company seems to have at least some bearing on the future business of the company.In some instances, changing names after a corporate transaction can be a positive signal to corporate workers and consumers.  After DaimlerChrysler sold its majority interest in Chrysler, Chrysler celebrated its return to its pre-merger name and its return to American ownership.[2]  It was expected that the name change and reintroduction of Chrysler’s pre-merger logo would be a “welcome change for the company and for the reputation of Chrysler’s name.”[3]  Yet, not all corporate transactions and resulting name changes have resulted in such a welcome change.In the same transaction that split Chrysler from DaimlerChrysler, the remaining Daimler contingent faced shareholder challenges to bring the “Benz” name back to Daimler.[4]  In the original merger between Daimler-Benz and Chrysler, “Daimler offered to drop the Benz hyphenate if Chrysler agreed to take a back seat in the name DaimlerChrysler.”[5]  With the Chrysler name now severed from Daimler, shareholders rallied to bring “Benz” back to Daimler, stating that “[r]einstating the name of one the company’s founding fathers would ‘constitute a certain degree of compensation for the many years of frustration for the employees, particularly in the traditional Benz plants.’”[6]  Thus, while the Chrysler contingent welcomes a return to American ownership and an identifiable American name, the Daimler shareholders express concern with not returning to the pre-merger name of Daimler-Benz.Deciding on a corporate name after a merger or similar transaction also can prove complicated to properly identify a company’s strongest businesses.  Consider the early 2001 merger of America Online, Inc. and Time Warner Inc.  America Online and Time Warner merged “the world’s most highly respected and valuable entertainment, news and Internet brands,” labeling the new company “AOL Time Warner Inc.”[7]  AOL Time Warner was expected to “lead the convergence of the media, entertainment, communications and Internet industries and provide wide-ranging, innovative benefits for consumers.”[8]  A few years later, the AOL Time Warner Board of Directors voted to rename the company “Time Warner Inc.”[9]  The new name was cited as one that “better reflects the portfolio of [the company’s] valuable businesses and ends any confusion between our corporate name and the America Online brand name.”[10]  Also notable, in the same press release describing the new name, the company describes itself as “the world’s leading media and entertainment company, whose businesses include filmed entertainment, interactive services, television networks, cable systems, publishing and music.”[11]  One might wonder why in the 2001 merger announcement, the internet services are promoted, yet the same services are downplayed if even existent in the 2003 description of the same company operating under a different name.  Some analysts attribute this move to Time Warner backing away from the America Online name and financial losses and to America Online’s need to prove itself to Time Warner in light of the changing internet landscape.[12]  Time Warner’s message in eliminating AOL from its company name could signal a shift away from viewing the internet business as an integral part of the corporation.[13]  It could also signal a shift toward severing AOL from the business of Time Warner, as analysts estimate that “Time Warner could realize more shareholder value if it were split up.”[14]To further complicate the name game, in 2006 Time Warner announced it would retire the “America Online” name and operate as “AOL.”[15]  The mission of America Online was to literally “[get] America online,” and that mission appears long since to have been accomplished.[16]  Thus, reflecting on the pattern of name changes in Time Warner, it appears that internet and entertainment businesses were once equally lucrative, and at some point the internet business was judged not truly indicative of the broader corporate portfolio of businesses and created confusion with the America Online brand name.  Regardless of the changes, it appears that Time Warner changed its name to highlight the value of its businesses over time.In contrast, consider Macy’s (formerly known as Federated Department Stores, Inc.) acquisition of May Company.  As part of the transaction, Macy’s changed the names of several regional department stores formerly operated by May Company.[17]  Depsite a statement that Macy's "carefully research[ed] customer preferences"[18], the name change had the effect of “alienating thousands of customers”[19] who dislike the newly-named store and remain loyal to the previous branded department store.  Unlike Time Warner, who appeared sensitive to customers’ and analysts’ perception of the America Online name and its internet business, Macy’s alienated customers merely by changing the name of its businesses.  While part of the merger process appears to rely on synergy of the merging companies, it seems that the names chosen may have much to do with the way the newly combined company is perceived.Ultimately, the name of a newly merged company is just one of several terms to negotiate in the merger process.  