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					       Law Week 2010
         Supplement to:



         sddt.com/lawweek10                                                                                                                                          Monday, May 3, 2010 / Vol. 125, No. 87




Strong IPO team, diligent                                                                                                            Senate showdown
preparation key to going public
       By PADMA NAGAPPAN                    public offering. These are the people         “But these can be fixed retroactive-
        Special to the Daily Transcript     who draft the prospectus, assist with      ly, with very few exceptions. You can
  A good business model or strong           the filing, solicit interest from          ratify actions and clean things up
product alone is not enough to have         investors, determine the price at          before you go public,” he said.
a successful initial public offering.       which the shares can be sold, and sell        Michael Kagnoff, a partner at DLA
  The preparation process prior to          the offering to the public.                Piper’s corporate and finance group,
going public is crucial and tedious,           For bankers with a track record of      said the pre-IPO process typically
starting with the financial reporting.      successful IPOs, quite often it is         takes between nine to 12 months.
The books have to be in order, with         more a question of whether they               “From a legal standpoint, things
quarterly, audited financial state-         want to work with a particular com-        can be put in place in a month, but
ments.                                      pany, rather than the company              most companies’ accounting capabil-
  But even this first step can be a         choosing the banker.                       ities have to be ramped up and that
stumbling block, especially if the             “Even before you can think about        takes time. Also, board members are
management team does not have               going public, you need to have an          often financial investors looking for
accounting experience. It might             experienced CFO who is familiar            quick exits, and they may not want to
require bringing in a strong internal       with the process and compliance            stick with the company in the long
auditor, and later, a professional,         issues, and comfortable talking to         run,” Kagnoff said, highlighting
accredited accounting firm whose            Wall Street. He has to be a good           issues that often crop up.
reputation meets the expectations of        communicator who can present a                Kagnoff explained that lawyers
investors and investment bankers.           convincing picture,” said Jeremy           join the process early on and most of
  Another step in the process is            Glaser, a partner at Mintz Levin who       their concern is focused on prepar-
showing economic indicators such as         describes himself as a classic tech        ing the registration statement, get-
the rate of growth and net profit           lawyer with 25 years of experience         ting the company listed on the
margins that prove the company’s            representing mostly technology             exchange and negotiation with
ability to make money for investors.        companies.                                 underwriters.
  A strong management team with                Glaser cited as an example Google          A company also needs to form                                                           Photo: Andrew Harrer/Bloomberg
impressive street credentials is also       (Nasdaq: GOOG), which brought in           committees — the most essential               Sen. Carl Levin, a Democrat from Michigan and chairman of the
critical to convince investors that         Eric Schmidt as CEO and George             being committees for corporate gov-           Senate's Permanent Subcommittee on Investigations, gives a televi -
they have the experience to follow          Reyes as CFO well before it went           ernance, auditing and compensa-               sion interview on Capitol Hill in Washington, D.C., on Wednesday.
through.                                    public.                                    tion. Others include a nominating             Levin pummeled Lloyd C. Blankfein, chairman and CEO of Goldman
  The credo that you need money to             He pointed out that most private        committee to nominate board mem-              Sachs Group Inc., with a barrage of questions about why the Wall
make money holds true for the IPO           companies are a little lax in docu-        bers.                                         Street firm sold securities it was betting against. Blankfein struggled
process, which can be lengthy and           menting stock options, intellectual           And policies for ethics and insider        to complete sentences as he tried to describe what it means to be a
expensive.                                  property agreements, employment            trading need to be put in place.              market-maker.
  Attracting the right investment           contracts, board meetings and com-                                                                                                                        Page 7
bankers is essential to a successful        pensation.                                              See IPO on 2

E-discovery

Need for support services firms growing
along with volume of electronically stored data
    By CAMERON LEIGH JAMES                  would reach $21.8 billion by 2011, a       expensive element of e-discovery.              The continuing demand for cost-       services to control and manage
        Special to the Daily Transcript     five-year compound annual growth              “It’s critical, and there’s where ven-   effective discovery management and       information to meet regulatory
   Due to the proliferation of elec-        rate of 17.6 percent.                      dors are extremely helpful is deter-        evolving technologies will change the    requirements or prepare for a future
tronic documents and communica-                Litigation support companies, like      mining costs,” Marean said.                 litigation support market. Law firms     lawsuit.
tion, one of the most significant chal-     San Diego-based Anacomp, provide           “Developing that estimate can be            will begin standardizing their e-dis-      “It’s a different animal now,” said
lenges in the legal industry is negoti-     technology platforms for data collec-      fairly difficult unless and until you       covery platform; litigation support      Friedman. “It’s exciting, but the lia-
ating the increasingly complex dis-         tion, preservation and processing.         know how much data you’re dealing           will be needed to evaluate and main-     bilities, costs and volumes of data are
covery process.                             Early case assessment tools help           with.”                                      tain those systems so law firms can      incredible. You cannot physically do
   Consider that the average desktop        lawyers refine and evaluate ESI for           Seattle-based litigation support         protect their investment and provide     things the same way you did 10 years
computer holds 1 gigabyte of data,          content, relevance and context to          services company TERIS has a large          quality assurance to their clients.      ago.”
the equivalent of 30 banker’s boxes         reduce review time and streamline          West Coast client base. With 275               Increasingly, e-discovery cus-
full of printed documents. Consider,        workflow.                                  employees, its core business is pro-        tomers are not just law firms.             James is a San Diego-based free-
too, that data is generated in a vari-         But technology is only one part of      cessing, culling and reformatting           Proactive companies are using            lance writer.
ety of formats: Word, Excel,                the equation. Knowing how to use it        data, according to Micah Kasdan,            emerging technologies and support                 Source Code: 20100503cre
PowerPoint, voice, video, jpeg, e-          effectively is the other. After all, you   vice president of ESI business devel-
mail and text messages, and is stored
on tapes, drives, CDs and at off-site
locations. Mix those variables with
                                            can teach a man to fish, but unless he
                                            knows where to cast his line, he may
                                            well starve.
                                                                                       opment.
                                                                                          Since California instituted new
                                                                                       civil procedures for dealing with
                                                                                                                                   Facebook’s expansion
the 2006 Amendments to the
Federal Rules of Civil Procedure
addressing electronically stored
                                               “Many that have been practicing
                                            law for 10 to 15 years are technology
                                            troglodytes, so there’s a huge need to
                                                                                       electronically stored information last
                                                                                       year, more California law firms are
                                                                                       requesting TERIS’ consulting servic-
                                                                                                                                   triggers political backlash
information,       and    last      year,   understand how to get the evidence         es. Kasdan said the company’s proj-                By MICHAEL LIEDTKE                and the movie might be passed along
California’s rule requiring litigants to    and how to search for it,” said            ect management expertise gets the                      The Associated Press          to other people in your Facebook
meet and confer on e-discovery              Marean, co-author of the 2010 edi-         right people in the room and facili-           SAN FRANCISCO — Facebook’s            network, depending on your privacy
issues. Sprinkle it with the admoni-        tion of Electronic Discovery and           tates communication between the             plan to spread its online social net-    settings.
tion of the courts that lawyers are         Records Management Guide, Rules,           law firm and the client’s IT people.        work to other websites could be             Facebook says all this will help
obligated to be competent in the area       Checklist and Forms. “That’s where            “There’s a gap between legal pro-        detoured by regulators looking into      personalize the Web for people. It
of electronic data. And then dump it        the outside vendors come in — they         fessionals and the world of informa-        privacy concerns that have raised the    stresses that no personal informa-
all onto an industry that is reluctant,     really know how to do it.”                 tional technology,” said Kasdan.            ire of federal lawmakers.                tion is being given to the dozens of
make that resistant, to change, and            DLA Piper’s “large and robust              One consistent issue Kasdan sees            Four senators said last week that     websites using the new plug-ins.
you’re waist deep in the quagmire of        internal litigation support depart-        is the legal team’s lack of planning        Facebook needs to make it easier for        Still, it means that information
e-discovery.                                ment” handles the majority of e-dis-       and communication strategies for            its 400 million users to protect their   that hadn’t been previously commu-
   “It’s a huge challenge for lawyers,”     covery in-house, except for data col-      negotiating with the opposition,            privacy as the site opens more           nicated could get broadcast to your
said Browning Marean, senior coun-          lecting, which Marean said is out-         which he said requires a level of           avenues for them to share their          friends and family on Facebook.
sel at DLA Piper in San Diego and an        sourced.                                   transparency, professionalism and           interests and other personal infor-         And Facebook is indeed sharing
expert in electronic discovery. “The           “The collection phase requires          courtesy to prevent the process from        mation.                                  some personal information with
body is buried in electronic data.”         culling, a skill set that is done in a     being more painful and costly than it          The Federal Trade Commission          three websites that Facebook hopes
   E-discovery, the intersection of         forensically sound manner so you           has to be.                                  already had been examining the pri-      will demonstrate how online services
technology and the law, is a compli-        don’t lose what may be critical — the         “From my perspective, that’s the         vacy and data collection practices of    can be more helpful when they know
cated       and     evolving       field.   metadata — associated with the file,”      biggest problem,” Kasdan said. “And         Facebook and other social networks,      more about their users. The sites
Accordingly, the need for litigation        he said.                                   that’s a tangible solution we provide:      the agency confirmed last Tuesday.       with greater access to Facebook’s
support services companies that                Litigation support professionals        the experience, technology and                 Then Facebook announced a pro-        data are business review service
identify, preserve and collect elec-        also act as consultants and help law       expertise to give clients perspective       posed expansion that irked Sen.          Yelp , music service Pandora and
tronically stored information (ESI)         firms map out their cases to ensure        on how best to plan and communi-            Charles Schumer, D-N.Y., and, he         Microsoft Corp.’s (Nasdaq: MSFT)
and assist legal teams through the e-       accuracy and defensibility.                cate the process of e-discovery.”           says, many Web surfers who called        Docs.com for word processing and
discovery process is growing.                  “Lawyers aren’t trained as project         Marean agreed.                           his office to complain.                  spreadsheets.
   During the last couple of years, the     managers. There’s a process and               “This is a huge challenge for us,” he       Having built one of the Web’s most       Facebook users who don’t want to
market for e-discovery products and         project     management         element     said. “You have to do a lot more            popular hangouts, Facebook is trying     be part of the company’s expansion
services has been boosted by cost-          throughout the lifecycle of discov-        meeting and conferring and getting          to extend its reach through new tools    have to go through their privacy set-
cutting measures instituted by cor-         ery,” said Jeff Friedman, Anacomp          protective orders from the court.           called “social plug-ins.” These enable   tings and change their preferences.
porations       and     law       firms.    marketing director and project man-        This is a rich area for education.”         Facebook’s users to share their inter-      Schumer thinks the onus instead
International interest in e-discovery,      ager. “Ours is really a consulting            If current economic conditions           ests in such products as clothes,        should be on Facebook to get users’
particularly in the European Union,         business supported by technology.”         continue, multinational law firms           movies and music on other websites.      explicit consent, a process known as
Australia and Canada, is also stimu-           Consultants also help law firms         and sole practitioners alike will need      For instance, you might hit a button     “opting in.”
lating growth. In 2007, the                 keep e-discovery costs proportional        to utilize cost-effective, competitive,     on Levis.com indicating you like a          “They have sort of assumed all
International Data Corp. (IDC) pre-         to the overall case and work with          repeatable and defensible processes         certain style of jeans, and then rec-    their users want their information to
dicted the legal discovery and litiga-      attorneys to manage the volume of          for e-discovery, and are likely to con-     ommend a movie on another site.
tion support infrastructure market          data that is reviewed, the most            tinue outsourcing to fill those needs.      That information about the jeans                  See Facebook on 3
2                                                         MONDAY, MAY 3, 2010 •           Law Week • THE DAILY TRANSCRIPT                    ®




