Hasl.bindex 2/6/06 11:24 AM Page 357

Index

A Aptitude, in decision making, 172 Abacus Direct, 60 Arbitrators, 151–152 Accountability, admitting error and, Argyris, C., 224 145, 147 Armstrong, J. S., 20 Actors, as testimony readers, 49 Arthur Andersen, 62; document reten- Ad hoc internal investigations, 84–85, tion/destruction policy of, 131, 86–88, 95, 252 179–186; Enron and, 126–127, Admissions: and apologies, 142–150; 177–178, 179–186, 222, 240, 314; smoking-gun documents as, 101 Enron-Andersen time line, 183–184; Airline grief counseling, 142, 150 Waste Management and, 221–222; Allaire, P., 126 WorldCom and, 49 Allbritton, J. L., 41–42 Asbestos claims, 33–34, 145–146 Allbritton, R., 41–42 Asia, legal traditions in, 264, 266 Allied Universal Corporation, 292–293 Assignability, 278 Alternative dispute resolution, Association of Corporate Counsel, 8 151–152 Assumptions, decision making based Altria Group, 131 on, 19–20. See also Decision traps American Fine China Guild, 306 and bias American International Group (AIG), At-will doctrine, 288–289, 294 53–54, 248 AT&T, 92 American Radiator & Standard Sani- Attestation signature, 83 tary Corp., United States vs., 339 “Atticus Finch,” 199 American Stock Exchange, 314 Attitude, in decision making, 172 Analysis paralysis, 22 Attorney-client privilege, 199 Annals of Internal Medicine, 149 Automated Medical Laboratories Anonymous hot lines. See Hot lines (AML), United States vs., 330, 331, and ombudsman programs 346n.5 Antibusiness bias, 46–47 Availability bias: characteristics of, 26; Antitrust law: collaboration and, 141; concept of, 21–25; by design, 26; complexity of, 298–300; costs of legal consequences of un-, 26 violating, 45; horizontal restraints and, 295–296,COPYRIGHTED 298–300; interna- MATERIALB tional, 26–27, 37, 169, 262, 263; Balanced scorecard, 70 price discrimination and, 296–300; Bank of America, 249 primer on, 295–300; proactive com- Banking industry scandals, 68, 247–248. pliance program for, 91–92, 169, See also Scandals, corporate 190–192; vertical restraints and, Barings, 247 296–297, 298, 299. See also Thomp- Basic Construction Co., United States son Memo; Unfair competition vs., 338, 346n.5 Apologies, 142–150; impact of, on Baum, H., 66–67 remedies, 147–149 Baxter International, 267

357 Hasl.bindex 2/6/06 11:24 AM Page 358

358 INDEX

Bayer, Baycol liabilities of, 71 Business process reengineering (BPR) Behavioral economics, 18–35; decision movement, 221 traps and, 21–35, 53; roots of, 21. Business schools, 208–211 See also Decision traps and bias Benefield, G., 145–146 C Bennis, W., 230 California Supreme Court, 169 Berry Street Corporation, 117 Campbell’s Soup, 72 Beutsch, United States vs., 338 Canada, employment laws of, 262–263 Bias, decision making. See Decision Candid Camera, 98–99 traps and bias Carlyle Group, Korea, 104–105 Bingham, J. F., 126 Cartels, 147, 295 Black, C., 62 Case law, 264 Blind spots: eliminating, 4–5; of lead- Catholic bishops, 116 ers, 238–245 Cell phone communications, 109, 113, Boehner, J., 115 114–115 Boehner case, 115 Cellophane, 307 Bondi, E., 48–49 Cerner Corporation, 106–107, 108 Bondi vs. Citigroup, 48–49 Certification signature, 83 Boston Legal, 199 CGB Occupational Therapy, 51–52 Boyden, S., 128 Champions, 251 Brand recognition, 92 Champy, J., 221 Breach of contract, 273–274, 281, 301 Chat rooms, 112 Breach of duty, 135–137, 154, 282 Checkov, A., 288 Bribery, international law and, 265, Cheesecake Factory Incorporated, 46 266–269 Chief executive officers (CEOs): im- Bridgestone-Firestone tire defect, 68, portance of legal risk management 128, 283–284, 285 to, 8; time spent on legal issues, Bristol-Myers case, 58 209; trend toward prosecution of, Bristol-Myers Squibb, 58 52–54 Brown, L., 214 Child labor laws, 288 Bush, G. W., 177 Chile, Riggs Bank scandal and, 41, 42 Business education: focus of, 208–211; China: Citibank in, 247; Confucian tra- legal education versus, 5; legal dition and, 264; elevator safety reg- training in, 6, 15, 19–20, 208, 213; ulation in, 57, 59; intellectual risk perspectives in, 5, 208 property law in, 302; labor pool of, Business hot spots, diagnosing, 84–94, 73; one-child rule in, 123; telecom- 225 munications regulation in, 55 Business objectives: alignment of poli- China Daily, 57 cies with, 179–186; defining, 165, Cincotta, United States vs., 330–331 209–210, 253–254; identifying legal Citigroup: Bondi vs., 48–49; defections risks associated with, 165–166; to, 69; regulatory problems of, lawyers’ support for, 204–208, 45–46, 248; scandals of, 247–248 210–211; measuring progress on Civil law model, 263–264 legal risk management and, Civil liability, criminal liability and, 45 245–247 Civil Rights Act, 23 Business policies: alignment of, Civil Rights movement, 288 179–186; communications and, Clash of Cultures, The (Raelin), 199 215–229; employees’ understand- Class action suits: in foreign countries, ing of, 76–77; employment law and, 45, 265; to get attention, 152; rise 293; excellence and risk tolerance in, 44–45, 265 in, 170–173; latent legal liabilities Classic economic theory, 4 in, 39–43 Clayton Act, 296 Hasl.bindex 2/6/06 11:24 AM Page 359