However, companies should take note that the names they choose may have a significant impact on corporate and customer image and branding.[1] Mary Ann Altman, Law Firm Mergers, PRAC. LAW INST. Order No. A4-4242 (Oct. 17, 1988).[2] Nick Bunkley, With Sale, Chrysler’s Identity is Simplified, NY TIMES, Aug. 4, 2007, available athttp://www.nytimes.com/2007/08/04/business/04auto.html?_r=1&oref=slogin.[3] Id.[4] Mark Landler, From Now On, It’s Just Plain Daimler, NY TIMES, Oct. 5, 2007, available athttp://query.nytimes.com/gst/fullpage.html?res=9C02E3D8133EF936A35753C1A9619C8B63.[5] Id.[6] Id.[7] Press Release, TimeWarner, America Online and Time Warner Complete Merger to Create AOL Time Warner (Jan. 11, 2001), available athttp://www.timewarner.com/corp/newsroom/pr/0,20812,668364,00.html.[8] Id.[9] Press Release, TimeWarner, AOL Time Warner to Rename Company “Time Warner” (Sept. 18, 2003), available at http://www.timewarner.com/corp/newsroom/pr/0,20812,670030,00.html.[10] Id.[11] Id.[12] See, e.g, Louise Story, Moving Downtown: AOL Seeks New Image, NY TIMES, Sept. 18, 2007,available at http://www.nytimes.com/2007/09/18/business/media/18adco.html.[13] Id. [14] Id.[15] Press Release, TimeWarner, America Online Changes its Name to AOL (Apr. 3, 2006), available athttp://www.timewarner.com/corp/newsroom/pr/0,20812,1179447,00.html.[16] Id.[17] Press Release, Macy's, Inc., Federated Announces Strategic Decisions to Integrate May Company Acquisition; Company to Focus on Building the Macy's and Bloomingdale's Brands While Increasing Profitability (Sept. 20, 2005), available at http://phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-newsArticle&ID=758787&highlight==.[18] Id.[19] Michael Barbaro, Macy’s and Hilfiger Strike Exclusive Deal, NY TIMES, Oct. 26, 2007, available athttp://www.nytimes.com/2007/10/26/business/26retail.html?_r=1&oref=slogin.

Healthcare mergers are topping headlines as what the Economist calls “meandering giants.”[1]  Most recently, CVS Corp. acquired Caremark Rx Inc. in a $26 billion acquisition agreement.[2]  Some wonder whether these mergers will lead to a “meandering giant syndrome,” where companies that grow too much may “stifle innovative culture that smaller companies tend to have,” leading to loss of corporate identity and employee enthusiasm.[3]  In other words, the Economist seems to be questioning whether the merger of major companies in the healthcare industry has a contemplated direction, or whether the pharmaceutical giants are “meandering” towards a possible corporate detriment.  As a proposed answer to the Economist’s question, I suggest that the pharmaceutical giants are lining up as merged entities to take advantage of the economies of scale, rather than meandering aimlessly. The Economist points to a number of factors underlying the merger of pharmaceutical giants.  The research costs of new drugs are a major factor, as “the number of drugs approved has fallen by half in the past seven years as the cost of developing them has doubled.”[4]  Also, “scale helps in developing novel drugs.”[5]  Several smaller, previously independent pharmaceutical firms recently realized this through their mergers into larger firms, and more mergers of this type are likely on the way.[6]  The latest factor, present in the CVS-Caremark merger, involves consolidating pharmacy benefit management (PBM) and drug store chains, resulting in an increased ability to negotiate lower drug prices for consumers.[7] To better explain the CVS-Caremark merger, each company previously occupied a unique niche in the pharmaceutical industry.  Caremark “buys directly from manufacturers and distributes drugs . . . by mail order.”[8]  CVS “operates nearly 5,400 retail stores with pharmacies.”[9]  As a merged entity, CVS and Caremark eliminate a substantial middle step of negotiations and sales between the company buying direct from the manufacturer and the company selling directly to consumers. Considering the Economist factors and the CVS-Caremark merger together, the CVS-Caremark merger sheds some doubt on the Economist’s presentation of pharmaceutical mergers as “meandering.”  If one looks solely to costs and scale, it makes sense that a larger company has more resources to invest in research and development of a variety of new drugs, thereby running the risk of “meandering giants.”  Taking these two factors in isolation, pharmaceutical giants are free to meander all they want, freely acquiring other companies within their industry niche until the giants possess competing medicine cabinets housing the next potential miracle drugs but stifle corporate innovation, identity, and enthusiasm.[10]  Yet, the CVS-Caremark merger takes meandering out the picture by introducing a type of vertical integration that has the potential to change the entire pharmaceutical industry.If Caremark wanted to meander, it had more than ample opportunity to do so.  PBM competitor Express Scripts Inc. also expressed an interest in acquiring Caremark prior to finalization of the CVS-Caremark deal.[11]  A deal between Caremark and Express Scripts would have resulted in a combination two of the top PBMs – or a horizontal integration deal.