Expert Insights: Corporate law Prop. 8 trial could
    John Wahlin                                   While most    consider. The first is a tax            ers children must allow cover-
    Partner
    Best Best & Krieger LLP
                                                of the new
                                                health   care
                                                                credit for certain small
                                                                employers for their contribu-
                                                                                                        age until age 27;
                                                                                                           * lifetime limits on coverage
                                                                                                                                             wrap up on June 16
                                                law imposes     tions to purchase health                are restricted immediately              SAN FRANCISCO (AP) — The federal trial to determine
  What can small businesses                     compliance      insurance for employees.                and will be eliminated in            if California’s same-sex marriage ban violates the U.S.
do to take advantage of the                     burdens    on      Another option is a new              2014;                                Constitution may wrap up in June after a months-long hia-
new insurance tax rules of the                  small   busi-   type of cafeteria plan. In 2011,           * health plans must provide,      tus, the judge said Wednesday.
recently enacted health care                    nesses, there   employers with less than 100            without cost-sharing, certain           Chief U.S. District Judge Vaughn Walker tentatively
reform? What should they do      are a few opportunities that   employees can establish a               preventive       services   and      scheduled the long-delayed closing arguments in the case for
to ensure compliance?            small business owners should   “simple cafeteria plan.” These          immunizations;                       June 16. After hearing more than two weeks of testimony in
                                                                plans will not be subject to               * insurance carriers cannot       January, Walker had wanted time to review all the evidence
                                                                cafeteria plan discrimination           rescind coverage;                    before hearing lawyers give their wrap-ups.
                                                                testing or testing for specific            * denial of coverage based           But the break dragged on while civil rights groups that
                                                                types of benefits.                      on a pre-existing condition is       opposed the voter-approved measure fought turning over
                                                                   In addition, a new program           not permitted for children           internal documents from the 2008 campaign to Proposition
                                                                will be available for employers         under age 19 (the general pro-       8’s sponsors. The groups, Equality California and the
                                                                who may want to assist early            hibition for all persons goes        American Civil Liberties Union, finally agreed last week to
                                                                retirees (age 55 plus) with             into effect in 2014);                supply the disputed documents.
                                                                health       coverage      until           * coverage under insured             Yusef Robb, a spokesman for the gay rights group that
                                                                Medicare eligibility. A rein-           health plans cannot discrimi-        spearheaded the case, says there may be one final hurdle to
                                                                surance program for qualify-            nate in favor of highly com-         the trial’s end.
                                                                ing employers will provide              pensated employees; and                 Protect Marriage, the coalition of religious and social con-
           Specializing in the management of domestic           reimbursement          to   the            * over-the-counter drugs          servative groups that qualified the ban for the ballot and is
             and international trademark portfolios             employer for a portion of the           will no longer be eligible for       now defending the measure in court, have asked Walker to
                                                                cost of providing coverage to           tax-free reimbursement under         strike some of the e-mails and memos written by Proposition
                                                                early retirees.                         a flexible spending account.         8 supporters that already were introduced as evidence in the
                                                                   Also, small businesses (less                      • • •                   trial.
                                                                than 50 full-time employees)                                                    The materials include some of the trial’s most explosive
                                                                will not be required to offer a           Dan Mogin                          elements, such as writings that claimed gays are more likely
                                                                health care plan to their                 Managing Attorney                  to be pedophiles and that allowing them to wed would cause
                                                                employees on any particular               The Mogin Law Firm PC              young people to become homosexual.
                                                                terms. This averts the possi-                                                   Lawyers for Protect Marriage told the judge in court
                                                                bility of onerous excise taxes             Does antitrust have a role to     papers filed last week that allowing the documents to remain
                                                                for failure to comply.                  play in financial reform legis-      in the trial record would violate the First Amendment free-
                                                                   With respect to compliance,          lation in preventing the “too        dom of association rights of the measure’s supporters.
                                                                several provisions are effective        big to fail” syndrome?                  Walker asked to be fully briefed on that issue by May 10.
                                                                for the next plan year of most             “Too big to                       He could set a separate hearing to resolve it before the clos-
                                                                health plans. These include:            fail” is a prod-                     ing arguments, Robb said.
                                                                   * any health plan that cov-          uct of size and                         Walker is presiding over a lawsuit brought by two gay cou-
                                                                                                        interconnect-                        ples seeking to overturn Proposition 8. The case is being
                                                                                                        edness      that                     closely watched across the country. It is the first federal trial
                                                                                                        results        in                    to examine if denying gays the right to wed violates their civil
                                                                     The Daily                          implicit gov-                        rights, and is expected to eventually reach the U.S. Supreme
                                                                                                        ernment sup-
           THE TRADEMARK GROUP, APLC                                 Transcript                ®

                                                                                                        port.     TBTF
                                                                                                                                             Court.
                                                                                                                                                                               Source Code: 20100428cm
                                                                       Founded April 3, 1886            financial institutions are
               Marnie Wright Barnhorst, Esq.                              www.sddt.com                  involved in a wide array of
                 Kiley B. MacDonald, Esq.                       ROBERT L. LOOMIS, Publisher             financial activities including      cipline of the competitive         antitrust cases difficult.
                Nicholas S. Barnhorst, Esq.                            George Chamberlin,               traditional banking, securities     market and can charge supra-          In terms of merger policy,
                                                                        Executive Editor                trading and underwriting,           competitive prices. Antitrust      ordinarily a merger can be
                                                                        Joseph Guerin, Editor           derivatives, etc. The differ-       tries to restrain market power     blocked if it might substan-
                                                                Richard Spaulding, Real Estate Editor
                1200 Prospect Street, Suite G-100                                                       ences between antitrust and         and restore competition. But,      tially lessen competition or
                                                                       Jennifer Chung Klam,
                       La Jolla, CA 92037                              Special Sections Editor          government regulation are           it does not prohibit large firms   tend to create a monopoly,
                        (858) 456-4801
                                                                     Tracye Grimes, Web Editor          important to understanding          or concentrated markets, and       including if it might facilitate
                                                                                                        whether antitrust can play a        therefore cannot reach that        either harmful coordination
                  info@trademarkgroup.com                       Ellen C. Revelle, Publisher Emerita
                                                                    July 31, 1910 - May 6, 2009         role in TBTF financial reform       aspect of TBTF. Financial reg-     among the remaining firms or
                                                                                                        legislation. Despite the rheto-     ulators, on the other hand,        unilateral monopoly-like pric-
               www.trademarkgroup.com                                 San Diego Daily Transcript
                                                                                                        ric, our actual commitment to       focus mostly on soundness-         ing by the merged firm.
                                                                           P.O. Box 85469               using competition law is ques-      and-safety and very little on      Financial institution mergers,
                                                                      San Diego, CA 92186–5469          tionable. This is particularly      market power. Before a crisis,     however,      enjoy      certain
                                                                           (619) 232-4381
                                                                       Web site: www.sddt.com
                                                                                                        true about large financial          regulators have typically con-     exemptions, pre-merger noti-
                                                                                                        institutions, which have            ducted examinations from the       fication and review can be
                                                                                                        repeatedly shown themselves         individual firm perspective        truncated, and the statutes
                                                                                                        to be skilled at lobbying and       rather than examining the          generally require deference to
                                                                                                        regulatory capture. When it         potential safety and sound-        bank regulators — all of which
                                                                                                        comes to financial institutions     ness effects of interconnected-    is compounded when dealing
                                                                                                        and TBTF, the current law           ness.                              with a failed financial firm.
                                                                                                        favors government regulation           The Supreme Court’s recent      Historically, bank regulators
                                                                                                        over antitrust/competition,         decisions finding implied          have focused on the sound-
                                                                                                        and the proposed reform leg-        antitrust immunity for regu-       ness and safety of the merging
                                                                                                        islation does not change that       lated companies, particularly      institutions. When they have
                                                                                                        dynamic.                            securities firms, elevate regu-    considered market power,
                                                                                                           A firm with “market power”       lation over competition and
                                                                                                        is insulated from the full dis-     make prospective TBTF                 See Corporate Law on 3


                                                                                                        IPO
                                                                                                              Continued from Page 1         watch out for. Once the IPO        ty is very small, it closes
                                                                                                           Glaser stressed that a com-      process has been started, the      quickly and getting it done in
                                                                                                        pany needs to have the finan-       company must observe a quiet       time is critical. I’ve seen com-
                                                                                                        cial resources to go public.        period when it cannot do any-      panies who did that and they
                                                                                                        Venture-backed firms he has         thing that appears as market-      would not have been able to
                                                                                                        worked with already had the         ing of the stock offering.         (launch the IPO) just a few
                                                                                                        documentation, policies and            Glaser recounted an inci-       weeks later,” he said.
                                                                                                        committees in place, so the         dent where a client did not           Glaser spoke about the
                                                                                                        cleanup process to go public        stay muzzled.                      CEO of a consumer product
                                                                                                        was minimal.                           “Years ago, I worked with a     company who stayed on top
                                                                                                           “But for those companies         flashy founder who was a           of the process and ensured
                                                                                                        that were internally funded, it     media favorite. He did not tell    there were no delays. “So
                                                                                                        was so much more complicat-         us he was going to do it, but      many things can go wrong,
                                                                                                        ed,” he revealed.                   he went on ‘Good Morning           that can delay the process, so
                                                                                                           Once the books are in order      America’ and was inter-            someone within the company
                                                                                                        and the documentation and           viewed,” he said, emphasizing      has to drive the process and
                                                                                                        policies are in place, meeting      that this was just not done.       keep everyone on a tight
                                                                                                        with and choosing an invest-           The quiet period extends        timeline.”
                                                                                                        ment banker is the next step.       through the IPO process up            Kagnoff stressed the same
                                                                                                           Then comes an organiza-          until 30 days after the allot-     point. Minimizing the time
                                                                                                        tional meeting with all par-        ment.                              equals minimizing the risk,
                                                                                                        ties, include lawyers repre-           When it comes to stock          since market conditions can
                                                                                                        senting both the company and        option plans, the company          change even in a couple of
                                                                                                        the underwriters — what             should have in place a pool of     days. An experienced CFO can
                                                                                                        Glaser referred to as an “all       shares that will last at least     shave the timeline and expe-
                                                                                                        hands meeting,” where the           two years after the IPO, so it     dite the process.
                                                                                                        registration statement is           does not have to ask its stock-       “Today, you’ll probably be
                                                                                                        drafted, books are reviewed         holders to approve a bigger        advised to wait longer than
                                                                                                        and due diligence is conduct-       pool.                              before, to go public. In recent
                                                                                                        ed.                                    Glaser said typical pools are   years, the market has made it
                                                                                                           So what makes a company          about 10 percent to 20 per-        uncertain if a company would
                                                                                                        attractive in the eyes of invest-   cent of the total outstanding      complete the IPO, but there
                                                                                                        ment bankers?                       shares. This number depends        are signs that it’s changing,”
                                                                                                           “Looking at the IPOs in          on whether the founders are        he said.
                                                                                                        2010, the bulk of the compa-        employees and already own             The most important step in
                                                                                                        nies had significant revenues       chunks of the company or           preparing to go public,
                                                                                                        — $50 million or more,              whether it is professionally       according to Glaser, is to have
                                                                                                        although there were a couple        managed.                           the right team.
                                                                                                        that did not, out of the eight         “Ensure that your stock            “Get the strongest, most
                                                                                                        that went public in the first       option grants have been            experienced          investment
                                                                                                        quarter,” Glaser said.              priced appropriately by an         bankers you can, with prior
                                                                                                           The recent IPOs were a mix       outside evaluation firm,”          experience. A company lawyer
                                                                                                        of biotech, service, network-       Kagnoff advised.                   who acts as its quarterback is
                                                                                                        ing and semiconductor com-             Another major legal issue is    very important. The account-
                                                                                                        panies.                             establishing the board and         ing team is also critical. I’ve
                                                                                                           Aside from showing consid-       roping in experienced people       seen cases when these there
                                                                                                        erable revenues, profitability      who will for the most part be      were not in place and things
                                                                                                        and strong growth prospects         independent board members.         got delayed.”
                                                                                                        are requirements that have             Glaser said being clear from
                                                                                                        become essentials again,            the outset with everyone             Nagappan is a San Diego-
                                                                                                        unlike during the dot-com           involved about the timeline of     based freelance business
                                                                                                        boom years.                         the IPO is important.              writer.
                                                                                                           There are some pitfalls to          “The window of opportuni-         Source Code: 20100503crb
                                                                      MONDAY, MAY 3, 2010 •       Law Week • THE DAILY TRANSCRIPT                  ®
                                                                                                                                                                                                                   3