INDEX 359

Clinton, B., 11, 24 Compositions-of-matter patents, 304 Closure management, 127–130 Computer backup tapes, 131–133 Coca-Cola, 116 Computer cameras, 114 Codes of conduct. See Ethics Confidence, 26. See also Overconfidence Coleman-Sunbeam deal, 50–51 Confidentiality: attorney-client, 199; of Colgate Palmolive, 66–67, 169 documents, 114–116, 125; as legal Collateral consequences, of criminal duty, 116, 249; rogue employees conviction, 341–342 and, 289 Collective knowledge, 186. See also Confidentiality agreements, in con- Knowledge management tracts, 163, 273 Collective marks, 306 Conflict resolution provisions, Color shade trademarks, 306–307 276–277 Columbia space shuttle disaster, 243–245 Conflicts: alternative dispute resolu- Comfort zones: employee, 218; loss aver- tion of, 151–152; dissatisfaction sion and, 31; preference for, 25, 31 and, 138–140; expectations man- Command-and-control approach, 221 agement for, 134–155; hidden Commitment: demonstrating, 216–222, agendas and, 142. See also Lawsuits 247–248; trust building and, 222–229 Confucian tradition, 264 Common law: contract interpretation Consent decrees, 58 and, 274–275; employment law Constructive discharge, 107, 292 and, 288–289; international tradi- Context, loss aversion and, 29 tions of, 263–264 Contingency fees, 264–265 Communication channels: document Contingent commission arrange- retention and, 130–133; strengths ments, 86, 88 and weaknesses of, 108–114 Continuous learning, 192–197 Communications: about compliance Contracts: conditional, 272–273; con- missteps, 221–222; and demonstrat- necting, to bottom line, 14; for ing commitment, 216–222; ele- copyrights, 308; defined, 270; dis- ments of, 218–219; empathic, 119, claimers in, 282–283; drafting con- 136, 240; expectations manage- trol of, 278–279; enforceability of, ment and, 134–155; in-person, 114; 271–274; formation of, 270; “four for internal compliance, 215–229; corners of,” 274–275; hot buttons between lawyers and managers, in, 276–278; interpretation of, 199–214; power of, 215–216; smok- 274–278; legal literacy for signers ing gun, 98–133, 140; trust building of, 82–83; legal risk and opportu- and, 222–229; unmanaged legal nity assessment of, 90; metrics for, risk and, 235. See also Documents; 194; overview of, 280; precise lan- Electronic documents guage for, 119; primer on, 269–281; Competent, preference for feeling, 25, remedies for, 279–280; standard- 31 ized or boilerplate, 186–187, Competition laws. See Antitrust law; 273–278; statute of limitations for, Unfair competition 273–274; tortious interference of, Competitive advantage: decision mak- 301; trade secrets and, 162–163, ing and, 162–163; legal leverage 277; written, 271–272 for, 17, 63–78; risk and opportunity Copyright Clearance Center, 309 assessment for, 92–93 Copyright law, Internet piracy and, 192 Complaints: as legal risk metrics, Copyrights and copyright law, 307–309 195–196; paying attention to, 140, Cornell University, 5, 70 195–196 Corporate governance, 8–9, 10 Compliance courses, 15 Corrupt business models, 121–122 Compliance programs, criminal liabil- Cost-benefit analysis: incentives and, ity and, 338–340 242; insufficiency of, 29, 31–33, 65 Hasl.bindex 2/6/06 11:24 AM Page 360