[12]  Yet, Caremark’s “refusal to permit confirmatory due diligence by Express Scripts”[13] appears to send a clear message that Caremark was not interested in a horizontal integration deal.When asked whether Express Scripts would pursue a vertical integration deal after its horizontal integration bid for Caremark was rejected, Express Scripts’ chief executive commented that he is having “a hard time seeing a vertical model that makes sense.”[14]  Yet, with CVS and Caremark eliminating the middleman between purchasers from drug manufacturers and suppliers to consumers, it is difficult to see why the CVS-Caremark model wouldn’t make sense, especially when one considers the likely benefits to individual and corporate consumers of pharmaceuticals and benefits plans.  Others in the pharmaceutical industry seem to realize these benefits.  Walgreens announced it had “a certain amount of trepidation about the merger” and is building from within to create a drug-benefits business called Walgreen Health Services.[15]  While Express Scripts may still be reeling from rejection of its offer and from the benefits one of its key horizontal competitors may now be able to offer consumers, other pharmaceutical giants are taking note of the deal by increasing their ability to compete with the comprehensive line of services CVS-Caremark will offer.In conclusion, the reason we should care about “meandering giants” is because, contrary to what theEconomist suggests, these pharmaceutical giants are not meandering at all.  Instead, the giants appear to be engaging in carefully calculated moves of vertical integration.  If the giants were meandering, we would expect to see more horizontal integration mergers which combine resources of multiple companies to better cover the increased research and development costs.  However, the CVS-Caremark deal introduces vertical integration, which shows that the giants are not meandering, but engaging in an industry changing merger practice.[1] Health-Care Mergers: Meandering Giants, ECONOMIST, Mar. 24, 2007 at ? (hereinafter “Meandering Giants”).[2] Associated Press, Caremark Deal Complete; Name Changes, CHI. TRIB., Mar. 23, 2007 at 2.[3] Meandering Giants, supra note 1.[4] Id.[5] Id.[6] Id. (noting that “Switzerland’s Serono and Germany’s Schering, Altana and Schwarz were all sold in 2006” and that “Britain’s Astra Zeneca and America’s Wyeth and Bristol-Myers Squibb” may be the next targets for larger, acquiring firms).[7] Id.[8] Louise Escola, Caremark Shareholders Approve $27 Billion CVS Bid, BUS. INS., Mar. 19, 2007, at 4. [9] Id.[10] See supra note 3.[11] CVS/Caremark Complete Merger, INVESTREND, Mar. 23, 2007 (page unavailable).[12] Mary Jo Feldstein, Express Scripts’ Future, ST. LOUIS POST-DISPATCH, Mar. 23, 2007 (page unavailable).[13] Express Scripts Declares Current Offer to Acquire Caremark “Best and Only” Offer without Confirmatory Due Diligence, LIFE SCIENCE WEEKLY, Mar. 27, 2007, at 418.[15] Feldstein, supra note 12.[16] Monee Fields-White, Coming Up Fast on Walgreen’s Trail: CVS Takeover of Caremark is Another Challenge for Company, CRAIN’S CHI. BUS., Mar. 19, 2007, at 4.

SIRIUS Satellite Radio and XM Satellite Radio announced plans for a “tax-free, all-stock merger of equals” in which XM shareholders will receive 4.6 shares of SIRIUS common stock per 1 share of XM stock owned.[1]  The planned merger has raised eyebrows as to whether the Federal Communications Commission (FCC) will approve the combination, particularly as under a current FCC rule SIRIUS and XM are prohibited from acquiring each other’s licenses.[2]  Based on this FCC rule, one has to wonder whether this is termed a “merger of equals,” despite what looks like an acquisition of XM by SIRIUS, to evade harsher FCC scrutiny.I.  Terms of the Merger... of “Equals”?Although termed a “merger of equals,” this transaction appears to fit the model of an acquisition of XM by SIRIUS.[3]  For one, XM shareholders will receive a certain amount of SIRIUS stock in exchange for their XM shares[4].  Second, XM shareholders will receive a 22% premium on that share transaction[5], resembling the price of a control premium in an acquisition.  Third, SIRIUS’s Chief Executive Officer, Mel Karmazin, will lead the combined entity as CEO, but XM’s CEO, Hugh Panero, “will not have an executive role” in the new entity[6].The rationale for the terminology “merger of equals” may have to do with the current FCC satellite radio licensing rule.  In 1997, the FCC granted only two licenses and, as a measure to ensure ongoing competition, “stipulated that one of the holders would ‘not be permitted to acquire control of the other.’”[7].  Thus, the FCC stipulation suggests that the rule would only apply if either SIRIUS acquired XM, or vice-versa, but not if the two companies merged “equally.”II.  FCC ReactionIn reaction to the SIRIUS-XM merger announcement, FCC Chairman Kevin J. Martin responded that to pass regulatory scrutiny the companies “would need to demonstrate that consumers would clearly be better off with both [i] more choice and [ii] affordable prices.”[8]  Whether this is a merger of equals or a disguised acquisition, the FCC will consider these factors in its regulatory review.A.  