Close-up: James Lance

Attorney finds satisfaction in steering clients through difficult situations
      By SYDNIE MOORE                                                       on every case,” he said, keep-      then helped negotiate a sub-      American Honda (NYSE:              for “Trial Bar News,” the
     Special to the Daily Transcript                                        ing in mind that it is the most     stantial settlement with the      HMC) regarding transmis-           monthly publication of the
   James Lance likes to com-                                                important case in the world to      hospital, enabling the family     sion defects — resulting in a      San      Diego       Consumer
pare his stints as a college ath-                                           that particular client. “If you     to move out of the family         transmission       replacement     Attorneys.
lete to his successful legal                                                take that approach, you will        home — a constant reminder        program valued in excess of           Although he is longer a
career.                                                                     be rewarded — both profes-          of their horrible loss — and      $180 million, a case that can      competitive athlete, Lance
   A football and rugby player                                              sionally and economically —         also set up college funds for     help him shed some light on        still makes time for the athlet-
while an undergrad at                                                       in the long run.”                   their other children.             the travails of Toyota (NYSE:      ic pastimes that initially
Missouri State University,                                                     And while it has not direct-        At a subsequent hearing,       TM).                               inspired his career choice. Not
Lance, now a partner at Kirby                                               ly influenced his practice, the     the federal district judge used      “They face a tough decision     surprisingly, his three young
Noonan Lance & Hoge LLP,                                                    economic downturn of the            the case as an example of what    on how they will handle their      sons are following in his foot-
says it’s the teamwork and the                                              last year has affected him per-     an attorney can do to help        litigation,” he said. “One thing   steps. All are avid athletes, so
adrenaline buzz of competi-                                                 sonally and professionally.         others and encouraged the         I have learned through years       Lance spends his weekends
tion that initially drew him to                                             “The most noticeable issue in       brothers to use their college     of practicing law: health and      watching them compete and
the practice of law.                                                        my practice related to the eco-     funds to enter the legal pro-     safety needs to be front and       coaching their baseball and
   “There is a lot less paper-                                              nomic downturn is the impact        fessional. “Although this set-    center. Failing to focus on        flag football teams — further
work involved in playing                            Lance                   on my real estate clients —         tlement was not the largest I     these issues can bring down        demonstrating that on the
sports,” he said laughing. “But                                             and others in the real estate       have been able to secure, it      the biggest companies in the       sports field and in the court-
there are similarities between         faceted nature of his practice,      industry. I have represented        was one of the most reward-       world.”                            room, he is a valuable team
trial work and athletics. Both         Lance has remained consis-           real estate consultants and         ing.”                                When he’s not in the court-     player who plays to win.
require preparation, team-             tently busy. Adaptability, he        developers, and regardless of          In another career mile-        room or preparing for trial,
work and the excitement that           said, is the key to success in       whether they develop large          stone, Lance was involved in      Lance serves on the board of         Moore is a San Diego-based
comes with competition.” In            today’s volatile economy. “Our       residential neighborhoods,          the prosecution of a nation-      the Association of Business        freelance writer.
addition, he said, like sports,        attorneys are all generalists,       commercial buildings or high-       wide class action against         Trial Lawyers and is an editor        Source Code: 20100503crd
trial work has a very simple           and flexible in the types of         rise condominiums, this econ-
measure of success or failure.
“The jury verdict is essentially
                                       cases we take on.” This versa-
                                       tile approach has helped his
                                                                            omy has been a severe blow to
                                                                            their business. In fact, some of
                                                                                                                Facebook
the final score.”                      firm grow and evolve as the          the companies I used to repre-           Continued from Page 1        framework that social net-         ple think of social networking.
   After paying his dues at a          economic climate has cooled.         sent no longer exist.”              be given far and wide, which      works and others will use to       Instead of communicating on
large St. Louis law firm, Lance           Additionally, as the econo-          He said the ability to help      is a false assumption,”           guide their data collection,       a closed website, Facebook’s
moved to San Diego and                 my soured, Lance opted to            clients navigate through diffi-     Schumer said in an interview.     use, and sharing practices,”       users could interact with one
joined Kirby Noonan 20 years           take some precautions. Since         cult situations is the most           Schumer sent a letter call-     said Jessica Rich, deputy          another over the entire Web.
ago. He was promoted to                many defendants have been            rewarding aspect of his job,        ing for simpler privacy con-      director of the FTC’s Bureau       More sharing could spawn
partner in 1993 and his name           increasingly reluctant to settle     and recalled successfully rep-      trols to Facebook founder         of Consumer Protection.            more customized websites
was added to the moniker in            cases early on, “I have been         resenting the parents of an 8-      Mark Zuckerberg. The con-            Schumer pledged to intro-       that look different to each per-
2006. Over the years, this             careful about taking contin-         year-old boy who was killed         cerns were echoed by Sen.         duce legislation that would        son visiting, depending on
accomplished litigator has             gent fee cases, in particular        by an elderly diabetic who ran      Michael Bennet, D-Colo; Sen.      expand the FTC’s powers over       their friends and preferences.
handled everything from real           those that require a large out-      a stop sign. Through a lot of       Mark Begich, D-Alaska; and        Facebook and other Internet           While Zuckerberg has
estate and complex business            lay in costs.”                       hard work and due diligence,        Sen. Al Franken, D-Minn.          social networks if the regula-     likened his vision to an online
disputes to serious personal              Lance has also been able to       “we determined that the doc-          Facebook tried to assure        tory agency doesn’t feel it has    nirvana, critics see another
injury cases, earning numer-           buck economic trends by              tors had prescribed a medica-       Schumer that its latest idea      the authority to require more      hole in the crumbling walls of
ous verdicts and settlements           adapting a simple, straight-         tion that blocked the ability of    won’t invade users’ privacy.      straightforward privacy con-       online privacy.
in excess of $1 million dollars        forward approach when tak-           the diabetic to recognize he          “We welcome a continued         trols.                                Facebook is moving from
in the process.                        ing on a new client.                 was going into insulin shock.”      dialogue with you and others         The political pressure could    being a social network about
   Because of the multi-                  “I do the best job possible       With perseverance, Lance            because we agree that scrutiny    undermine Facebook’s ambi-         sharing with friends “to a
                                                                                                                over the handling of personal     tion to create a more social,      service that is about collecting
Corporate Law                                                                                                   data is needed as Internet
                                                                                                                users seek a more social and
                                                                                                                                                  open Web that could make it
                                                                                                                                                  easier to aim online advertis-
                                                                                                                                                                                     and sharing information
                                                                                                                                                                                     about you with advertisers so
      Continued from Page 2            nitely be the recipient of criti-    tors together or via a commit-      interactive experience,” a        ing at consumers based on          they can more closely tailor
their focus has often been on          cism. Why? How could                 tee may need to meet with           Facebook vice president,          their presumed interests.          ads to you,” said Ginger
retail bank locations, rather          “financial distress” creep up        company auditors, lawyers           Elliot Schrage, wrote in a let-   Facebook would probably            McCall, staff counsel at the
than on the larger themes              on you as a director? You and        and financial advisers and          ter to Schumer.                   thrive in a more communal          Washington-based Electronic
implicated in TBTF.                    your fellow directors are legal-     perhaps hire new, independ-           Schumer called Facebook’s       Internet because it has            Privacy Information Center.
   However, if the TBTF                ly responsible for the day-to-       ent consultants who will act        response inadequate and said      amassed a huge database of
implicit government support            day operations and well being        solely for the directors or         his staff planned to meet with    personal information since           AP Technology Writers
were to be considered a source         of the company. How could            committee. There are a num-         the company.                      Zuckerberg set up its website      Barbara Ortutay in New York
of market power that facili-           you let the situation creep up       ber of valuable resources             Meanwhile, the FTC indi-        in a Harvard dorm room six         and     Joelle  Tessler  in
tates domination of important          on you? This kind of thing           available describing the duties     cated it will weigh into the      years ago.                         Washington contributed to
lines of commerce, coordina-           doesn’t happen overnight.            of directors. These should be       debate at some point.                If Facebook’s plans pan out,    this report.
tion with other TBTF firms or             As a director, you have the       reviewed.                             “Our plan is to develop a       it could change the way peo-          Source Code: 20100503crg
supra-competitive pricing,             obligation to be informed               Financial    literature     is
antitrust could come into play.        about the affairs of the compa-      replete with articles dis-
A revised merger policy could          ny and the right to find out         cussing the “zone of insolven-
also be engaged for the TBTF           about its affairs by probing,        cy” and what directors are
problem if coordinated and             asking questions and demand-         supposed to do when the com-
unilateral effects analysis and        ing answers from the officers        pany “enters the zone.”
real-world sub-market defini-          to whom the day-to-day oper-         Unfortunately, there are no
tions were fully considered.           ations may have (and usually         signposts that say, “You’ve
The public might also be bet-          are) delegated by the board.         arrived in the zone.” For a
ter served if financial regula-        Since the buck stops with the        number of years, there seemed
tors used a competition law            board of directors, each direc-      to be little guidance to direc-
perspective and analyzed the           tor has a lot at stake in being      tors on what they should do
effects on soundness and safe-         up-to-date on company affairs        when they reached the zone or
ty of a less-concentrated,             and meaningfully informed.           to whom they owed duties
more diverse banking system            Once informed, the directors         beyond the corporation,
that minimized the instances           must act with care, good faith       shareholders and creditors.
of TBTF.                               and loyalty to seek a resolution        Fortunately, courts in
   In sum, antitrust could             of the situation/condition in        Delaware and California
become an important tool for           which the company has                recently have clarified this sit-
dealing with TBTF if the               become enmeshed.                     uation considerably. In the
reform legislation includes: a)           What are some of the obvi-        case of companies subject to
repeal of implied antitrust            ous and simple things a direc-       the laws of either state, direc-
immunity for regulated finan-          tor can do to be informed?           tors must be able to show that
cial firms; b) changes to the          Demand regular reports be            they discharged the duties of
financial institutions’ exemp-         sent to the board, even in the       care, loyalty and good faith
tions in the existing merger           intervals between its regular        (see above) in the decision
statutes; c) requiring greater         meetings. Demand the board           making and actions directed
emphasis on competition to             have regularly scheduled             by them for the company
combat systemic risk by                meetings with a comprehen-           experiencing financial dis-
enhancing the roles of the             sive agenda covering at least        tress. If this can be demon-
DOJ and FTC in merger                  financial matters, operational       strated, the directors and
review, including for failed           matters, litigation, HR issues,      their decisions are protected
firms (a merger process simi-          follow-ups on old business,          by the business judgment
lar to the shared power regime         coverage of new business and         rule. There are some differ-
used for communications                developments (this is not a          ences between Delaware and
firms within the FCC’s juris-          comprehensive list). Attend          California law based on these
diction); and, d) the creation         every board meeting. Demand          court cases. The differences
of a financial regulator whose         that the agenda and written          are important to understand,
primary mission is to combat           materials to be reviewed at          and should be carefully laid
market power. None of these            each meeting be sent to direc-       out for the directors by the
are presently on the table.            tors well enough in advance of       legal adviser for the company
             • • •                     the meeting to permit sub-           or one chosen in the circum-
                                       stantive review.                     stances to act for and advise
  Robert G. Copeland                      What might a director look        the directors.
  Partner                              at prior to the meeting? The            Bottom line, as long as
  Sheppard Mullin Richter &            financial statements, pre-           directors act and memorialize
Hampton LLP Attorneys at               pared to compare year-to-            their actions in an appropri-
Law                                    date numbers against the             ate and customary fashion,
                                       same period a year ago and           they should be able to guide
   What can directors of a             against budget: are there spe-       the company through the
company do to reduce the               cific items that might suggest       financial distress/zone of
risks of personal liability            “financial         difficulties”?    insolvency, even if the road
when the company is in finan-          Accounts payable: are they           leads to the actual insolvency
cial distress?                         growing? Why? What is hap-           of the company. Directors
   If you are                          pening to cash? Is there a           need not and should not go it
the director of                        report on the status of signifi-     alone. They should call upon
a     company                          cant company borrowings,             all of the resources available
and you learn                          such as compliance with loan         to them for appropriate finan-
that the com-                          covenants and ratios required        cial and legal support and
pany is in                             to be maintained under insti-        advice. And, of course, mak-
financial dis-                         tutional loan arrangements?          ing sure of the coverages and
tress         —                        If so, this information should       that premiums are paid up on
whether you                            be a regular report and disclo-      any D&O insurance policy
learn through the “grapevine,”         sure item to the board.              maintained by the company
at a board meeting or whatev-             “Financial difficulty” usual-     would be prudent as well.
er, you may be in trouble              ly begins to be revealed long           — Compiled by Michael
either from shareholders or            before there is a crisis. If prob-   Chung Klam
creditors or both. You’ll defi-        lems are detected, the direc-            Source Code: 20100503crc
4                                                                                MONDAY, MAY 3, 2010 •               Law Week • THE DAILY TRANSCRIPT                                 ®




