Arlen Specter 
Senator Arlen Specter (D-PA) does like to have fun.  Lately he's had it at the expense of the U.S. Chamber of Commerce set.

A short while ago, Senator Specter put in play an oh-so-brief but mighty potent bill that would revert federal courts to the pre-Iqbal and Twombly standard of pleading claims. 

This week, he followed up with a bill that would wipe out two other defendant-friendly Supreme Court rulings.  (Hat tip to Joshua Gallu at Bloomberg.)  These — Stoneridge and Central Bank, N.A. v. First Interstate Bank, N.A., 511 U.S. 164 (1994) – confined private securities fraud cases to "primary" actors and let mere aiders and abettors off the hook.

The new Specter bill would amend a section (15 U.S.C. 78t(e)) that now allows the Securities and Exchange Commission (but not private parties) to bring A&B cases.  The change would add a subsection (2).  It would say:

PRIVATE CIVIL ACTIONS.–For purposes of any private civil action implied under this title, any person that knowingly or recklessly provides substantial assistance to another person in violation of this title, or of any rule or regulation issued under this title, shall be deemed to be in violation of this title to the same extent as the person to whom such assistance is provided.

Feed-icon-14x14 People who like this sort of thing will find this the sort of thing they like.

Fenway Park

Hmmm.  This place looks strangely familiar. 

Today we journey to the land of Blawgletter's legal schooling — the Commonwealth of Massachusetts.  We do so not to visit the question of same-sex marriages, nor the issue of banning class actions in arbitration clauses.  We travel thither instead to look at how well law firms do vis-a-vis clients that take bankruptcy without paying.

The Supreme Judicial Court of Massachusetts last week ruled that Ropes & Gray LLP held a valid statutory lien on an insolvent client's patent and could collect on the lien out of proceeds from the sale of the patent.  The Bay State statute — General Laws ch. 221, § 50 — granted "the attorney who appears for a client . . . a lien for his reasonable fees and expenses upon his client's . . . claim".  It also stated that the lien arose "[f]rom the [attorney's] authorized . . . appearance in any proceeding before any state or federal department". 

The Court read the statute:

  • to create a lawyer's lien from the moment the "attorney" (Ropes & Gray) appeared before a "federal department" (the U.S. Patent and Trademark Office) to press the client's "claim" (the patent application),
  • to fix the lien on the result of pressing the claim (the patent), and
  • to apply the lien to the funds resulting from pre-bankruptcy sale of the patent.

Ropes & Gray LLP v. Jalbert, No. SJC-10333 (Mass. July 28, 2009) (answering questions that First Circuit certified in In re Engage, Inc., 544 F.3d 50, 58 (1st Cir.2008)).

Feed-icon-14x14 Yes, they do call Boston the Hub of the Universe.

Velociraptor

The very picture of quaintness.

The ex-publisher of the WSJ, L. Gordon Crovitz, writes today under the title "The Antitrust Anachronism:  When will technology's ever faster cycles of creative destruction spell the end of antitrust law?"  He argues that the blazing speed of change in high tech renders the Sherman Act, well, quaint.

The oversight Mr. Crovitz disdains happens under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.  HSR requires parties to big mergers and other large deals to report their plans to the Federal Trade Commission and the Antitrust Division in the Department of Justice.

He opines that, as antitrust review of an Internet search deal between Microsoft and Yahoo shows, "by the time regulators can assess a technology market, the market has often moved on."

Ah, yes.  The old market has moved on defense.  Nothing to see here, folks — the market has moved on.  Or it will move on.  Pretty soon.  I think.  Yes, yes — I just saw it move . . . on.

Mr. Crovitz glides over the fact that not long ago "Google tried to do a deal with Yahoo" — a combo that would've put two firms holding almost 85 percent of the search market in cahoots.  If that prospect troubled Mr. Crovitz, he gives no sign of worry — doubtless due to his faith that the market would sooner or later have moved on.

Another bit of fantasy plays into the op-ed.  Mr. Crovitz speaks as if the anti-monopoly part (section 2) of the Sherman Act stands for all antitrust law.  What about section 1 — the piece that condemns contracts, trusts, and conspiracies in restraint of trade?  Will the market self-police price-fixing cartels in the course of moving on?  Will it put conspirators in prison?  Huh?

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A panel of the Tenth Circuit today vacated the 72-month sentence Joseph P. Nacchio got for insider trading in the stock of Qwest Communications, where he served as CEO.  The court held that the district court added too many months to the prison hitch by overstating Mr. Nacchio's "gain" from exercising stock options in April and May 2001.  The gain consisted not of all the profit from selling the stock.  No.  It included only the amount that resulted from Mr. Nacchio's "deception" — as distinct from normal rise in the stock's price.  United States v. Nacchio, No. 07-1311 (10th Cir. July 31, 2009).

The en banc Tenth Circuit split 5-4 in February 2009 on Mr. Nacchio's conviction.  Judge Holmes, who wrote the new opinion, authored the en banc majority's, too.