More ChoiceThere are two possible angles from which one can consider whether a SIRIUS-XM combination will provide consumers with more choice.  The first is to consider whether the combined entity will offer greater programming choices to consumers than two separate entities.  The second is to consider whether the combined entity will offer more choice to consumers in general, taking into account other radio media sources.SIRIUS and XM impliedly advocate for the first angle.  SIRIUS and XM claim that their combination will provide consumers with a “broader selection of content, including a wide range of commercial-free music channels, exclusive and non-exclusive sports coverage, news, talk, and entertainment programming.”[9]The second angle would look to consumer choices in general.  Being that XM and SIRIUS are the only satellite radio providers[10], it seems as though consumers would have less choice with only one satellite radio provider instead of two.  However, the FCC could also look to a broader market of music providers, including “digital broadcast radio providers, wireless music services on mobile phones[,] and portable players such as iPods.”[11]  The problem with this argument, though, is that the broader market of “choice” exists with or without a SIRIUS-XM merger.  In other words, consumers already have the choice to listen to satellite radio or another musical source, regardless of whether there are one or two satellite radio providers.  Thus, whether the proposed merger will offer consumers more choice will turn upon whether SIRIUS and XM can deliver the broader radio content as promised.B.  Affordable PricesSIRIUS and XM describe how the merger will enhance financial performance[12], and one may think that such performance benefits will flow down to consumers.  SIRIUS and XM point to “better manag[ing] its costs through sales and marketing and subscriber acquisition efficiencies, satellite fleet synergies, combined R&D and other benefits from economies of scale.”[13]  However, one must also consider the immense costs currently faced by each company, as well as costs associated with the merger, which may affect consumer prices.  Both SIRIUS and XM currently need “to overcome their debt and depreciation costs.”[14]  In terms of merger costs, currently “XM radio receivers [cannot] receive signals from Sirius, and vice versa.”[15]  Although XM and SIRIUS are expending efforts to develop a receiver which would be compatible with both signals[16], one logically would not expect this development to be cost-free.  Another concern is that the presence of only one company in the market, rather than a pair of competitors, could give the merged entity “more pricing power as the only U.S. satellite radio provider.”[17]  Thus, while a merger may enhance financial performance, it is not clearly evident that the resulting benefits would overcome the costs currently borne by each company individually and the costs incurred to implement the merger.III.  Predicted OutcomeThis is likely to be a difficult challenge for SIRIUS and XM.  The FCC’s concerns about choice and affordable prices indicate standards against which the FCC may modify the rule if it does not see this as a merger of equals.  However, one should not discount the current FCC rule against one satellite radio provider’s acquisition of the other’s license.  In other words, before the FCC even considers choice and affordable prices, it should look to whether the “merger of equals” is really what it purports to be, or whether the combination is a linguistic loophole to the rule against acquiring a competitor’s broadcasting license.  All in all, even if the FCC accepts the proposed transaction as a “merger of equals” rather than as an acquisition of XM by SIRIUS, it is not clear that the transaction would result in more choice and affordable prices for consumers, leading one to question the practicable viability of the transaction.[1] Press Release, SIRIUS Satellite Radio, SIRIUS and XM to Combine in $13 Billion Merger of Equals (Feb. 19, 2007), available at http://investor.sirius.com/ReleaseDetail.cfm?ReleaseID=230306.[2] Satellite Radio Deal Puts Focus on Regulators, N.Y. TIMES, Feb. 20, 2007, available athttp://dealbook.blogs.nytimes.com/2007/02/20/satellite-radio-deal-puts-focus-on-regulators/.[3] Phil Mintz, The XM-Sirius Deal May Not Fly, BUSINESS WEEK ONLINE, Feb. 20, 2007 (page unavailable on Westlaw).[4] Id.[5] Id.[6] Id.[7] Joseph Menn and David Colker, Satellite Radio Competitors Agree to Merge, L.A. TIMES, Feb. 20, 2007 at Business 1 (emphasis added).[8] Editorial, Radio Daze: XM and Sirius, the Nation’s Two Satellite Radio Providers, Want to Merge.  The FCC Should Let Them, L.A. TIMES, Feb. 20, 2007, at 20 (emphasis added).[9] Press Release, SIRIUS Satellite Radio, supra note 1.[10] Menn and Colker, supra note 7.[11] Id.[12] See Press Release, SIRIUS Satellite Radio, supra note 1.[13] Id.[14] Editorial, supra note 8.[15] Seth Sutel, Satellite Radio Rivals XM and Sirius Agree to Combination, CHICAGO TRIBUNE, Feb. 19, 2007, available at http://www.chicagotribune.com/news/local/michigan/chi-ap-mi-xmradio-sirius,1,2557495.story.[16] Id.[17] Id.