Sempra to pay $410 million to settle energy suits
   (AP) — Sempra Energy                      The     California     Public              igation with California parties                  the companies used Enron-                  the crisis to drive up prices.           by an amount to be set by the
(NYSE: SRE) said last week it              Utilities          Commission                over issues related to the                       style tactics to exploit                      The new settlement involves           Public Utilities Commission,
has agreed to pay $410 mil-                approved the proposed settle-                state’s energy crisis, we are                    California’s        deregulated            Sempra energy and commodi-               Finefrock said.
lion to settle claims that it              ment last week but it still will             pleased to put these matters                     power system, create phony                 ties trading units. It calls for            Sempra also will pay more
gouged California on electrici-            need approval from the                       behind us,” Sempra Chairman                      energy shortages, avoid mar-               Sempra to provide reimburse-             than $100 million to settle
ty contracts that were signed              Federal Energy Regulatory                    and CEO Donald E. Felsinger                      ket rules and generate profits,            ment of $270 million to                  separate claims by the Public
as the state struggled through             Commission, which is expect-                 said in his own statement.                       costing utility ratepayers as              California utility customers,            Utilities Commission and the
an energy crisis a decade ago.             ed later this year, Kline said.              “We believe this is a fair and                   much as $9 billion.                        who still are being charged 30           state Department of Water
   The San Diego-based owner                 “The settlements will put                  reasonable outcome for both                         The state has now negotiat-             to 40 cents a month on their             and Power, he said.
of San Diego Gas & Electric                hundreds of millions of dol-                 our shareholders and the state                   ed more than $3.2 billion in               gas and electric bills to pay off           Most of the settlement
Co. and the Southern                       lars back into the pockets of                of California.”                                  settlements with energy com-               debt from energy crisis deals,           money already is in reserve
California Gas Co. reached an              California energy consumers                    Sempra was among several                       panies to settle 39 claims of              said Jim Finefrock, a Brown              but it is expected to reduce
agreement in principle with                who suffered blackouts and                   energy companies sued over                       overcharging, state authori-               spokesman.                               first-quarter earnings by $96
state and federal regulators               great economic harm during                   alleged wrongdoing during                        ties said in a statement.                     Customers of San Diego                million after taxes, or about
for a cash settlement without              the energy crisis,” state                    the crisis, when wholesale                          Four years ago, Sempra                  Gas & Electric, Southern                 38 cents per share, Kline said.
acknowledging any wrongdo-                 Attorney General Jerry Brown                 energy prices soared and the                     agreed to pay $377 million to              California Edison and Pacific               The company’s quarterly
ing, company spokesman                     said in a written statement.                 state suffered rolling black-                    settle claims that it manipulat-           Gas & Electric Co. will see              earnings, which will be
Doug Kline said.                             “After nearly a decade of lit-             outs. The suits claimed that                     ed natural gas supplies during             their bills reduced next year            released May 4, already are
                                                                                                                                                                                                                             expected to suffer from poor
                                                                                                                                                                                                                             performance and disruption
                                                                                                                                                                                                                             in its commodities unit, RBS

                                                                                        Law Firms                                                                                                                            Sempra          Commodities.
                                                                                                                                                                                                                             Sempra is selling the unit,
                                                                                                                                                                                                                             which is a joint venture with
                                                                                     Listed by Number of Local Attorneys                                                                                                     the Royal Bank of Scotland. It
                                                 Number of        Number of
                                                                                                                                                                                                                             deals in the international oil,
                                                   Local            Local                                                                                                                                                    metals, natural gas and power
                                                                                                                                                                                                   Year
          Firm Name
                                                 Attorneys         Partners
                                                                                                                                                                                                Established    Year          markets.
                                                                                                     Areas of Practice                                    Executive(s) & Title(s)
          URL
                                                 Number of        Number of
                                                                                                                                                                                                    in      Established         Source Code: 20100428tqb
                                                                                                                                                                                                San Diego
                                                 Firmwide           Local
                                                 Attorneys        Associates

                                                                                 Antitrust, appellate, bankruptcy, complex litigation,       Francis B. Burch Jr., Global Chairman; Lee I.
                                                                                                                                                                                                                             Drug subsidiaries
                                                                                                                                                                                                                             agree to settle
                                                    124               61         corporate and securities, employment, estate plan-          Miller, Firm Joint CEO; Sir Nigel Knowles, Firm
    1     DLA Piper US LLP
          www.dlapiper.com
                                                    3,500             50
                                                                                 ning, First Amendment law, IP and technology,
                                                                                 licensing, litigation, mergers and acquisitions,
                                                                                                                                             Joint CEO; Terry O’Malley, Managing
                                                                                                                                             Partner/U.S. Offices; Robert W. Brownlie,
                                                                                                                                                                                                   2005          1927