Tom Hanks in Bonfire
Tom Hanks as bond-trading wunderkind Sherman McCoy in The Bonfire of the Vanities (1990).

The WSJ today runs "The End of Big Law" — an unkind poke at masters of the legal universe.  In the op-ed, Douglas McCollam, who writes for The American Lawyer, leads with a WSJ audience-pleasing thought:  "[T]here is at least one bright spot amidst all the [economic] gloom: For once your lawyers are suffering right along with you."

Mr. McCollam does go on.  Blawgletter's faves include:

It seems plain that a great many members of the American bar fell prey to the same strain of hubris that infected their clients. They embarked on empire building—opening offices from Beijing to Bucharest—and snapping up smaller rivals, confident that the future belonged not so much to the best and the brightest as to the biggest. The movement toward gigantism was virtually uniform across the legal industry.

*    *    *    *

At bottom, what’s in question is the whole economic edifice of the modern American law firm. Like the pharaohs of old, big firms are enamored of constructing pyramids with an ever-widening base of associates and nonequity partners toiling on behalf of a narrowing band of equity partners at the top. Increasing a firm’s “leverage”—as expressed through the billable hour, one of the most pernicious creations in the annals of commerce—has been the key metric driving profitability at big law firms over the last generation.

We find ourselves unable to rouse sympathy, much less empathy.  For, unlike Big Law, our firm:
  • Hasn't acquired any firm, rival or not;..
  • Can't imagine biggest status; 
  • Presents negative leverage — fewer associates (32) than partners (50).
  • Usually assigns one partner and one associate to a case. 
  • Works more on a contingent fee and flat fee basis than on hourly cases.
  • Does litigation — lawsuits and arbitrations — only. 

Yes, we have opened offices around the country — in Dallas, Houston, Los Angeles, New York, and Seattle — and most recently in New York.  But what caused that — hubris or the mess on Wall Street?

Ren Hoek 
Cartoon short producer Marlin "Ren" T. Hoek.

Blawgletter® sometimes thinks we live for opinions like one the Federal Circuit offered today.

How should we describe it?  Kafka-esque doesn't quite get us there; too harsh.  More like Ren Hoek-ey, we think.

The ruling dealt with a pet subject of the Federal Circuit — patent "claim construction".  The process aims to divine the True Meaning of terms and phrases in a patent claim or claims, which define the metes and bounds of the patent.  But you knew that.

The opinion made our head feel funny.  The court tried to teach that a "de novo" review of a claim construction differs from doing "an independent analysis in the first instance".  It said:

Although claim construction is a question of law, we generally refuse to construe claims in the first instance. . . . We have explained that this court’s review, although de novo, is not to function as an independent analysis in the first instance. . . . In this case, however, we accept the parties’ invitation to construe the "probability density function estimation" claim term, for three reasons. First, although the district court did not specifically construe the claim term, its opinion references the question of claim construction, and it is apparent that the district court’s views on the matter have been exhausted. . . . Second, both parties have agreed that we should construe the claim limitation. Third, we agree that the record, which includes considerable evidence and expert testimony, has been sufficiently developed to enable us to construe the claim term without prejudicing either party.

Wavetronix, LLC v. EIS Electronic Integrated Systems, No. 08-1129, slip op. at 13-14 (Fed. Cir. July 29, 2009) (citations omitted).  Got that?  The court refuses to do X "in the first instance" because it prefers to do X "de novo" in the second instance.  And when de novo X happens, it doesn't count as "independent".  Hmm.

The effect on our noggin reminded us of a 1993 cartoon-within-a-cartoon, one that featured a canine it called Explodey the Pup.  You can guess what happened when Explodey's admirer gave him a smooch.  If you prefer not to guess, watch the short – from Ren & Stimpy – for yourself here.

Feed-icon-14x14 Our feed prefers Stimpy.

If you planned to argue a transfer motion to the U.S. Judicial Panel on Multidistrict Litigation, you'd best start getting yourself to Portland, Oregon. 

The JPML scheduled 16 motions — MDL Nos. 2067 through 2082 – in the Mark O. Hatfield U.S. Courthouse from 9:30 a.m. until the arguments finish.

The session will include In re Citigroup, Inc. Securities Litig., MDL No. 2070; In re Federal Home Loan Mortgage Corp. (Freddie Mac) Securities Litig., MDL No. 2072; In re Tickemaster Entertainment, Inc. Marketing and Sales Practices Litig., MDL No. 2078; and In re Blood Reagents Antitrust Litig., MDL No. 2081.

Charles Montague 
Charles Edward Montague (1867-1928).

Our best friends for a long time to come will not be any of the standing cynosures of reporters' eyes; they will find a part of their satisfaction in being nobodies; assured of the truth of the saying that there is no limit to what a man can do so long as he does not care a straw who gets the credit for it.

Charles Edward Montague, Disenchantment 260 (1922) (emphasis ours).

FeedIcon Or:  "If anything goes bad, I did it.  If anything goes semi-good, then we did it.  If anything goes real good, then you did it.  That's all it takes to get people to win football games."  Paul "Bear" Bryant