The General Rule

You absolutely must learn that “You have the right to remain silent” REALLY means SHUT UP!!!! It means “YOUR LAWYER WILL TELL YOU NOT TO TALK TO US BUT WE THINK YOU ARE SO STUPID YOU WILL TALK TO US ANYWAY.” We have an ADVERSARY system. What’s that mean? It means it’s *everyone* against the defense!

If you doubt me go to YouTube and search for “Don’t talk to the police.” Or you can just click on the video below:

 


 
If you still talk to the police after seeing this, you deserve your fate.

Don’t Talk To The Police–The Exception

There may (just possibly) be an exception to the general rule. That’s if you may be charged as part of the War On Terror. This exception is because what can be done under those laws (even just on a charge, let’s not get anywhere near a conviction) is so draconian, so harsh that many very competent lawyers will have their clients do most anything that breaks normal rules to avoid a terrorism charge. Even if you are later charged with lying to federal investigators, if convicted, the penalty is harsh; but orders of magnitude less than what could happen if you are charged under one or more of the terrorism laws. In that case, you might not even get to trial for, well, forever. And forget about bail in the interim.

Typical police response – get the guy for *something* and get some leverage on the family, too.

Don’t Talk To The Police: (For The Lawyers And Their Clients)

When you are charged with complex white collar or conspiracy-type crimes, get a lawyer. Once you have one, consider the following and make appropriate decisions after considering all the facts: a) the early cooperators always get the best deals; b) the first people to gain credibility with the investigators are the ones who frame the investigators’ view of the evidence they find; c) if you don’t cooperate, you can find yourself pulled into the indictment along with everyone else.

But, as a general comment, I don’t think it’s a good idea for the federales to prosecute so many people for lying to investigators. It engenders exactly the response that most of you have expressed.

Standard behavior for the police is to find something to charge you with–material witness, lying to investigators, obstructing justice, littering, something. Even better, they will find something to charge your wife, child, girlfriend with. That will increase the pressure on you to testify as they want. Now they won’t tell you how to testify, they’ll just tell you that you are lying and threaten you with perjury etc. etc. unless you tell the story their way–even if their way is wrong.

September 17, 2010, was the Constitution’s 223rd Birthday! Yes the Old Girl has finally had another birthday. Celebrate all who will! For those who care, a good re-reading of the literal words of the Constitution is important. Here’s a link to it: www.usconstitution.net/const.html. What a revolutionary document! You might also want to read The Federalist Papers to understand a bit about the debate on what the Constitution meant to the Founders, how and why they disagreed on so many different things, and why it is hard to know what “original intent” was, when so many of the Founders didn’t agree either. Here’s a link: www.foundingfathers.info/federalistpapers.


OC – Opposing Counsel

PC – Potential Client

SWMBO – She Who Must Be Obeyed–wife or girlfriend. From the Rumpole of the Bailey series of books by John Mortimer. Dramatized several years ago on PBS.

YMMV – Your Message May Vary

HTH – Hope This Helps

IIRC – If I Recall Correctly

IMHO – In My Humble Opinion

IMNSHO – In My Not So Humble Opinion

<g> – grin

<vbg> – very big grin

WTF – Wholly, Totally Flabbergasted

IP – Intellectual Property

PI – Personal Injury

PD – Public Defender

OTOH – On The One Hand or On the Other Hand (context distinguishes)

BOTOH – But On The Other Hand

BTW – By The Way

SH – Summary Judgment

MtD – Motion to Dismiss

APP – appeal

K – contract

List of emoticons – http://en.wikipedia.org/wiki/List_of_emoticons

In my experience, clients just love “flat fees.” They regularly ask me about them. Well, “flat fees” may be okay for many times of legal issues but, for litigators like me, they are a problem. Unlike a house painter, I can’t see the house before giving a quote. (Assuming, as I do, that a house painter would give a higher quote for a mansion than, say, a small, one-bedroom house. Another example, if Bill Gates walked in and said “I need a Chapter 7 bankruptcy filed” you would not do well charging him the same fee as a standard no-asset Chapter 7.)