                                                                                 patent, privacy, real estate, tax and trusts, trademark     Managing Partner


          Procopio, Cory,                           112               58
                                                                                                                                             Thomas W. Turner Jr., Managing Partner;                                         on Topamax
    2     Hargreaves & Savitch LLP
          www.procopio.com                          112               22
                                                                                 Full-service firm
                                                                                                                                             Michael J. Changaris, Partner; Craig A.
                                                                                                                                             Ramseyer, Partner; Sandra L. Shippey, Partner;
                                                                                                                                             Craig P. Sapin, Partner
                                                                                                                                                                                                   1946          1946
                                                                                                                                                                                                                                     By PETE YOST
                                                                                                                                                                                                                                     The Associated Press
                                                                                 Full-service law firm with eight major practice areas:                                                                                         WASHINGTON — Two
          Luce, Forward, Hamilton &                 103               62         business, business litigaton, bankruptcy, insurance                                                                                         subsidiaries of pharmaceuti-
    3     Scripps LLP
          www.luce.com                              171               44
                                                                                 litigation, labor and employment, real estate, real
                                                                                 estate and environmental litigation, family wealth
                                                                                                                                        Richard C. Bigelow, COO; Kurt Kicklighter,
                                                                                                                                        Managing Partner
                                                                                                                                                                                                   1873          1873
                                                                                                                                                                                                                             cal giant Johnson & Johnson
                                                                                 and exempt organizations                                                                                                                    (NYSE: JNJ) have agreed to
                                                                                                                                             Bruce P. Shepherd, San Diego Managing
                                                                                                                                                                                                                             pay more than $81 million
                                                                                 Patents, trademarks, copyrights, trade secrets, false
                                                                                                                                             Partner; Scott Wolfe, San Diego, Corporate Local                                stemming from allegedly ille-
                                                                                 and misleading advertising, models and designs,
                                                    101               28                                                                     Chair and Partner; Robert Howard, San Diego,                                    gal promotion of the epilepsy
    4     Latham & Watkins LLP
          www.lw.com
                                                    2,000             68
                                                                                 geographical indications, rights of privacy and pub-
                                                                                 licity, grey market, unfair competition, e-Commerce,
                                                                                                                                             Environment, Land & Resources Local Chair and
                                                                                                                                             Partner; Kelley Gale, San Diego, Finance Local
                                                                                                                                                                                                   1980          1934        drug Topamax for psychiatric
                                                                                 Internet regulation, online theft of intellectual prop-
                                                                                                                                             Chair and Partner; Michael Weaver, San Diego,                                   uses, the Justice Department
                                                                                 erty, cybercrime
                                                                                                                                             Litigation Local Chair and Partner                                              announced Thursday.
                                                                                 Full-service firm including corporate litigation and
                                                                                                                                                                                                                                Federal drug regulators
                                                     96               45         transactions; securities; labor and employment;             Kevin Alexander, Managing Partner; P.                                           approved Topamax as an anti-
    5     Gordon & Rees LLP
          www.gordonrees.com
                                                    405               49
                                                                                 environmental, toxic tort; real estate; IP; construc-
                                                                                 tion; bankruptcy; health care; maritime; insurance;
                                                                                                                                             Gerhardt Zacher, Partner; Roger Manusukhani,
                                                                                                                                             Partner; Miles Scully, Partner
                                                                                                                                                                                                   1990          1974        epileptic drug and for preven-
                                                                                                                                                                                                                             tion of migraines.
                                                                                 tort and product liability
                                                                                                                                                                                                                                The Justice Department
                                                                                 Antitrust/trade regulation, bankruptcy/restructuring,                                                                                       case was the second settle-
                                                     91               27
                                                                                 commercial class action litigation, credit finance,         Joe Conroy, CEO (Reston); Stephen C. Neal,                                      ment this week involving a
    6     Cooley LLP
          www.cooley.com
                                                    644               57
                                                                                 employment and labor, environmental, estate plan-
                                                                                 ning, IP litigation, international, Internet law, life
                                                                                 sciences, M&As, real estate, tax litigation, venture
                                                                                                                                             Chairman (Palo Alto); Mark Pitchford, COO
                                                                                                                                             (Palo Alto); Frederick T. Muto, Partner In
                                                                                                                                             Charge (San Diego)
                                                                                                                                                                                                   1992          1920        pharmaceutical manufactur-
                                                                                                                                                                                                                             er’s    alleged    misconduct
                                                                                 capital, white collar, regulatory defense                                                                                                   involving promotion of unap-
                                                                                                                                                                                                                             proved uses for a drug.
          Robbins Gellar Rudman & Dowd
                                                     89               32         Litigation, securities fraud, shareholder derivative                                                                                           On Tuesday, Attorney
    7     LLP (formerly Coughlin Stoia
          Geller Rudman & Robbins LLP)
                                                    180               47
                                                                                 litigation, corporate governance, options backdat-
                                                                                 ing litigation, corporate takeover litigation
                                                                                                                                             Darren J. Robbins, Partner; Paul J. Geller,
                                                                                                                                             Partner; Samuel H. Rudman, Partner
                                                                                                                                                                                                   2004          1976        General Eric Holder and
          www.rgrdlaw.com                                                                                                                                                                                                    Health and Human Services
                                                                                                                                                                                                                             Secretary Kathleen Sebelius
                                                                                 Corporate and securities, entertainment and media,          Guy N. Halgren, Chairman; Dana J. Dunwoody,                                     announced a $520 million
          Sheppard, Mullin, Richter &                81               38
    8     Hampton LLP
          www.sheppardmullin.com                    551               49
                                                                                 finance and bankruptcy, IP, labor and employment,
                                                                                 litigation, real estate/land use/environmental, tax,
                                                                                                                                             Administrative Partner (San Diego); Richard L.
                                                                                                                                             Kintz, Administrative Partner (San Diego/Del
                                                                                                                                                                                                   1986          1927        settlement with AstraZeneca,
                                                                                 trusts and estate planning, white collar defense            Mar)                                                                            (NYSE: AZN) resolving alle-
                                                                                                                                                                                                                             gations of illegal marketing
                                                     72               20         Patents, trademarks, copyright, trade secrets, tech-
                                                                                                                                             Mark C. Zebrowski, Managing Partner (San                                        of the Anglo-Swiss compa-
    9     Morrison & Foerster LLP
          www.mofo.com
                                                    1,032             46
                                                                                 nology transfer and licensing arrangements, alter-
                                                                                 native dispute resolution, litigation
                                                                                                                                             Diego); Keith C. Wetmore, Chair; Pamela J.
                                                                                                                                             Reed, Managing Partner; Harold J. McElhinny,
                                                                                                                                             Managing Partner
                                                                                                                                                                                                   1999          1883        ny’s antipsychotic drug
                                                                                                                                                                                                                             Seroquel.
                                                                                                                                                                                                                                In the case involving
                                                                                 Civil and business litigation, real estate, general                                                                                         Topamax, the government
                                                     68                0                                                                     Robert Caplan, President/Managing Member;
 10       Seltzer Caplan McMahon Vitek
          www.scmv.com
                                                     69               22
                                                                                 corporate, securities, taxation, land use, probate,
                                                                                 estate planning, white collar crime, environmental
                                                                                 law, family law, bankruptcy, IP, employment law
                                                                                                                                             Gerald McMahon, Chairman of the Board;
                                                                                                                                             Brian Seltzer, COO; James Dawe, CFO
                                                                                                                                                                                                   1948          1948        says Ortho-McNeil-Janssen
                                                                                                                                                                                                                             Pharmaceuticals Inc. will pay
                                                                                                                                                                                                                             more than $75 million for
                                                     60               42                                                                                                                                                     alleged illegal promotion of
 11       Higgs, Fletcher & Mack LLP
          www.higgslaw.com
                                                     60               20
                                                                                 Full-service firm with business, transactional and
                                                                                 litigation practice areas
                                                                                                                                             John L. Morrell, Chairman/Managing Partner;
                                                                                                                                             David J. Whitson, Exec. Director
                                                                                                                                                                                                   1939          1939        the drug for a variety of psy-
                                                                                                                                                                                                                             chiatric uses.
                                                                                                                                                                                                                                Ortho-McNeil Pharmaceu-
                                                     56               22         Corporate, environmental, litigation, health, IP,
 12       Foley & Lardner LLP
          www.foley.com
                                                    930               28
                                                                                 securities, taxation, real estate, construction, labor
                                                                                 and employment, bankruptcy, venture capital
                                                                                                                                             Ralf-Reinhard Boer, Chairman/CEO; Van A.
                                                                                                                                             Tengberg, Managing Partner, San Diego
                                                                                                                                                                                                   1996          1842
                                                                                                                                                                                                                             tical LLC, a subsidiary of
                                                                                                                                                                                                                             OMJPI, has agreed to plead
                                                                                                                                                                                                                             guilty to a single misde-
                                                                                 Litigation, offensive portfolio strategy, internal IP                                                                                       meanor violation of the Food,
          Knobbe, Martens,                           51               26
 13       Olson & Bear LLP
          www.kmob.com                              259               25
                                                                                 audits, market clearance risk managment, design
                                                                                 around strategy and investment, acqusition dili-
                                                                                 gence
                                                                                                                                             Ned A. Israelsen, Office Managing Partner (San
                                                                                                                                             Diego); Weslie Pettus, Office Administrator
                                                                                                                                                                                                   1984          1962        Drug and Cosmetic Act and to
                                                                                                                                                                                                                             pay a $6.1 million criminal
                                                                                                                                                                                                                             fine.
          Lewis Brisbois Bisgaard &                  44               23                                                                                                                                                        The government says that
 14       Smith LLP
          www.lbbslaw.com                           699               22
                                                                                 Full-sevice firm
                                                                                                                                             R. Gaylord Smith, Managing Partner; Douglas
                                                                                                                                             W. Lewis, Administrative Partner
                                                                                                                                                                                                   1984          1979
                                                                                                                                                                                                                             Ortho-McNeil Pharmaceu-
                                                                                                                                                                                                                             tical promoted Topamax
          Allen Matkins Leck Gamble                  36               25         Real estate, litigation, corporate and securities,                                                                                          sales for unapproved psychi-
 15       Mallory & Natsis LLP
          www.allenmatkins.com                      230               13
                                                                                 bankruptcy creditors rights, labor and employment,
                                                                                 tax, IP
                                                                                                                                    Joe Davidson, Managing Partner (San
                                                                                                                                    Diego/Del Mar)
                                                                                                                                                                                                   1987          1977        atric uses under a program
                                                                                                                                                                                                                             called “Doctor-for-a-Day.”
                                                                                                                                                                                                                             Under it, Ortho-McNeil
                                                     37               n/a                                                                                                                                                    hired outside physicians who
 16       Fish & Richardson PC
          www.fr.com
                                                    373               19
                                                                                 Patent litigation, patent prosecution, trademark and Peter Devlin, President; Roger A. Denning,
                                                                                 copyright, business litigation                       Managing Principal (Southern California office)
                                                                                                                                                                                                   1995          1878
                                                                                                                                                                                                                             joined sales representatives
                                                                                                                                                                                                                             in visits to health care
          Paul, Hastings,
                                                                                                                                                                                                                             providers and to speak at
                                                     36               10
 17       Janofsky & Walker LLP
          www.paulhastings.com                      1,059             24
                                                                                 IP litigation, patent prosecution, securities litiga-
                                                                                 tion, corporate, employment law, litigation
                                                                                                                                             Seth Zachary, Chairman; Greg Nitzkowski,
                                                                                                                                             Managing Partner
                                                                                                                                                                                                   2003          1951        meetings and dinners about
                                                                                                                                                                                                                             prescribing Topamax for
                                                                                                                                                                                                                             unapproved uses.
                                                                                 Employment and labor, eminent domain, water
                                                     35               15                                                                                                                                                        In a statement, Ortho-
 18       Best Best & Krieger LLP
          www.bbklaw.com
                                                    177               18
                                                                                 rights, land use, municipal, schools, environmental
                                                                                 and natural resources, real property, title insur-
                                                                                                                                             Warren B. Diven, Office Managing Partner              1993          1891        McNeil-Janssen Pharmaceu-
                                                                                 ance, trust, general business litigation                                                                                                    ticals Inc. said it has been
                                                                                                                                             James Rishwain Jr., Firm Chair; Stephen
                                                                                                                                                                                                                             cooperating with the govern-
                                                                                                                                             Huttler, Exec. Vice Chair (Washington, D.C.);                                   ment since its investigation
          Pillsbury Winthrop                         35               13         IP and technology, biotechnology, health care,
 19       Shaw Pittman LLP
          www.pillsburylaw.com                      737               21
                                                                                 information technology, communications, multi-
                                                                                 media software and computers, real estate
                                                                                                                                             James G. Gatto, Firmwide IP Chair (Northern
                                                                                                                                             Va.); Michael Garrett, Managing Partner (San
                                                                                                                                             Diego); John R. Wetherell, San Diego IP
                                                                                                                                                                                                   1976          1868        began in December 2003.
                                                                                                                                                                                                                                OMJPI denies it engaged in
                                                                                                                                             Practice Leader                                                                 any wrongful conduct, with
                                                                                                                                                                                                                             the exception of acknowledg-
          Wilson Sonsini Goodrich &                  35                6
                                                                                 IP counseling and patents; IP litigation; technology;                                                                                       ing the admissions made by
 20       Rosati PC
          www.wsgr.com                              600               25
                                                                                 Internet and copyright litigation; technology trans-
                                                                                 actions; trademarks, copyrights and advertising;
                                                                                 global outsourcing transactions
                                                                                                                                             Larry Sonsini, Chairman; Steven Bochner, CEO          2004          1961        Ortho-McNeil Pharmaceuti-
                                                                                                                                                                                                                             cal LLC in connection with
                                                                                                                                                                                                                             the misdemeanor plea, the
                                                     33               n/a                                                             John D. Klinedinst, CEO; Greg Garbacz, COO;                                            company added.
 21       Klinedinst PC
          www.klinedinstlaw.com
                                                     56               13
                                                                                 Employment and labor, real estate, professional lia-
                                                                                 bility, business litigation, IP, environment defense
                                                                                                                                      Carey Cooper, Co-COO; Heather Rosing, CFO;
                                                                                                                                      Kurt Campbell, CRO
                                                                                                                                                                                                   1983          1983           The settlement resolves two
                                                                                                                                                                                                                             lawsuits brought under the
                                                                                                                                             Tom Briggs, Licensing/Technology Transactions
                                                                                                                                                                                                                             False Claims Act, in which
                                                     32               13
                                                                                 IP, labor and employment, products liability and
                                                                                                                                             Team Co-Chair (Firmwide); Anthony Insogna,                                      private whistleblowers can
 22       Jones Day
          www.jonesday.com
                                                    2,621             14
                                                                                 general litigation, labor and employment, products
                                                                                 liability, civil and business litigation, white collar
                                                                                 criminal litigation and defense
                                                                                                                                             Pharmaceutical Team Co-Chair (Firmwide);
                                                                                                                                             Nick Pisano, Medical Device Team Co-Chair
                                                                                                                                                                                                   2004          1893        sue on behalf of the United
                                                                                                                                                                                                                             States. More than $9 million
                                                                                                                                             (Firmwide)
                                                                                                                                                                                                                             of the settlement will go to the
                                                                                                                                                                                                                             private citizens who brought
          Mintz Levin Cohn                           32               16                                                                     Eddie Wang Rodriguez, Managing Partner (San
 23       Ferris Glovsky and Popeo PC
          www.mintz.com                             443               14
                                                                                 IP, real estate, corporate, bankruptcy, employment          Diego); Robert I. Bodian, Firm Managing
                                                                                                                                             Partner
                                                                                                                                                                                                   2006          1933        the lawsuits.