360 INDEX

Counterfeiting, 302 availability and, 27, 63; lawyers and, Court TV, 47 200; legal literacy and, 87–88, 96; of Cover-ups, 88. See also Obstruction of loss aversion, 28–33, 157; noncom- justice pliance and, 217–218; of overconfi- Covey, S. R., 63, 119, 136, 240 dence, 25–28; Sarbanes-Oxley Act Cox-2 inhibitors, 285 compliance and, 314–316; that sab- Credit Suisse First Boston, 29–30 otage legal leverage, 21–35. See also Criminal liability: civil liability and, 45; Availability bias; Loss aversion; criminal intent and, 185; factors in, Overconfidence 329–346; Sarbanes-Oxley Act inter- Deficiencies, documentation of, pretation and, 315–316; Thompson 195–196 Memo on, 316, 329–346. See also Delivery date specification, 276 U.S. Federal Sentencing Guidelines Demosthenes, 53 for Organizations Denial, 53, 200 Criminal proceedings: alternatives to, Denny’s: availability bias applied to, 343; Andersen’s demise and, 178; 22–25; consent decree of, 58, 89 increased prosecution and, 52–54; Design, lack of availability triggered by, personal costs of, 17, 53–55 26 Crosby, P., 6 Deutsche Bank, 69 Cross-functionality: for legal risk as- Deutsche Börse, 111, 114 sessment, 189; for product liability Dial Corporation, 66–67, 169 assessment, 90–91, 226–227; re- Directors’ insurance premiums, 34 framing for, 157–158; for regula- Disclaimers, 282–283 tory compliance, 90 Discovery: document product requests Cross-licensing arrangements, 141 in, 124–125; electronic, 49–51; CSI effect, 47 ethics and, 124–125; in United Customer complaint form, careless States, 265 salesman and, 100–102, 119 Discovery space shuttle, 244–245 Customer relations, 142 Discrimination, 289–291, 293. See also Racial discrimination cases; Sexual D harassment Damage awards: product liability and, Disparagement, as anticompetitive be- 281; trend toward high, 51–52, havior, 301 264–265, 282. See also Punitive Disproportionate impact, 290 damages Disrespectful language, 105–108 Damage control, 167 Distributors, competition with, Data: defined, 186; developing, 298–300, 302 187–190 Documents: carelessness with, 99–102; Decision making: behavioral econom- clarity and accuracy in, 118–120, ics in, 18–35; ethical, 122–125; for 140, 272; of closure process, 127– legal leverage, 64, 156–173; legal 130; communication channels and, literacy for, 94–97, 167–168; luck 108–114; confidentiality of, 114–116, and, 158–161; rational versus irra- 124–125; ethics and, 122–125; as tional, 4, 20–21; risk tolerance and latent legal liabilities, 49–51; legal excellence in, 170–173 leverage rules for, 103–133; legal Decision-making processes: develop- literacy applied to, 116–118; legal ing, 161–169; value of, 158–161 versus illegal business practices and, Decision traps and bias: of availability, 121–122; paper, 113; personal busi- 21–25; bad habits and, 87–88; de- ness in, 103–106, 131; respectful- nial and, 53; ethical leadership ness in, 105–108; retention of, and, 238–245; in first level of legal 50–51, 130–133, 177–178, 179–186; understanding, 251; information shredding, 177–178, 179–186; Hasl.bindex 2/6/06 11:24 AM Page 361