In a change from the ordinary politics of promoting the supremacy of one party platform over another, this past campaign season aspiring candidates promised bi-partisan cooperation on several key issues.  It is interesting to think, though, of what these candidates meant by “cooperation.”  Analogizing the promised cooperation to a legal partnership framework, candidates could be interpreted to have campaigned to form bi-partisan political partnerships under which they would owe fiduciary duties of loyalty and care to their political foes.  While cooperating under a duty of loyalty and care may sound appalling to the newly elected candidates, imposing legal-inspired fiduciary duties on political partnerships could benefit the American economic and political landscape. As a brief review of fiduciary duties, the Revised Uniform Partnership Act (RUPA) requires that a partner owes to the partnership and the other partners the duty of loyalty and the duty of care.[1]  The duty of care encompasses “refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.”[2]  The duty of loyalty includes an anti-theft provision, a prohibition against self-dealing, and a prohibition against competing against the partnership.[3]  In a revered opinion well-known to law students, Justice Cardozo described the standard of behavior for the duty of loyalty as “[n]ot honesty alone, but the punctilio of an honor the most sensitive.”[4] It is somewhat hard to believe that aspiring candidates envisioned serving the adverse party with the “punctilio of an honor the most sensitive.”  Additionally, in today’s world, without pointing to specific examples, the media highlights all sorts of “grossly negligent or reckless” conduct of well-known political figures, some who resign or are removed from office, and some who remain in office, with or without the disdain of the American public.  Alas, when we think of those bad apples who have gone astray in their political dealings, we doubt that political figures can cooperate with care and loyalty toward each other when they cannot refrain from their own acts of negligence or recklessness. Yet, all is not lost.  Shortly after the polls closed and the results were announced, prominent political leaders met and reaffirmed the spirit of bi-partisan cooperation echoed in campaigns throughout America.[5]   One leader stated “[w]e won’t agree on every issue . . . [but] we will do our very best to address big problems.”[6]  Another leader added that “we will work together – we being Republicans and Democrats, the president and the Congress – to solve the problems and make [Americans’] lives better, more secure and our country more safe.”[7]  Regardless of who these leaders are, or what parties they represent, the message is clear: political leaders want to work together to help America. This inspiring message, if put to use, could greatly benefit the American economy in terms of cooperating on issues such as social security, minimum wage, immigration, health care, and the war in Iraq.  What the message seems to lack at this point, however, are standards of conduct for this cooperation, which this article likens to the fiduciary duties imposed on legal partners. The duty of care, as applied to political partners, begins with one’s own actions and the reality of the political spotlight.  This duty encompasses the responsibility to refrain from grossly negligent or reckless conduct, intentional misconduct, and knowing violations of law.  Several political examples of breaches of this duty come to mind – lying under oath, breaking into an opposing party’s national headquarters, and violating campaign finance laws, to name a few.  Abidance by this duty, and the subsequent diminution of such breaches, would allow politicians, political parties, and cooperative alliances more time to focus on key issues and less time fighting corruption.  Although the duty of care begins with individual political behavior, the duty would serve political partnerships as a whole as a mechanism to regulate political conduct.   The duty of loyalty would require politicians to put aside their differences when serving a political partnership to solve looming problems such as social security.  Today’s working generation works without definite security that there will be anything left in the social security system to supplement their retirement.  With regards to issues like social security, there is no room for self-dealing or competing against the political partnership, because to do so would prolong the life of the issue until it is too late to make a positive difference.  