So, in any given case, I cannot know what a fair rate is until I know how much work is involved in the matter until I’ve had some time to investigate it and, with luck, learn who the opposing lawyer will be. How complicated the issue, how contentious litigation will be, how many documents will be involved, how often I will have to go to court to fight for documents with a Motion to Compel, how often I will have to go to Court to resist completely inappropriate demands for documents, etc. Without answers to these (and many other) questions, any sort of fixed fee is completely impossible–it will be either unfair to the client or unfair to me.

My solution is actually simple: I call it the “Task Order” approach. Using this approach, I do an investigation first of all (for a fixed fee). Once that is completed I have a better idea of who complicated and contentious the case will be. If I don’t do that, I risk either over-charging my client or losing money on the deal. Once the investigation is completed, the client and I meet and discuss my findings. Generally I will then give the client a 29-step, 5 phase outline of what takes place in litigation. Based on this outline, my investigation, and other expertise, the client and I reach agreement on the next step in the case and what I will charge for that next step only. By doing this, the client knows and approves each step and knows and approves the cost of each step. Best of all, the client a) can budget for the case, b) stays informed and involved, and c)knows that the cash register doesn’t start running whenever they ask a question. My bottom line is that Task Order Billing makes happy clients.

If you are not in California (where Covenants Not To Compete are effectively worthless) there is, generally speaking, a 3 prong test: Given the industry involved, is the Covenant reasonable in terms of time limit, job functions or descriptions prohibited, and geographic reach. Thus, a radio DJ job may have a greater geographic reach than a hair stylist’s job (e.g., 50 miles v. 5 miles). Similarly, the radio DJ job could be shorter duration (say 6 moths) than the stylists (maybe 1 year). A careful analysis of the job function/description is also important. Just because you signed a Covenant Not To Compete when you were a salesperson you may not be prohibited from beings a Sales Manager. Or vice versa. Bottom line: Each case should be carefully analyzed and the legal precedents for that industry should be studied.

Frequently, the most economical way to protect proprietary information like customer lists, prices, costs and technologies is to treat them as trade secrets. Keeping the secret provides an additional benefit—you can sue whoever steals it. To do that, however, you will have to show that:

• The trade secret can be described precisely enough to show that it is not part of what is generally known in the trade or business
• The trade secret derives some independent economic value; the secret is not generally known to the public
• The company has used reasonable efforts under the circumstances to maintain the secret

Here is a checklist of basic steps you should take to help protect your trade secrets. Use it to audit your current protections and to plan for more stringent measures.

Trade Secrets Checklist

This article is edited and reprinted with the permission of Evan L. Loeffler

Life would be a lot simpler if you could buy or sell real estate as easily as buying or selling a used car. When you buy or sell a used car, the seller sets the price, the buyer finds a car she wants to buy, they haggle over the price and, eventually, agree, money is paid and everyone is happy. That model doesn’t work too well when buying or selling real estate. Each state, county and city has special rules, regulations, taxes, forms, and procedures that must be followed. These not only regulate the sale of real estate but also protect the parties involved. And if the purchase involves a mortgage, a lot more rules and regulations (some of which are federal) come into play.

1. If the seller does not have authority to sell the property, the deal will be fouled up. It should be obvious that you cannot sell what you do not own. This sounds simple but if there is a trust, a community property agreement, a family corporation, or even an expired power of attorney, things quickly get both complicated and possibly unpleasant.

2. If the description of the property to be bought/sold is incomplete or legally inadequate, the deal will be fouled up. Note: A mailing address is not an adequate description of the property. You absolutely must use the entire lengthy and convoluted legal description on the purchase and sale agreement for it to be enforceable.

3. If zoning is inconsistent with intended use. This is not merely caveat emptor. If the buyer specifically tells the seller what she intends and the seller indicates that the zoning is appropriate, the deal will be fouled up. Both parties should check and be sure.

4. If the buyer fails to pay earnest money or follow earnest money provisions. These provisions are there so the buyer can show good faith. If the contract requires that money be paid or financing be obtained by a specific date, it is a breach of the contract to fail to live up to these terms. Sellers can then accept other offers if they so choose.

5. If both parties do not expressly accept any changes to the initial offer. There is no contract unless both parties expressly accept the changes arrived at after negotiation. Acceptance is shown by, e.g., both parties’ initials.