                                                                                                                                                                                                                               AP Press Business Writer
                                                                                                                                                                                                                             Linda A. Johnson contributed
Data Source: The firms and their websites. Listed by Number of Local Attorneys. This is a partial list; a more complete listing can be found at sourcebook.sddt.com. N/A: Not Applicable, n/a: not available,
wnd: would not disclose. In the case of a tie, firms are listed alphabetically. It is not the intent of this list to endorse its participants, nor to imply that the company’s size or numerical rank indicates its quali-   to this report from Trenton,
ty or service. We reserve the right to edit listings or to exclude a listing due to insufficient information. The following firms did not respond to our survey: Daley & Heft LLP; Lorber, Greenfield & Polito LLP;          N.J.
LaFave and Rice Attorneys at Law; Duckor Spradling Metzger & Wynne; Branton & Wilson APC. Compiled by Robin Scott, robin.scott@sddt.com. Last updated 4/2010.                                                                  Source Code: 20100503crh
                                                                MONDAY, MAY 3, 2010 •       Law Week • THE DAILY TRANSCRIPT                        ®
                                                                                                                                                                                                                      5

Corporate law roundtable

Companies still dealing with cost of corporate compliance
     By DOUG SHERWIN                     The Sarbanes-Oxley Act of    the expense involved in com-
        The Daily Transcript          2002 was enacted as a           pliance.
  In the past few years, the          response to the corporate          San Diego attorney Robert
nation’s business environment         scandals       at     Enron,    Brownlie, the international
has been faced with the dou-          WorldCom,                Tyco   co-chair of DLA Piper’s secu-
ble whammy of government              International and others. It    rities litigation group, said the
regulation and the recession.         introduced stringent account-   legislation has only empow-
  While the economy is                ing provisions and placed       ered class-action plaintiffs’
beginning to rebound, costly          increased accountability and    attorneys to go after company
legislative controls continue         scrutiny on company execu-      executives.
to hamper American compa-             tives.                             “It’s a mistake and a dis-
nies and foreign investment in           The result, however, has     service to public companies
the United States, according          been a decrease in companies    and their boards and execu-
to a recent Daily Transcript          going public and a retreat of   tives to say that the (corpo-
roundtable discussion.                foreign investment because of   rate) culture has radically
                                                                      changed as a result of
                                                                      Sarbanes-Oxley,” he said,
                                                                      “because that would suggest
                                                                      that companies were rampant
                                                                      with lax controls and fraud
                                                                      before that happened.
                                                                         “Long before Sarbanes
                                                                      Oxley, I was always impressed
                                                                      with companies and boards
                                                                      about how seriously they took
                                                                      their jobs and doing right by
                                                                      the      shareholders.     What                                                                                      All photos: J. Kat Woronowicz
                                                                      Sarbanes-Oxley did was for-         William Eigner is a corporate and securities partner with Procopio Cory Hargreaves & Savitch
                                                                      malize some of those controls,      LLP.
                                                                      and require that third-party
                                                                      vendors get involved. It has        Pittman who represents pub-
                                                                      resulted in a transfer of share-    lic companies, said the biggest
                                                                      holder wealth to third-party        challenge for the United
                                                                      vendors.”                           States is to stay competitive
                                                                         Carol Lam, a former U.S.         with other financial centers
                                                                      attorney in San Diego and           throughout the world. As an
                                                                      now Qualcomm ’s (Nasdaq:            example, he noted Pillsbury’s
                                                                      QCOM) senior vice president         busiest office with public
                                                                      and deputy general counsel,         offerings is in Shanghai.
                                                                      said the new regulations have          “I would say there’s a funda-
                                                                      put executives on alert and         mental challenge about how
                                                                      given the government the            competitive we are as a coun-
                                                                      power of enforcement.               try and a culture,” he said.
                                                                         “It’s usually government         “Where do we stand, vis-à-vis
                                                                      prosecution that really gets        the rest of the world?”
Lionel Bochurberg is vice president of international legal oper-      people’s attention, and I think        Colin Murray, who chairs
ations for NextWave Broadband.                                        that has caused greater scruti-     Baker & McKenzie’s litigation
                                                                      ny and more financial con-          and dispute resolution prac-
                                                                      trols,” she said. “What’s more      tice group in San Diego,
                                                                      difficult to measure is what        agreed.
                                                                      problems or even catastro-             “There’s a presumption that
                                                                      phes may have been prevent-         (foreign countries) want to
                                                                      ed, because of greater con-         play in our space here,”
                                                                      cerns because Sarbanes Oxley        Murray said. “That’s not nec-
                                                                      exists. Was some of it over-        essarily the case if we are, in
                                                                      done? Probably, but I don’t         fact, regulating to a point
                                                                      think we have visibility into       where we’re disincentivizing
                                                                      what was discovered along the       foreign money, foreign invest-
                                                                      way.”                               ment from coming in.”
                                                                         Lionel Bochurberg, vice                                                 Carol Lam is senior vice president and deputy general counsel
                                                                      president of legal operations           See Roundtable on 6                for Qualcomm Inc.
                                                                      for NextWave Broadband ,
                                                                      said Sarbanes-Oxley, however,
                                                                      has caused some foreign com-


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                                                                      panies to exit the U.S. market
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                                                                      London.
                                                                         “Sarbanes-Oxley, really, at
                                                                      the end of the day, added a lot
                                                                      of cost and expense and a lot
                                                                      of worry for companies,”
                                                                      added DLA Piper’s Brownlie.
Mike Hird represents public companies as a partner with                  Mike Hird, a partner for
Pillsbury Winthrop Shaw Pittman.                                      Pillsbury Winthrop Shaw




Costly legislative controls continue to hamper American companies and foreign investment in
the United States, according to roundtable participants.                                                            For more than 20 years, Peterson Reporting has        Reporting
                                                                                                                   partnered with law firms the world over to bring       Videography
                                                                                                                      their transcripts to life with a combination of
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                                       William Eigner, Partner
                               Procopio Cory Hargreaves & Savitch LLP

                                          Mike Hird, Partner
                                  Pillsbury Winthrop Shaw Pittman

                          Carol Lam, SVP & Deputy General Counsel
                                       Qualcomm Inc.                                                          530 B Street, Suite 350         619 260 1069                        Call to request green
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                                        Baker & McKenzie
6                                                                MONDAY, MAY 3, 2010 •       Law Week • THE DAILY TRANSCRIPT                    ®




    I-95 high court in need    Followers, fans and friends:
    of some regional diversity The ethics of social networking                                             By WENDY L. PATRICK                 directly or indirectly with a
        By MARK SHERMAN              were the western frontier of     tices were federal appeals             Special to the Daily Transcript   judicial officer or a judge
           The Associated Press      the newly created United         court judges — rather than           When a modern lawyer sits           about the merits of a contest-
       WASHINGTON — Forget           States has the high court’s      worry too much about geog-        down at her desk in the morn-          ed matter pending before the
    liberal vs. conservative jus-    membership been so con-          raphy.                            ing and turns on her comput-           judicial officer or judge except
    tices. The Supreme Court is      centrated.                          Yet Powe said he believes      er, her home page may come             in open court, with the con-
    way out of regional align-          Diversity on the court        that the late Chief Justice       up as anything from Google,            sent of or in the presence of all
    ment: It’s heavily tilted        often is measured by gender,     William Rehnquist and             to the Wall Street Journal, to         counsel in the matter, in writ-
    toward the Northeast corri-      ethnicity, religion and race,    retired Justice Sandra Day        her Facebook home page. If             ing with copies furnished to
    dor and could become even        and the current candidates       O’Connor, who both lived in       some of her Facebook                   all counsel, or in ex parte mat-
    more so as President Barack      are being assessed by those      Arizona before coming to          “friends” are also judges              ters.
    Obama prepares to fill an        measures. But there could        Washington, displayed their       and/or she appears before her             Regarding the appearance
    upcoming vacancy.                be some value, both in the       Western influence in some         clients, she may face some sig-        of impropriety, what if you are
       Five of the nine justices     politics of the nomination       decisions that gave power to      nificant issues regarding the          “following” an adverse party
    have strong ties to Boston,      and a familiarity with issues    the states at the expense of      appearance of impropriety,             on Twitter in order to gain
    New York and central New         a new justice might bring, in    Congress.                         confidentiality and the attor-         public information? Is it dif-
    Jersey. Chief Justice John       choosing someone who lives          “As a Westerner who’s          ney-client privilege. Welcome          ferent if they are “following”                  Patrick
    Roberts is a Midwesterner        far from Interstate 95, the      lived in the East several         to the practice of law in the          you? Does it matter if you are
    raised in Indiana, but he        principal north-south route      times in my life, I know atti-    new millennium.                        only reading each other’s           on someone’s Facebook page.
    went to college and law          along the Eastern Seaboard.      tudes are just different in the      In an age of electronic com-        “tweets” and not communicat-        The prudent lawyer might
    school at Harvard and has           “The impetus to appoint       West,” said Powe. “There’s        munication and social net-             ing with each other directly?       nonetheless consider posting
    spent his entire professional    someone from the West is a       more of an optimism, more         working, lawyers must be               Some lawyers balk at the idea       disclaimers on their social
    life in Washington.              really        good        one.   of a willingness to move,         aware of their ethical and pro-        of having to run a conflicts        networking pages similar to
       Even Justice Clarence         Geographical diversity is        although there’s a greater        fessional responsibilities and         check on every person or enti-      those found on many legal
    Thomas, who stresses his         important on the court. Do       attachment to the land.”          how they apply within the              ty with whom they interact in       Web sites, clarifying that
    Georgia roots, has lived and     you really want water rights        Lee       Epstein,         a   increasingly public realm of           some fashion on social net-         unsolicited communications
    worked in Washington since       issues decided by people         Northwestern University           electronic communication.              working sites, but others           will not be considered confi-
    1983.                            from Amtrak’s Northeast          law professor, has begun to       The use of popular social net-         believe that particularly when      dential. The lawyer should
       Eight justices have Ivy       corridor?” said Roy Englert,     look at whether there’s any       working sites such as                  discussing sensitive informa-       consider on what part of the
    League law degrees, which        a          Harvard-educated      correlation between geogra-       Facebook,       Twitter     and        tion, there might be an argu-       lawyer’s site the client posts
    explains this joking response    Washington lawyer who            phy and voting patterns in        LinkedIn both professionally           ment that such diligence is         the communication, whether
    when a law student asked         argues regularly in front of     Supreme Court cases. Her          and personally can raise               required.                           it was on the lawyer’s “wall” or
    Roberts if too many justices     the Supreme Court.               research is at a preliminary      issues relating to client confi-                                           in the form of a personal mes-
    came from elite schools. No,        Two Westerners and two        stage.                            dentiality, the attorney-client          A new Facebook ‘friend’ or        sage.
    the chief justice said, “Some    from the Midwest are on             Should anyone care about       privilege, attorney advertis-                 accidental client?
    went to Yale.” The only non-     Obama’s list. Homeland           this? “I don’t know,” Epstein     ing, trial publicity and more.            “Confidential communica-                   Conclusion
    Ivy Leaguer, Justice John        Security Secretary Janet         said. “But in one sense, it’s                                            tion between client and               Social networking sites are
    Paul Stevens, is leaving the     Napolitano was Arizona’s         curious that the president            Who are your ‘friends’?            lawyer”     is    defined     in    a great way to keep in touch
    court at the end of this term;   governor and appeals court       doesn’t think about this             Who can you be “friends”            California Evidence Code            with family and friends. When
    he       graduated        from   Judge Sidney Thomas is           more or that the Senate           with on social networking              Section 952 as “information         such sites are used in the
    Northwestern.                    from Montana.                    doesn’t think about this          sites? In some jurisdictions,          transmitted between a client        practice of law, however, a
       At least three of the            Appeals court Judge           more. Senators have con-          the answer may be: Not a               and his or her lawyer in the        working knowledge of the
    known, serious candidates        Diane Wood lives and works       stituent interests.”              judge! The Florida Supreme             course of that relationship         legal and ethical rules that
    to replace Chicago native        in Chicago, and brings her          When President Franklin        Court, in November 2009                and in confidence by a means        may apply in this area is criti-
    Stevens fit the Northeastern     University of Texas law          Delano Roosevelt chose            Judicial Ethics Advisory               which, so far as the client is      cal. An awareness of the issues
    profile: Solicitor General       degree to the diversity scale.   Iowa federal judge and            Committee opinion number               aware, discloses the informa-       that may arise in the online
    Elena Kagan, appeals court       Michigan Gov. Jennifer           Kentucky-born            Wiley    2009-20, stated that while a           tion to no third persons other      arena will permit intelligent
    Judge Merrick Garland and        Granholm,        though      a   Rutledge for the court in         judge may post comments                than those who are present to       use of social networking sites
    Harvard Law School’s dean,       Harvard graduate, was born       1943, the nominee wondered        and other material on the              further the interest of the         to communicate effectively, as
    Martha Minow. Garland and        in Canada.                       how the president settled on      judge social networking site           client in the consultation or       well as ethically.
    Minow were born in                  Former Georgia Supreme        him, said retired University      page as long as they did not           those to whom disclosure is
    Chicago.       But,     unlike   Court Justice Leah Sears is      of Virginia professor Henry       violate the Code of Judicial           reasonably necessary for the           Patrick is a San Diego
    Stevens,     they     studied,   the only person on Obama’s       J. Abraham, author of a book      Conduct, a judge may not add           transmission of the informa-        County deputy district attor-
    worked and lived on the East     list who lives in the South.     on Supreme Court appoint-         lawyers who may appear                 tion or the accomplishment of       ney in the Sex Crimes and
    Coast as adults.                    Lucas A. “Scot” Powe Jr., a   ments.                            before him or her as “friends”         the purpose for which the           Stalking Division. She is the
       Not since the Allegheny       Texas law professor, said he        “FDR said, ‘Wiley, you’ve      on such sites, nor can they            lawyer is consulted, and            immediate past chair and cur-
    Mountains (ranging through       would prefer that Obama          got geography,’” Abraham          permit lawyers to add the              includes a legal opinion            rent co-chair of the San Diego
    Pennsylvania,       Maryland,    select someone who hasn’t        said.                             judge as a “friend.” The com-          formed and the advice given         County Bar Association Legal
    West Virginia and Virginia)      been a judge — all nine jus-       Source Code: 20100503crk        mittee pointed out that judges         by the lawyer in the course of      Ethics Committee and is one
                                                                                                        are permitted to list lawyers as       that relationship.”                 of 16 members of the
                                                                                                        “friends” as long as they do              Because the communica-           California       State      Bar
                                                                                                        not practice in front of the           tion on a lawyer’s Facebook         Committee on Professional
                                                                                                        judge.                                 page is visible to anyone listed    Responsibility and Conduct.
                                                                                                           Communicating with oth-             as a “friend,” would that fact      She writes an ethics column in
                                                                                                        ers involved in the court              alone defeat a claim of confi-      The Daily Transcript, and
                                                                                                        process on social networking           dentiality? One could argue         writes and lectures on ethics
                                                                                                        sites can also potentially vio-        that it would not be reason-        nationally and international-
                                                                                                        late California Rule of                able for a would-be client to       ly. The preceeding article does
                                                                                                        Professional Conduct 5-300,            assume they were communi-           not constitute legal advice.
                                                                                                        Contact with Officials, which          cating with the lawyer in con-      Please shepardize all case law
                                                                                                        states in paragraph (B) that a         fidence given the obvious           before using.
                                                                                                        lawyer may not communicate             public nature of information            Source Code: 20100503crf