Furthermore, on issues like social security, political figures are not only partners, but also could be viewed as directors of an American corporation, with the duty to do what is best for the shareholders of American citizenship. Yet, as either partners or directors, the accompanying fiduciary duties constrain politicians’ conduct to what is best for the country. Predictably, if politicians agreed to the complete scope of legal fiduciary duties they would have to sacrifice some degree of loyalty to their own party and set aside personal viewpoints on certain issues.  However, fiduciary duties in the political context are not expected to lead to complete agreement on all issues and are instead offered as a standard for political behavior in joint endeavors.  Indeed, it is the spirit of democracy, free speech, and open dialog that characterizes American politics.  Thus, as a last resort for particular issues, RUPA allows a partnership agreement to contractually restrict fiduciary duties provided that the agreement cannot eliminate the duty of loyalty or unreasonably reduce the duty of care.[8]  This would allow political cooperation on certain key issues, while reserving those hotly contested issues as categories that may be disputed without violating the duty of loyalty to the other party. As a final note, one might ask why imposing legal fiduciary duties would be more effective than other recourse, such as impeachment, media attention, and public condemnation.  First, while impeachment is a potential remedy, it is rarely used.  Second, political figures have suffered the effects of media attention and public condemnation for years, yet scandal persists.  As an alternative, fiduciary duties would constrain the need for impeachment, negative media attention, and public condemnation by imposing a standard of behavior that would preempt these ineffective constraints.  As a counterargument, fiduciary duties may lead to increased political litigation.  Yet, even the threat of judicial recourse for breach of the duty of care or loyalty may adequately deter reckless conduct or self-dealing.  At the very least, by recognizing the existence of the duties of care and loyalty, politicians know what is expected of them and consequently may not engage in behavior that would breach these duties. In summary, hopeful candidates recited campaign promises for bi-partisan cooperation.  After the election, American leaders then reaffirmed their intentions for such cooperation.  Yet, what is missing from this proposed cooperative equation is a standard of conduct.  To fill this void, bi-partisan political partnerships could model their behavior off the fiduciary duties of care and loyalty of legal partnerships to the benefit of the American society and economy.[1] REV. UNIF. PARTNERSHIP ACT §404(a) (1997).[2] Id. at §404(c).[3] D. Gordon Smith & Cynthia A. Williams, BUSINESS ORGANIZATIONS: CASES, PROBLEMS AND CASE STUDIES 74 (Aspen Publishers 2004).[4] Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928).[5] See Dana Bash, Ed Henry & John King, Bush, Dems Promise Cooperation as Senate Shifts, CNN.COM, Nov. 9, 2006, at http://www.cnn.com/2006/POLITICS/11/09/election.main/index.html.[6] Id.[7] Id.[8] REV. UNIF. PARTNERSHIP ACT, supra note 1 at §103.

Limited liability companies (LLCs) enjoy unique hybrid status as a “relatively new form of doing business that is created and defined by state law.”[1]  Though the LLC is “not formally characterized”[2] as either a partnership or a corporation, but as a hybrid entity, problems occur when precedent addresses partnerships or corporations, but not LLCs directly.  When the law fails to address LLCs specifically, judges and commentators analyze the law and determine whether an LLC should be grouped as a corporation or a partnership for a specific purpose.  For example, bankruptcy laws do not refer specifically to LLCs, yet LLCs can still be debtors or creditors.[3]  Generally speaking, “LLCs have been treated as corporations almost by default for bankruptcy purposes.”[4]  However, placing LLCs into default corporate categories may not always effectively serve the goals of an LLC.   In particular, this article addresses a current interpretive problem existing in the characterization of single-member LLCs for the purpose of determining whether the LLC may appear before a court without counsel.While default corporate categorizations may work for LLCs in bankruptcy proceedings, the imposition of corporate treatment on LLCs for other purposes may not adequately serve the goals of certain types of LLCs.  For one, it may not be practicable to require all LLCs to be treated as corporate-like entities for the purpose of court representation.  The general rule for corporate representation is that corporations, as “artificial entities, may only appear in court through an attorney.”[5]  Thus, any non-lawyer representing the corporation engages in “the unauthorized practice of law.”[6]  Courts have included LLCs within the group of artificial entities who may not be represented by a non-lawyer.