6. If the note and deed of trust are not attached to the sales contract. Unless the purchase is for cash, the land will be purchased by a loan, which is secured by a deed of trust. These documents, showing the principal, payment terms and interests, should be made a part of the purchase and sale agreement. This is a classic method of voiding a sale.

7. If everything is not in writing. There can be no side agreements or “understandings.” And be sure that there is an “integration” clause saying that the purchase and sale agreement is the entire agreement and any changes must be in writing and signed by both parties.

8. If the seller disclosure form is not filled out correctly. It is a legal requirement in most jurisdictions that the seller of real estate certify that any existing defects in the property have been disclosed and any prior defects have been properly repaired. Frequently, sellers massage the facts, or indicate that they “don’t know” if there have ever been any defects. Generally, the test is whether a seller knew or should have known of defect in the ordinary course of events. If the seller’s answers on a disclosure appear to be vague or unresponsive, it is a good idea to wonder why.

9. If the buyer allows the seller to stay in possession after closing. If you are going to do this, be sure there is a specific, time limited, rental clause. This clause should also state the consequences to the seller if she stays beyond the agreed date.

10. If there is no explicit agreement spelling out what the seller takes with her. Much time and money has been spent in litigation over whether the seller was entitled to take her chandelier, washer, dryer, range, oven, or refrigerator.

11. If the property is commercial or has ever had an oil furnace or an underground oil tank and you do not get an environmental survey done. Fixing the environmental problems that a leaking oil tank or furnace can cause could cost thousands of dollars.

12. If the parties do not explicitly include a clause ensuring that post-closing obligations will survive. For example, if the sellers agree to be responsible for hauling away the old cars in the back yard, be sure that there is something in the sales contract that clearly requires them to do so.

Once upon a time, early common law covenants not to compete were void as against public policy. In those days, a person could not pursue a trade or craft without being apprenticed. Once apprenticed, a covenant not to engage in that trade, especially in a non-mobile society, would effectively deny a person the ability to earn a living and would make him a public charge.

Over time, the rules have been substantially modified so that today a non-competition agreement will be enforced if:

• It is supported by consideration
• It is ancillary to a lawful arrangement such as an employment contract
• It is reasonable under multifaceted tests fashioned by the courts

Therefore, both parties must gain something from the agreement limiting competition and it must be linked to another Agreement like an employment contract.

Tests fashioned by the courts to determine what is a Reasonable Agreement include:
1. Agreements not to compete are restraints on trade and thus are not favored
2. The employer bears the burden of showing that the restraint is reasonable and no greater than necessary to protect its legitimate business interests
3. The restraint must not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn a living
4. The restraint must be reasonable in light of sound public policy
5. Finally, the language of the agreement will be strictly construed and, if in any way ambiguous, it will be construed in favor of free competition and against the employer

Whether restrictive agreements in an employment contract will be enforced depends upon the specific facts in each case.

Confidentiality Agreements
Even without a non-competition agreement, a former employee cannot compete with his former employer by using confidential information or trade secrets obtained from the former employer while he worked there.

Trade Secrets
Trade secrets can be anything: finances, methods of production, customer lists, etc. Anything that gives the user an independent economic advantage over the non-user. The simple acquisition of a trade secret can violate the law if you know it was acquired improperly or if you disclose it w/o permission, (covers former employees using it) or if you acquire it by accident or mistake and know it. Trade secrets can be protected for as long as secrecy is maintained. Therefore, the employer must use “reasonable efforts” to keep it secret. This is very fact specific and the courts will look at case-by-case situations.

Interference with Contracts or Business
Either deliberate or negligent (careless) interference with existing contracts, prospective contracts, or current employees’ willingness to work for you can violate the law.

Unfair Competition
Unfair competition includes many different types of fraudulent, deceptive and dishonest trade practices. The law’s purpose in limiting competition is to protect a business’ investment in distinguishing itself and its image, to preserve the goodwill it has with customers, to deter a business from appropriating the goodwill of a competitor, to promote clarity and stability by encouraging consumers to rely on a merchant’s goodwill and reputation, and to increase competition.