                                                                                                        Roundtable
                                                                                                              Continued from Page 5            limited partners have really        But the venture community
                                                                                                           While regulation has had a          created the current situation,”     itself is years from returning
                                                                                                        chilling effect on initial public      he said. “Corporate investors       to its peak.”
                                                                                                        offerings (IPOs), the recession        have really stepped to the fore        Source Code: 20100503cra
                                                                                                        compounded the problem.                in the current environment.               doug.sherwin@sddt.com
                                                                                                        But now, with the economy
                                                                                                        beginning to recover, venture
                                                                                                        capitalists have regained the
                                                                                                        ability to raise funds, accord-
                                                                                                        ing to William Eigner, a cor-
                                                                                                        porate and securities partner
                                                                                                        with San Diego’s Procopio,
                                                                                                        Cory, Hargreaves & Savitch.
                                                                                                           “The mergers and acquisi-
                                                                                                        tions activity is heating up a
                                                                                                        bit because business owners
                                                                                                        have pent up demand to sell
                                                                                                        their business because of life
                                                                                                        change or just wanting to take
                                                                                                        chips off the table,” he said.
                                                                                                        “Buyers now are not so afraid
                                                                                                        to go out and buy, and so it’s
                                                                                                        making everyone more realis-
                                                                                                        tic.”
                                                                                                           Pillsbury, which had zero
                                                                                                        active IPOs in its West Coast
                                                                                                        office during the third quarter
                                                                                                        last year, now has nine active
                                                                                                        projects, including two that           Robert Brownlie is a partner with DLA Piper.
                                                                                                        priced within the past month,
                                                                                                        Hird said.
                                                                                                           The rise in activity has been
                                                                                                        due to the debt markets thaw-
                                                                                                        ing along with equity markets
                                                                                                        beginning to loosen as well,
                                                                                                        according to DLA’s Brownlie.
                                                                                                           “I think venture capitalists
                                                                                                        are still being selective in
                                                                                                        where they put their money,”
                                                                                                        he said, “and their expecta-
                                                                                                        tions are also changing with
                                                                                                        respect to how long they
                                                                                                        need to be invested in a com-
                                                                                                        pany. That’s changing behav-
                                                                                                        ior and opening up new
                                                                                                        types of investments by ven-
                                                                                                        ture firms.”
                                                                                                           Hird said the key issue in
                                                                                                        the venture capital communi-
                                                                                                        ty now is not an investment
                                                                                                        problem, but a limited part-
                                                                                                        ner problem.
                                                                                                           “The long-term returns to           Colin Murray is a partner with Baker & McKenzie.
                                                                  MONDAY, MAY 3, 2010 •       Law Week • THE DAILY TRANSCRIPT                    ®
                                                                                                                                                                                                                   7


Senate showdown puts Goldman’s defense on display
   By MARCY GORDON and              Goldman’s conduct before the        Congress — with expletives            Both sides are trying to har-     Goldman shares had gained           “fill the halls of Congress, hop-
        TOM RAUM                    financial near-meltdown that        frequently           undeleted.    ness voter anger toward Wall         another $2.31 to $155.35 by         ing to weaken or kill legisla-
        The Associated Press        turned into the worst reces-        Unrepentant, five present and      Street. Unlike with the health       midday Wednesday.                   tion” to increase regulation.
   WASHINGTON — A Senate            sion     since    the     Great     two former Goldman execu-          care debate, both Democrats             Levin cited a “fundamental       He accused Wall Street firms
showdown has put Goldman            Depression. The Securities          tives unflinchingly stood by       and Republicans say they             conflict” in Goldman’s selling      of selling securities they
Sachs (NYSE: GS)’ defense of        and Exchange Commission             their conduct before the Senate    want tighter regulations             to clients home-loan securi-        wouldn’t invest in themselves.
its conduct in the run-up to        filed a civil fraud suit earlier    Permanent Subcommittee on          passed — but they disagree on        ties that company e-mails           That’s “unbridled greed in the
the financial crisis on display     this month against the firm         Investigations, which had          timing and significant details.      showed its own employees            absence of the cop on the beat
before indignant lawmakers          and one of its traders.             probed Goldman’s activities for       Whether Tuesday’s hearing         had derided as “junk” and           to control it,” he said.
and a national audience.               A group of 62 House law-         18 months.                         would help Democrats win             “crap” — and then betting              The Goldman witnesses
Democrats hope it also builds       makers, meanwhile, is asking           “Unfortunately, the housing     Republican converts on the           against the same securities         strongly denied that the firm
momentum for legislation,           the Justice Department to           market went south very             legislation remained an open         and not telling the buyers.         intentionally cashed in on the
now before the Senate, to           conduct a criminal investiga-       quickly,” Blankfein told the       question. “It’s too soon to tell,”      “They’re buying something        housing crash by crafting a
tighten regulation of the           tion of Goldman. Rep. Marcy         panel. “So people lost money       Sen. Carl Levin, D-Mich., the        from you, and you are betting       strategy to bet against home
nation’s financial system.          Kaptur, D-Ohio, announced           in it.”                            panel’s chairman, said in a          against it. And you want peo-       loan securities while mislead-
   Goldman Sachs CEO Lloyd          Wednesday a letter to Attorney         Nearby at the Capitol,          brief interview outside the          ple to trust you. I wouldn’t        ing its own clients.
Blankfein testily told skeptical    General Eric Holder request-        Republicans succeeded for a        hearing room. “We’ll have to         trust you,” Levin told                 “I will defend myself in
senators at a hearing last week     ing an immediate opening of a       second day in blocking efforts     wait until the dust settles.”        Blankfein.                          court against this false claim,”
that clients who bought sub-        criminal probe. “On the face of     to move toward Senate debate          At the hearing, there was            Blankfein denied such a          said Fabrice Tourre, a French-
prime mortgage securities           the SEC filing, criminal fraud      and a vote on the sweeping         hour upon hour — nearly 11           conflict in a feisty exchange.      born 31-year-old Goldman
from the Wall Street power-         on a historic scale seems to        financial overhaul legislation.    hours in all, winding up just        “We do hundreds of thou-            trader who was the only indi-
house in 2006 and 2007 came         have occurred in this instance,”    At the same time, they floated     before 9 p.m. EDT — of com-          sands, if not millions of trans-    vidual named in the SEC suit.
looking for risk “and that’s        the letter said.                    a partial alternative that they    bative exchanges, occasional         actions a day, as a market          “I deny — categorically — the
what they got.”                        The lawmakers, mostly            said could lead to an election-    humor and long stretches of          maker,” he said, noting that        SEC’s allegation.”
   The Senate investigative         Democrats, who signed the           year compromise on an issue        senators and Wall Street             behind every transaction there         The SEC says Tourre mar-
panel alleges the firm bet          letter     included      House      that commands strong public        insiders speaking past each          was a buyer and a seller, creat-    keted securities without telling
against its clients — and the       Judiciary           Committee       support. Additional votes are      other. There was talk of ethical     ing both winners and losers.        buyers they had been chosen
housing market — by taking          Chairman Rep. John Conyers,         expected later in the week.        obligations versus financial            Levin vigorously pressed         with help from a Goldman
short positions on mortgage         D-Mich.                                Among an array of changes,      transactions so complex they         about an e-mail between             hedge fund client that was bet-
securities, and failed to tell         Goldman’s CEO and other          the legislation would crack        all but defy explanation. And        Goldman executives describing       ting the investments would
them that the securities it was     executives were lambasted by        down on the kind of lightly        there were a half-dozen pro-         one product called Timberwolf       fail. The commission alleged
selling were very high risk.        senators for “unbridled greed”      regulated housing market           testers dressed head to toe in       as “one s——y deal.”                 that Tourre told investors the
   Blankfein was the final wit-     in an often-electric showdown       investments that helped set        prison stripes with Goldman             “Your top priority is to sell    hedge fund, Paulson & Co.,
ness in a daylong hearing on        between Wall Street and             off the crisis in 2007.            executives’ names around             that s——y deal,” Levin said.        actually bought into the invest-
                                                                                                           their necks.                         “Should Goldman Sachs be            ments. Tourre said he didn’t