[7]  The policy behind this requirement is that: [T]he conduct of litigation by a nonlawyer creates unusual burdens not only for the party he represents but as well for his adversaries and the court. The lay litigant frequently brings pleadings that are awkwardly drafted . . .  In addition to lacking the professional skills of a lawyer, the lay litigant lacks many of the attorney's ethical responsibilities, e.g., to avoid litigating unfounded or vexatious claims.[8] From the court’s perspective, the nonlawyer lacks the skills, knowledge, and style needed to aptly appear before the court.  This seems to be sending a message to businesses that if they want to organize as a limited liability company, they will be held to some of the same rules of business as corporations, including the requirement of appearing in court through professional counsel. However, is this really positive precedent for LLCs?  Larger hybrid entities, such as those organized as an LLC subsidiary under a parent corporation may not be affected by pro se rules, as any legal matters could be handled by the parents’ counsel.  Yet consider smaller, single-member LLCs that are not part of a larger corporate family.  In Collier v. Cobalt, LLC, a defendant lay person presented the court with a motion to appear on behalf of the co-defendant LLC, partly because the LLC could not afford an attorney.[9]  The defendant was the sole “employee, owner, and shareholder” of the LLC [10], and so presumably his self-representation would not adversely affect anyone’s interest but his own.  Nonetheless, the court denied the defendant LLC’s motion for pro se representation.[11]  Following the reasoning laid out by a bankruptcy court in In re ICLNDS Notes Acquisition, LLC, the Cobalt, LLCcourt did not seem to care whether the LLC was characterized as a partnership, corporation, or hybrid entity and held firm to the premise that “it may only appear in court through counsel.”[12]  The irony in the ruling, however, is that the court recognized “the apparent harshness of this rule in a situation such as that alleged here, i.e., where a legal entity consisting of a sole employee and shareholder is unable to afford counsel” but did nothing to shape its holding as to fit the realities of the case.[13] From one perspective, the court seems to be punishing the single-member, closely-held LLC for establishing itself as a legal entity.  Cobalt, LLC likely established itself under LLC form to enjoy limited liability and protect its sole owner from personal liability.  Yet due to lack of funds, the LLC was unable to defend itself in court, putting its sole owner in a likewise uncomfortable position.  Though the sole owner could be protected by limited liability, he could not protect the business itself if he could not afford the cost of legal counsel.  In this case, the sole owner did not have sufficient funds for his own representation either, yet he was allowed to remain in court pro se on his own behalf.[14]  From this point of view the sole owner may have been better off not establishing the LLC form, because at least then he would be able to represent his business in a court of law.  Yet, without the organizational establishment, the sole owner would be exposed to the personal liability that he sought to protect against in the first place.As the current message stands, courts are sending a clear message to LLCs that if they want to enjoy the benefits of the organizational form, they need to have sufficient funds on hand in case of legal controversies.  Another way to deal with this issue may be to carve out an exception for closely-held single-member LLCs to allow for pro se representation.  This would not be incongruent with current precedent; rather, it would remove from the category of corporations and other “artificial entities” single-member LLCs, which could be considered “individuals” who would be allowed self-representation.  Although it still would be in the best of the interest of the single-member LLC to seek more experienced, legal counsel in the event of a dispute, a carve out would enable closely-held businesses to retain both limited liability and the ability to appear in court if they could not afford legal counsel.  In any event, the impracticable result suggested by Cobalt, LLC demonstrates why grouping LLCs with corporations or partnerships for specific legal purposes may not always result in sensible outcomes.[1] In re ICLNDS Notes Acquisition, LLC, 259 B.R. 289, 292 (Bankr. N.D. Ohio 2001).[2] Id.[4] Nicholas Karambelas, LIMITED LIABILITY COMPANIES: LAW, PRACTICE AND FORMS § 17:3 (2006).[5] In re ICLNDS Notes Acquisition, LLC at 293.[6] Id.[7] In re Interiors of Yesterday, LLC, 284 B.R. 19, 23 (Bankr. D. Conn. 2002). [8] Id. at 24.[9] Collier v. Cobalt LLC, 2002 WL 726640 at *1 (E.D. La. 2002).[10] Id. [11] Id. at *2.[12] Id. at *1.[13] Id. at *2.[14] Id.

