November 19 2012, 19:59
Founded in 1983, Ancestory.com is the world’s largest family history website that provides access to more than ten billion records and thirty eight million family trees.[i] Recently, the London based private equity firm Permira Advisers LLP agreed to purchase the company at a valuation of $32 a share.[ii] The $32 amount represents a premium of 10% based on the company’s price at the time the deal was announced. [iii] However, many shareholders are unsatisfied and upset.[iv] In fact, many shareholders have filed suit against the company.[v] Principally, these suits allege that the Board of Directors of Ancestry.com breached their fiduciary duties to stockholders by failing to obtain a higher price by adequately shopping the company and that the decision to consummate the sale was not in the best interest of shareholders, rather that of the Board of Directors.[vi] [More]
November 30 2009, 02:06
Antitrust law is usually understood as applying to companies and their products. The incentives for assuring competition among companies have not limited the function of antitrust law. Antitrust law has developed its application to beyond those players in the market. Now, lawyers and bar associations also have to watch out for antitrust regulation. The American Bar Association has been under pressure to lighten up several of its rules in order to allow multidisciplinary firms to evolve.
The application of antitrust law to lawyers will be discussed in this article. Part I discusses if the definition of “trade” applies to professional services for the purpose of antitrust regulation. Is the discussion of regulation related to horizontal agreements or legislation? If it is legislation (for example, laws establishing bar associations), it is out of the scope of antitrust law. Part II brings the European and also an economic approach to this matter giving more light to the discussion of what are the consequences of the direct application of antitrust law to lawyers. Part III recommends that lawyers should not be exempt from antitrust regulation. The formation of collusion and price fixing exists among this profession as well as in other areas and should be regulated. However, the existence of an exam to evaluate the quality of lawyers is not an anticompetitive behavior limiting entrance on the market, but it is a correction of the market that should exist to inform prospective clients. Part IV provides concluding thoughts on the regulation of attorneys [More]
March 8 2008, 21:13
For an entrepreneur, starting a new business can be a fulfilling venture. However, if the company and its assets are not properly protected, the risks that come along with such an endeavor can prove to be costly. This article will first discuss the agency issues that arise in a litigious society. It will then explain the process for retaining liability insurance. Finally, it will conclude by suggesting some simple ways a new business owner can ensure he or she will receive maximum liability protection. [More]
February 13 2008, 21:15
The process of starting a business that relies on outside employees is time consuming and often confusing. However, with the aid of a qualified attorney and the implementation of the proper procedures, an entrepreneur may be able to safeguard himself against many of the risks of bringing other people on board while reaping the benefits. This article will first discuss the basics of hiring a qualified employee and suggest an organization for a family run business. It will then discuss the implications of non-compete agreements, existence of trade secrets, and creation of pension plans. Finally, it will conclude by discussing the implications of retaining an attorney to aid in the employee hiring process. [More]
November 14 2007, 21:16
Starting a new business can be a scary venture for a new entrepreneur. Beyond picking a location, hiring personnel and establishing a clientele base, deciding how to register the business can be an important decision with lasting implications. There are five main categories under which a new business owner can register his or her new business: sole proprietorship, general partnership, limited liability partnership, limited liability company or corporation. This article discusses the pros and cons of registering under each of the five categories and the legal implications of each option. [More]
December 1 2006, 15:34
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. The duty of care encompasses “refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.” The duty of loyalty includes an anti-theft provision, a prohibition against self-dealing, and a prohibition against competing against the partnership. 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.” 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. One leader stated “[w]e won’t agree on every issue . . . [but] we will do our very best to address big problems.” 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.” 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. 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. REV. UNIF. PARTNERSHIP ACT §404(a) (1997). Id. at §404(c). D. Gordon Smith & Cynthia A. Williams, BUSINESS ORGANIZATIONS: CASES, PROBLEMS AND CASE STUDIES 74 (Aspen Publishers 2004). Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928). 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. Id. Id. REV. UNIF. PARTNERSHIP ACT, supra note 1 at §103.
November 6 2006, 15:33
Limited liability companies (LLCs) enjoy unique hybrid status as a “relatively new form of doing business that is created and defined by state law.” Though the LLC is “not formally characterized” 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. Generally speaking, “LLCs have been treated as corporations almost by default for bankruptcy purposes.” 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.” Thus, any non-lawyer representing the corporation engages in “the unauthorized practice of law.” Courts have included LLCs within the group of artificial entities who may not be represented by a non-lawyer. 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. 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. The defendant was the sole “employee, owner, and shareholder” of the LLC , 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. 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.” 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. 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. 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. In re ICLNDS Notes Acquisition, LLC, 259 B.R. 289, 292 (Bankr. N.D. Ohio 2001). Id. Nicholas Karambelas, LIMITED LIABILITY COMPANIES: LAW, PRACTICE AND FORMS § 17:3 (2006). In re ICLNDS Notes Acquisition, LLC at 293. Id. In re Interiors of Yesterday, LLC, 284 B.R. 19, 23 (Bankr. D. Conn. 2002).  Id. at 24. Collier v. Cobalt LLC, 2002 WL 726640 at *1 (E.D. La. 2002). Id.  Id. at *2. Id. at *1. Id. at *2. Id.
October 6 2006, 15:35
Automotive News recently reported that General Motors Corp. and Ford Motor Co. have discussed a possible merger or alliance. Neither company will comment on the talks , leading some followers to believe the reports are mere "speculation" and reflect "[n]ostalgia for the glory days of the American automobile industry." 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." The combined company would account for "an astounding 41 percent of the U.S. auto market." 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." 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. Second, Ford and GM would have to lay aside their differences as competitors  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  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. 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.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. Additionally, a merger may not solve a key challenge facing both auto giants: building vehicles that consumers want to buy.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  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." 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. The companies could use their combined power to improve hybrid drive transmissions, fuel cell technology, flexible fuel vehicles, and clean diesel. 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.  Ford, GM Discussed Merger, Alliance - Report, ASSOCIATED PRESS, available athttp://www.msnbc.msn.com/id/14889304/. Id. 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. Dan Arnall, Indecent Proposal? What a Ford/GM Merger Could Mean, ABC NEWS, at http://abcnews.go.com/Business/print?id=2459206. Id. Roland Jones, Ford, GM Could Score Gains by Collaborating, MSNBC.COM, at http://www.msnbc.msn.com/id/14923545. Lengell, supra note 3. Id. Id. Id. Arnall, supra note 4. Id. John W. Schoen, Ford, GM Race to Get Smaller, MSNBC.COM, athttp://www.msnbc.msn.com/id/14939898/. 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”). Jones, supra note 6. Id. Id.