Free speech versus kids                                                                                       Senators from both parties
                                                                                                           verbally       pounded
                                                                                                           Goldman executives, accusing
                                                                                                                                         the
                                                                                                                                                trying to sell a s——y deal?”
                                                                                                                                                   “I didn’t use that term with
                                                                                                                                                respect to this deal,” the exec-
                                                                                                                                                                                    recall telling investors that.
                                                                                                                                                                                       Tourre said: “I am saddened
                                                                                                                                                                                    and humbled by what hap-
                                                                                                           them of a financial version of       utive responded.                    pened in the market in 2007
and violent video games                                                                                    rigged casino gambling that
                                                                                                           they said endangered the
                                                                                                                                                   Other senators repeated the
                                                                                                                                                language in their questioning.
                                                                                                                                                                                    and 2008. ... But I believe my
                                                                                                                                                                                    conduct was proper.”
    By JESSE J. HOLLAND             chase and play. They also argue       But courts in other states       entire U.S. economy.                    Blankfein said the company          Was Goldman harmed by
        The Associated Press        that video games — which the        have struck down similar laws.        That drew a protest from          didn’t bet against its clients —    the hearing?
   WASHINGTON — The U.S.            Entertainment            Software     The video game industry          Sen. John Ensign, a Nevada           and can’t survive without              “Despite the interrogation,
Supreme Court will decide           Association says are played in      also argues that approval of       Republican. In Las Vegas, he         their trust. He repeated the        the Goldman team hasn’t
whether free speech rights are      68 percent of American house-       California’s     video    game     said, “people know the odds          company’s assertion that it         really provided any new infor-
more important than helping         holds — are protected forms of      restrictions could open the        are against them. They play          lost $1.2 billion in the residen-   mation,” market analyst
parents keep violent material       expression under the First          door for states to limit minors’   anyway. On Wall Street, they         tial mortgage meltdown in           Edward Yardeni said. “And
away from children.                 Amendment             to      the   access to other material on the    manipulate the odds while            2007 and 2008 that touched          the (senators) aren’t creating
   The justices agreed last week    Constitution.                       grounds of protecting chil-        you’re playing the game.”            off the financial crisis and a      a more damaging view than
to      consider     reinstating       But supporters of the law        dren. “The state, in essence,         Away from the hearing             severe recession. He also           already existed.”
California’s ban on the sale or     note that the Supreme Court         asks us to create a new catego-    room, analysts and investors         argued that Goldman wasn’t             “Right now, it looks like the
rental of violent video games to    has upheld laws keeping             ry of nonprotected material        suggested the firm was surviv-       making an aggressive negative       PR battle has been fought to a
minors, a law the 9th U.S.          minors from buying or having        based on its depiction of vio-     ing the hearing with its reputa-     bet — or short — on the mort-       draw,” Yardeni added.
Circuit Court of Appeals in San     access to pornography, alcohol      lence,” Callahan wrote in the      tion intact, something its stock     gage market’s slide.
Francisco threw out last year       and      tobacco.      And    the   30-page ruling.                    performance for the day may             He and other executives            Associated Press writers
on grounds that it violated         California law does not ban           The court will hear argu-        have underscored. Goldman’s          described their use of complex      Stevenson Jacobs in New
minors’ constitutional rights.      parents from purchasing or          ments in this case in the fall.    stock rose $1.01 to $153.04 on       trading tools as a way to           York and Jim Kuhnhenn and
   California Gov. Arnold           buying the video games for            The case is Schwarzenegger       Tuesday, a day in which the          reduce risks for the company        Michael       Sandler     in
Schwarzenegger, who signed          their children.                     v. Entertainment Merchants         Dow Jones industrials had            and its clients.                    Washington contributed to
the law in 2005, said he was           Michael D. Gallagher, presi-     Association, 08-1448.              their worst drop in nearly three        Earlier, Levin said that         this report.
pleased the high court would        dent of the Entertainment              Source Code: 20100503crj        months, down 213 points.             financial industry lobbyists             Source Code: 20100428fz
review the appeals court deci-      Software Association, said
sion.                               video games should get the
   “We have a responsibility to     same First Amendment pro-
our kids and our communities        tections as the court reaffirmed
to protect against the effects of   last week for videos.
games that depict ultra-violent        Given the recent ruling on
actions, just as we already do      videos showing animal cruelty,
with movies.”                       “we are hopeful that the court
   However, the judge who           will reject California’s invita-
wrote the decision overturning      tion to break from these settled
the law said at the time that       principles by treating depic-
there was no research showing       tions of violence, especially
a connection between violent        those in creative works, as
video games and psychological       unprotected by the First
harm to young people.               Amendment,” he said.
   The Supreme Court’s deci-           Leland Yee, the California
sion to hear the case comes         state senator who wrote the
only a week after the high          video game ban, said the
court voted overwhelmingly to       Supreme Court obviously
strike down a federal law ban-      doesn’t think the animal cru-
ning videos showing animal          elty video ban and the violent
cruelty. The California case        video game ban are compara-
poses similar free speech con-      ble. If the justices thought
cerns, although the state law is    that, he said, they would not
aimed at protecting children,       be reviewing the 9th Circuit’s
raising an additional issue.        decision to throw out the
   California’s law would have      video game ban.
prohibited the sale or rental of       “Clearly, the justices want to
violent games — those that          look specifically at our narrow-
include “killing, maiming, dis-     ly tailored law that simply lim-
membering or sexually assault-      its sales of ultra-violent games
ing an image of a human             to kids without prohibiting
being” — to anyone under 18.        speech,” said Yee, a San
It also would have created          Francisco Democrat.
strict labeling requirements for       California          lawmakers
video game manufacturers.           approved the law, in part, by
Retailers who violated the act      relying on several studies sug-
could have been fined up to         gesting violent games can be
$1,000 for each violation.          linked to aggression, anti-
   Lawyer Stephen S. Smith,         social behavior and desensiti-
who has represented several         zation to violence in children.
video game companies in             But federal judges have dis-
court, said the Supreme Court       missed that research.
may use this case to explain           “None of the research estab-
how far lawmakers can go            lishes or suggests a causal link
when trying to regulate depic-      between minors playing vio-
tions of violence.                  lent video games and actual
   “There is a fair amount of       psychological or neurological
First Amendment law in the          harm, and inferences to that
area of sexual explicitness and     effect would not be reason-
obscenity,” he said. “But there     able,” Judge Consuelo Callahan
is not nearly as much law on        said in the 9th Circuit ruling.
the issue of violence and what         Callahan also said there were
may be restricted or not under      less restrictive ways to protect
the First Amendment in that         children from “unquestionably
arena.”                             violent” video games.
   The California law never            The supporters of the law say
took effect, and was challenged     the same legal justifications for
shortly after it was signed by      banning minors from access-
Schwarzenegger.        A     U.S.   ing pornography can be
District Court blocked it after     applied to violent video games.
the industry sued the state, cit-   They point to recent Federal
ing constitutional concerns.        Trade Commission studies sug-
   Opponents of the law note        gesting that the video game
that video games already are        industry’s rating system was
labeled with a rating system        not effective in blocking
that lets parents decide what       minors from purchasing games
games their children can pur-       designed for adults.
8                                                           MONDAY, MAY 3, 2010 •    Law Week • THE DAILY TRANSCRIPT              ®




State’s immigration law faces new challenges
    By JONATHAN J. COOPER       veteran Martin Escobar            rights and could hinder        enforcing the law.              Republican Gov. Jan Brewer,           A group of conservative
        The Associated Press    argues there’s no way for offi-   police investigations in          The group argues federal     the law requires local and         state       lawmakers       in
  PHOENIX — An Arizona          cers to confirm people’s          Hispanic-prevalent areas.      law pre-empts state regula-     state law enforcement to           Oklahoma are considering
police officer and a Latino     immigration status without          A Latino clergy group also   tion of national borders, and   question people about their        pushing a bill similar to
group filed the first legal     impeding investigations. The      sued Thursday in federal       that Arizona’s law violates     immigration status if there’s      Arizona’s. In Texas, Rep.
challenges of Arizona’s         lawsuit, filed Thursday in        court in Phoenix. The          due process rights by letting   reason to suspect they’re in       Debbie Riddle, a Republican,
sweeping new law cracking       U.S. District Court in            National Coalition of Latino   police detain suspected ille-   the country illegally, and         said she will introduce a
down on illegal immigration     Tucson, alleges the new           Clergy and Christian Leaders   gal immigrants before they’re   makes it a state crime to be in    measure similar to the
Thursday.                       immigration law violates          will seek an injunction pre-   convicted.                      the United States illegally.       Arizona law in the January
  Fifteen-year Tucson police    numerous       constitutional     venting authorities from          Signed last week by             U.S. Attorney General Eric      legislative session. And
                                                                                                                                 Holder has said the federal        Republicans running for gov-
                                                                                                                                 government may challenge           ernor in Colorado and
                                                                                                                                 the law, and more Hispanic         Minnesota expressed sup-
                                                                                                                                 and civil rights groups are        port for the crackdown. “I’d
                                                                                                                                 planning lawsuits.                 do something very similar” if
                                                                                                                                    “Mexican-Americans are not      elected, Former Rep. Scott
                                                                                                                                 going to take this lying down,”    McInnis, told KHOW-AM
                                                                                                                                 singer Linda Ronstadt, a           radio in Denver.
                                                                                                                                 Tucson native, said at a state        Denver Public Schools is
                                                                                                                                 Capitol news conference on a       banning work-related travel
                                                                                                                                 lawsuit planned by the             to Arizona. Even though
                                                                                                                                 American Civil Liberties           school employees are in the
                                                                                                                                 Union, the Mexican American        country       legally,    DPS
                                                                                                                                 Legal       Defense         and    spokesman               Kristy
                                                                                                                                 Educational Fund and the           Armstrong said officials
                                                                                                                                 National Immigration Law           don’t want them to be “sub-
                                                                                                                                 Center.                            jected to that kind of scruti-
                                                                                                                                    MALDEF President Tho-           ny and search.”
                                                                                                                                 mas Saenz said many Latinos           Retired South African
                                                                                                                                 fear implementation of the         archbishop Desmond Tutu
                                                                                                                                 law but that the legal chal-       also chimed in, saying he
                                                                                                                                 lenge provides reason for          supports the idea of a boycott
                                                                                                                                 optimism. “We will be in           of     Arizona     businesses,
                                                                                                                                 Arizona to protect the com-        according to a letter he wrote
                                                                                                                                 munity,” he said.                  that was posted Wednesday
                                                                                                                                    On Wednesday, a group           on TheCommunity.com, a
                                                                                                                                 filed papers to launch a ref-      website for Nobel peace lau-
                                                                                                                                 erendum drive that could           reates that promotes peace
                                                                                                                                 put the law on hold until          and human rights.
                                                                                                                                 2012, when voters could               “I recognize that Arizona
                                                                                                                                 decide     whether       it   is   has become a widening entry
                                                                                                                                 repealed.                          point for illegal immigration
         An expansive outlook:                                                                                                      The legislation’s chief         from the South ... but a solu-
                                                                                                                                 sponsor, Republican Rep.           tion that degrades innocent
                                                                                                                                 Russell Pearce, said he has no     people, or that makes anyone
              What the legal community expects from a law school devoted to the big picture.                                     doubt voters will support the      with broken English a sus-
              Vibrant, engaging graduates with perspectives for today’s legal landscape.                                         new law at the ballot box,         pect, is not a solution,” Tutu
                                                                                                                                 which would then protect it        said.
                                                                                                                                 from      repeal      by    the       Colombian singer Shakira
                                                                                                                                 Legislature. In Arizona,           planned to visit Phoenix on
                                                                                                                                 measures approved by voters        Thursday to meet with the
                                                                                                                                 can only be repealed at the        city’s police chief and mayor
                                                                                                                                 ballot box.                        over her concerns that the
                                                                                                                                    At least three Arizona          law would lead to racial pro-
                                                                                                                                 cities — Phoenix, Flagstaff        filing.
                                                                                                                                 and Tucson — also are con-
                                                                                                                                 sidering lawsuits to block the       Associated Press writers
                                                                                                                                 law.                               Mark Carlson and Matt
              www.CaliforniaWestern.edu                                                                                             Meanwhile, the effect of        Sedensky contributed to this
                                                                                                                                 the law continued to ripple        report.
                                                                                                                                 beyond Arizona.                       Source Code: 20100503cri

				
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