Non-solicitation Agreements
Virginia Courts will enforce a signed agreement not to solicit business from the clients of the former employer for a reasonable period of time. Like non-competition agreements, non-solicitation agreements are analyzed under the same principles of fairness to both sides.

The following is taken from an excellent article written by one of my esteemed colleagues, Jonathan Goodman, Esq. We will begin by posing a hypothetical situation, and then discuss possible strategic decisions you, or any other CEO, might reasonably make to the issues at hand. Then, we’ll analyze possible problems with those decisions.

Here is the situation:

You are the CEO of a mid-cap public company. While driving to work one morning, you receive a phone call from your in-house general counsel. She’s on a conference call with the supervisor of the company’s accounting department. You learn the following.

The accounting supervisor received a visit that morning at 6:45 from two (it’s usually two, they travel in pairs) FBI agents. The accounting supervisor says he told the FBI agents “nothing, absolutely nothing.” He also admits, under gentle questioning from you, that the ambush interview at his home lasted “almost two hours.” Hmmmnn.

The accounting supervisor also turned over his company-issued laptop computer to the two FBI agents because he assumed “the FBI would be suspicious if I turned down their request for my computer.” Hmmmnn (again).

During the almost two-hour interview in which “nothing” was revealed, the FBI agents questioned the accounting supervisor about a lucrative government contract, which your company has had for almost five years. They also questioned him about your company’s “restated” financial statements, and they hone in on certain transactions, which are informally known in your company as “round-trips.” (Suddenly that term doesn’t sound so great).

After speaking to your accounting department supervisor, the FBI agents leave a grand jury subpoena with him. As best as you can tell, the subpoena basically asks for all relevant financial and accounting information for the past seven years.

At this point, your general counsel asks the accounting manager to hang up, and you speak privately with your general counsel. Together you telephone the company’s loss prevention, security/investigation department supervisor, a retired DEA agent from Queens. After hearing what has happened, he says he suspects that the accounts receivable clerk who was recently placed on probation for violation of the company’s substance abuse policy is the “snitch” who has been “feeding stories” to the FBI.

Decision: Your general counsel tells you that the company should immediately contact its outside corporate counsel to conduct a full investigation of the government contract and the so-called “round-trip” transactions. After all, she explains, this outside law firm is already familiar with the restated financial statements (because it was involved in the process two years ago). She tells you that using the company’s “regular” outside law firm would be efficient and would generate a cost savings.

Analysis: This is probably a huge mistake. Asking the law firm to be the investigator may generate some short-term savings but it is risky because the law firm would, in effect, be investigating its own conduct. Perhaps the law firm would do a masterful and objective job of investigating the allegations. Perhaps not. Either way, it would look terrible and government prosecutors and investigators would be extremely skeptical.

Decision: You suggest that the company immediately terminate the accounts receivable clerk. You conclude that the company has ample grounds to fire him because of his previous violation of the company’s substance abuse policy. You believe that terminating this employee is necessary before he tells more false stories to the FBI.

Analysis: You may have an MBA from Harvard Business School but you lack some basic common sense. Terminating this employee may well backfire on you. First, you are certainly not sure that the employee did, in fact, provide information and/or documents to the FBI. Second, if the employee is the informant, then he will probably be viewed as a “whistle-blower,” and is entitled to statutory protection. Thus, the employee may have been tooting some coke two or three months ago, but you already decided that this was insufficient to terminate him at the time. The government—and the jury, or multiple juries—will view this employment decision in an extremely negative way.

Decision: Your retired DEA agent forcefully insists that all employees be told to “shut the hell up.” He reminds you that many criminal prosecutions are based on confessions, admissions and knee-jerk statements given by company executives and employees. He suggests that a firm-wide email be distributed, advising all employees to not answer questions from the FBI and to contact the legal department in the event that an FBI special agent makes contact with them.

Analysis: You’re batting zero for three here. Superficially, it may make sense to shut down the information-gathering process and prevent your employees from making misguided, uninformed and uncounseled statements to the FBI. But the FBI and federal prosecutors will probably view these directives as obstruction of justice, which is in and of itself a crime.