INDEX 361

smoking gun, 98–133, 182; subject fraternization of, 291–292; head- to pretrial discovery, 124–125; room for, 69–70; leaders’ moral warnings in, 125–127. See also Con- authority and, 232–244; legal com- tracts; Electronic documents; petency requirements for, 95, Smoking guns 257–259; legal literacy for, 70, Dolby Laboratories, 93 76–77, 94–97; listening to, 219–221, DoubleClick, 60–61, 68, 168 224, 240–245; managing and devel- Dow-Corning breast implants, 29 oping, 72–74; participation of, “Dr Evil,” 46 225–229; as source of legal lever- Drafting control, 278–279 age, 13; trust building with, Drucker, P., 19–20, 35, 77 222–229 Due diligence, 272 Employment at-will doctrine, 288–289 Duke University, 201 Employment law: extraterritorial, 267; Dumped goods, 300–301 international, 93–94, 262–263, 294; Duncan, D., 182, 183, 184, 185 organization size and, 88; primer Dunlap, T., 91–92, 190 on, 287–295; theories of, 293–294 DuPont, 222 Employment practices insurance, ha- rassment claims and, 33 E Enforcement: increase in, 52–54, 55, E-mail. See Electronic documents 57–58; proactive avoidance of, East Asia, legal traditions in, 264 58–62; rule of law and, 55, 57–58 Ebbers, B., 45 Enron and Enron scandal, 26; Arthur Edison, T. A., 156 Andersen and, 177–178, 179–186, Edison Schools, 52 222, 240, 314; bankruptcy filing of, EgyptAir, 142 59; document discovery in, 103–104; Electronic documents and e-mail: dis- ethics policy of, 217; impact of, 46, paraging versus respectful language 53, 68; insurance policies of, 34; in, 106–108; guidelines for using, internal warnings at, 126–127, 240, 108–114; as latent legal liabilities, 241; technically legal defense of, 49–51; maintenance of, 50–51, 130– 249–250 133; misunderstandings in, 109–111; Enron-Andersen time line, 183–184 personal versus company business Environmental contamination or ex- use of, 103–106, 131; privacy of, posure claims, 33–34, 145–146 104, 109, 116; saving draft forms of, Equatorial Guinea, 41 108; strengths and weaknesses of, Erin Brockovich, 47 112. See also Documents Escalator, 307 Electronic networks, 131 Ethical dilemmas, 122–125; moral Electronic piracy, 192 leadership and, 233–238 Emotional weighting, power of, 21–22 Ethical leadership: building moral Empathic communication, 119, 136, authority and, 232–248; for legal 240 leverage, 230–250 Employee background checks, 289 Ethics and ethics codes: communica- Employee raiding, 301–302 tions and, 215–229; demonstrating Employee reporting metrics, 195 commitment to, 216–222, 247–248; Employee satisfaction, 69–70 situational, 122–125, 233, 247; Employee suggestion plan, 168–169 spirit of the law and, 248–250 Employee termination litigation, 139, Ethics Resource Center, 11 292–293 Ethics training, 6, 208 Employees: authority of, 98–102; col- Europe: antitrust/fair competition lective knowledge and, 186; com- laws in, 26–27, 169, 262; legal tra- munications for compliance of, ditions of, 263; patent law in, 304 215–229; documents and, 98–102; European Commission, 111 Hasl.bindex 2/6/06 11:24 AM Page 362