Automotive News recently reported that General Motors Corp. and Ford Motor Co. have discussed a possible merger or alliance.[1]  Neither company will comment on the talks [2], leading some followers to believe the reports are mere "speculation" and reflect "[n]ostalgia for the glory days of the American automobile industry."[3]  Nostalgia and speculation aside, the merger/alliance rumors are enough to incite the interests of industry followers and American car buyers as to the possible benefits of such a relationship.A merger would combine "two of the world's most recognized brands."[4]  The combined company would account for "an astounding 41 percent of the U.S. auto market."[5]  An alliance could force innovative thought and encourage novel business decisions, as it seems to some that "[t]he old school way of doing things at Ford and GM isn't working."[6]  If nothing else, a merger would combine name recognition and product lines.  However, the merger process would not be an easy ride for Ford and GM.The two auto giants would have to overcome significant hurdles to join forces.  For one, Ford and GM tout different management styles.[7]  Second, Ford and GM would have to lay aside their differences as competitors [8] and assume new roles as partners.  Third, assuming that Ford and GM can consolidate their competing products under one roof, they may face problems of brand loyalty [9] and may find themselves having to convince consumers who self-identify as a "Ford" or "GM" person that their former foe is now their friend.  Fourth, there would be little advantage to GM in the merger as the stronger company.[10]  Finally, the merged entity would face the task of defining which product lines and particular vehicles are worth saving and which do not benefit continuing operations.[11]While the possibility of a merger is intriguing in the sense that it could create an ultra-American automotive entity, the costs of such merger may outweigh the benefits.  Increased size would not necessarily bring success for Ford and GM, both of whom struggle with expensive non-operational plants, "thousands of union workers they have to pay even when they do not need them," and associated pension and salary costs.[12]  Additionally, a merger may not solve a key challenge facing both auto giants: building vehicles that consumers want to buy.[13]Rather than combine total operations to form the American automotive giant that is rumored to be, Ford and GM would be better off implementing an alliance in the form of partnerships [14] in smaller focused areas.  Such partnerships could improve vehicle design and production and benefit consumers in the market for an improved version of an American namesake.  One way Ford and GM could accomplish this objective is to co-develop "components that are not customer-centric, like car batteries."[15]  Although it would take significant time and testing to make work, Ford and GM could partner to create component parts that can be used in many if not all vehicles manufactured individually by the two companies.  While the average consumer may prefer his or her Ford F-150 pickup over GM’s Chevrolet Silverado, or vice-versa, the average consumer may not prefer either Ford or GM’s particular brand of batteries, brakes, spark plugs, shocks, springs, steering systems or vehicle frames.  Moreover, if Ford and GM were to combine component product operations, they could limit expenses by having less plants and workers than if the companies conducted base operations separately.  In essence, partnering to make component parts would solve at least part of the plant and employee expenses burdening each company while enabling both Ford and GM to continue manufacturing individual vehicle lines. Ford and GM could also research and develop jointly fuel-saving technologies.[16]  The companies could use their combined power to improve hybrid drive transmissions, fuel cell technology, flexible fuel vehicles, and clean diesel.[17]  This would be a win-win situation for both the American auto giants and consumers.  Given the increased costs commuting to work and shuttling kids to soccer practice, consumers want more fuel efficient vehicles.  If both Ford and GM developed fuel saving technologies, the companies could incorporate that technology into their respective product lines, build more attractive products, and capitalize on consumer interest, thereby increasing demand for such vehicles.  Again, by partnering on core aspects of vehicle operation and design, Ford and GM could derive mutual benefit yet still retain their unique product lines and customer brand loyalties. While a complete merger sounds provocative, at this point the talks cannot be referred to as more than unconfirmed speculation.  Even if Ford and GM confirm these rumors, a complete merger would not solve the present state of the respective companies’ problems.  Rather than combine underperforming product lines and enormous expenses, Ford and GM would be better off leaving their cars in separate parking lots rather than moving everything into one giant mess of a parking garage.  If Ford and GM combine forces in an alliance, that partnership should be aimed at promoting research and developing component parts that can be used in each company’s vehicles.  At the very least, consumers would benefit from having more advanced vehicles boasting improvements such as better fuel economy.  If Ford and GM collaborate on base components and technologies, each company could then incorporate the innovations into new models that would attract consumer interest and reinvigorate American automotive competition.     [1] Ford, GM Discussed Merger, Alliance - Report, ASSOCIATED PRESS, available athttp://www.msnbc.msn.com/id/14889304/.[2] Id.[3] Sean Lengell, Speculation, Mostly Idle, of a Ford-GM Merger, WASH. TIMES, Sept. 19, 2006 available at http://washingtontimes.com/functions/print/php?StoryID=20060919-120553-2225r.[4] Dan Arnall, Indecent Proposal?  What a Ford/GM Merger Could Mean, ABC NEWS, at http://abcnews.go.com/Business/print?id=2459206.[5] Id.[6] Roland Jones, Ford, GM Could Score Gains by Collaborating, MSNBC.COM, at http://www.msnbc.msn.com/id/14923545.[7] Lengell, supra note 3.[8] Id.[9] Id.[10] Id.[11] Arnall, supra note 4.[12] Id.[13] John W. Schoen, Ford, GM Race to Get Smaller, MSNBC.COM, athttp://www.msnbc.msn.com/id/14939898/.[14] See Revised Uniform Partnership Act §202(a) (defining “partnership” as an “association of two or more persons to carry on as co-owners a business for profit”).[15] Jones, supra note 6.[16] Id.[17] Id.