Decision: Remembering a presentation you attended at a white-collar crime symposium for corporate executives, you decide to issue an email to all employees, urging them to not destroy any documents. You pat yourself on the back for remembering this, and for acting on it.

Analysis: Don’t be too quick to congratulate yourself. Unless you also advised your MIS or IT department to immediately stop the automatic process of purging and discarding old emails, downloaded emails, storage disks, etc., you may not have gone far enough. Many companies have email systems where old emails are temporarily stored on disks, kept for some period of time (e.g., two years) and then discarded. You do not want the prosecutor and FBI determining whether the continued discarding of disks containing three-year-old emails was routine or an intentional effort to destroy potentially relevant evidence in the midst of a criminal investigation.

Decision: In addition to asking outside general counsel to conduct an “independent” investigation, you also contact two or three experienced litigation lawyers (who periodically handle commercial litigation for the company on an hourly basis) to represent the top management executives.

Analysis: Unless these litigation lawyers, experienced as they may well be, have direct experience in criminal cases, they may not be the right lawyers to be representing your top managers in a criminal investigation.

Decision: You remember an article you read about “joint defense agreements” while returning from your last business trip. You instruct your general counsel to obtain a standard joint defense agreement and to have it signed by the lawyers who will become involved in this case. Your general counsel hops on the Internet and downloads a “sample” joint defense agreement, which has been circulating for the past two to three years.

Analysis: Criminal defense lawyers may debate the wisdom of reducing joint defense agreements to writing, but using an outdated joint defense agreement may be problematic. The agreement should specifically discuss what happens at trial—and whether participants can or cannot be cross-examined with information obtained solely from information exchanged as part of the joint defense agreement. Failure to adequately resolve this issue may lead to a motion for disqualification and some tough questions from the judge and prosecutor.

Decision: Recognizing that the government views the company as a target and appreciating that the government probably interviewed other witnesses before visiting with your accounting department supervisor, you correctly assume that the government has issued other grand jury subpoenas and has obtained information from other witnesses. In a legitimate effort to find out more information, you contact the CFO of one of your largest customers and ask him whether his company has been contacted by the FBI. He willingly tells you “yes,” and volunteers that he is scheduled to appear before the grand jury in 10 days. He also says that he is expected to produce documents a few days before his grand jury appearance. You ask to meet with him in a few days to review the contract and other documents he will be producing and to generally discuss the business relationship between your two companies.

Analysis: Again, these may seem to be perfectly logical and understandable steps, but the government may well view this as obstruction of justice. Combined with the earlier effort to direct employees to not answer questions, this development will not put you at the top of the prosecutor’s “good corporate citizen” list.

So, do you think you might have made some of the same decisions as the hypothetical CEO? If so, don’t be frustrated. The point we want to make is that seemingly logical business decisions can carry with them a host of potential legal problems. It is best to speak with an experienced business attorney who can effectively guide you through the process.

1. When you call the office, you’ll be able to speak with an attorney, not a legal assistant.
2. The lawyer you hire is the lawyer who does your work. Your case will not be palmed off to a junior associate.
3. One attorney will know the facts, do the research and apply the law with full knowledge of your case. At large firms, critical information can be lost in the necessary interactions between numerous lawyers, paralegals, assistants, etc.
4. Working with fewer clients leads to a greater understanding of your case, your particular situation and desires.
5. A smaller firm’s lack of bureaucracy means the wishes of partners, junior partners, wannabe partners, etc. do not have to be taken into account. Only you, the client, matters. And there is greater flexibility to devise the best solutions for your particular case.
6. Flexible billing: A small firm can offer a variety of options, including traditional hourly billing, fixed rates and blended fees.
7. Low overhead. You won’t be paying for expensive décor, “team-building” junkets to the Cayman Islands or a fabulous Christmas party… just a good attorney.
8. Lower hourly rate. See reason above for details on how a small firm can keep costs down.
9. Lower bills. With a small firm, you don’t have to worry about file churning by the staff, who need to bill a certain number of hours a week.
10. Tom Friedman is correct: “The earth is flat.” That is, today’s technology allows a small firm to do the same legal research as an army of associates and paralegals. And better yet, your attorney is doing the research.