362 INDEX

European Competition Commission, Foreign Corrupt Practices Act (FCPA), 26–27 195, 266–267 European Court of First Instance, 111 Foreign languages, communication European Union, hot line laws of, 94 misunderstandings and, 111 Evidence, as litigation driver, 135–137, Foreign laws. See International law 154 Fortune, 24, 107 Excellence, 170–173 Fox, A., 105–106 Expectations management, 134–155; Fox, C., 31 communication precision for, Framing, availability bias and, 25 118–120; international differences France: class actions in, 45, 265; intel- and, 265; knowledge management lectual property law in, 303 for, 192, 196; litigation dynamics Franklin, B., 81 and, 135–140; litigation prevention Fraud, obsession with financial perfor- and, 140–153; risk assessment for, 91 mance and, 72. See also Criminal Expert witnesses, 51 proceedings; Scandals, corporate Extraterritorial laws, 266–269 Frederick the Great, 134 Funt, A., 98 F Face-to-face communications, 114 G Face-to-face training, 190–191 G-3 video phone, 114 Fair use standard, 308–309 Gandhi, M., 238, 242 Fairness: employment law and, 294; Gateway, 141 expectations management and, Geifeld, B., 314 137–138, 143, 154–155; in negotia- Gender discrimination, 290. See also tion, 154–155; reputation and, Sexual harassment 66–67. See also Unfair competition Geneen, H., 224 Family estate settlement case, 137–138, General Electric (GE): in bribing 142 Israeli military, 266; Honeywell Faxes, 111, 113, 114 merger deal of, 26–27, 37, 169, 262; Fear, employee, 223–224, 237–238, 241 Six Sigma in, 189, 195 Feurstein, A., 11–12 Genericide, 307 Fiduciary duty, 286–287 Geneva Conventions, 261 Final exam lesson, 236–238 George Washington University, 11 Financial controls legislation. See German Works Council Act, 94 Sarbanes-Oxley Act (SOX) Germany: antitrust law in, 263; intel- Financial performance: legal risk man- lectual property law in, 303; worker agement for improving, 70–74, 253; rights in, 94 obsession with, 71–72, 209–210, Gingrich, N., 114–115 216, 253–254 Globalization, 264 Financial reporting, benefits of trans- Goethe, 215 parent, 70–72 Golann, D., 146 Fines, 89 Graco, 89 Fishhoff, B., 22 Grand Circle, 142, 149 Fitz-enz, J., 72 Great Britain: Citibank in, 248; class Five-Point Play, 201 actions in, 45, 265 Fleet Bank, 117 Greenberg, G., 86 Force majeure provision, 271 Greenberg, M. “H.”, 53–54, 248 Ford Motor Company: Ford Explorer Grief counseling, 142, 150 tire problem of, 68, 128, 283–284, Grimshaw vs. Ford Motor Company, 285; Ford Pinto case of, 31–33, 169; 31–33 Grimshaw vs., 31–33 Grove, A., 91–92, 100, 190–192, 238 Hasl.bindex 2/6/06 11:24 AM Page 363

INDEX 363

H consequences of, 26; as losing strat- Hague Convention, 261 egy, 14–16, 185–186, 252 Hairdresser case, 134–135, 136–137, 142 Imclone, 30 Hammer, M., 221 Impossibility, contract, 271 Harassment claims: employment prac- Incentives: building, 233–238; charac- tices insurance and, 33; underesti- teristics of, 239; impacts of, 239; lis- mation of, 33. See also Sexual tening and, 242; negative, 233–235, harassment 239; positive, 239 Hardball tactics, 48–49 Indemnity provisions, 277, 282–283 Harris, J. N., 48–49 India: legal tradition of, 264; personal Harvard Business School, 9 jurisdiction in, 263 Hazardous products, 284 Information: availability of, and bias, Health insurance, 34 27, 63, 234–235; defined, 186; Heath, 25 developing, 187–190 Hecker, J., 127 Initial public offerings (IPOs), 198–199 Helpline, 228 Injunctive relief, 279–280 Hidden agendas, 142 Insider, The, 47 High-reliability organizations, 170–171 Instant messaging, 112, 131 High-tech bubble, 160 Insurance, overreliance on, 33–35 Hilton Hotels Corp., United States vs., Integration clause, 272 338, 346n.5 Integrity: contracts and, 272; demon- Hindu Buddhist tradition, 264 strating, 240–242 Hollinger International, 61–62 Intel, 100; antitrust compliance strat- Holtzman, E., 267 egy of, 91–92, 169, 190–192; Pen- Honeywell: GE merger deal with, tium chip recall of, 238 26–27, 37, 169, 262; knowledge Intellectual property rights and law: management system of, 189–190 contracts and, 277; defined, 303; Honeywell Law Web, 189–190 failure to secure, 36–38; interna- Hooters, 290 tional, 262, 302, 303–304, 306; Horizontal restraints, 295–296, primer on, 303–311; risk and op- 298–300 portunity assessment for, 90, 92–93; Hostile work environment: disrespect unfair competition and, 302; value and, 107–108; knowledge manage- creation and, 309–310. See also ment and, 179; sexual harassment Copyrights and copyright law; and, 291–292 Patent rights and law; Trade secrets; Hot lines and ombudsman programs: Trademarks and trademark law benefits of, 93–94; communication Interests: legal rights and, 141–143; about, 219, 220; foreign laws for, relationship, 142–150 93–94; metrics for, 195 International Association of Fire House accounts, 299, 302 Chiefs, 306 Houseman, J., 203 International business, ethical dilem- Human capital, 72–74. See also Em- mas in, 123 ployee headings International Convention on Combat- Human needs, 149–150, 233, 234–235, ing Bribery of Foreign Public Offi- 241, 287–288 cials in International Business Huntsman Chemical Corporation, 10, Transactions, 267, 268–269 37, 90, 118, 169 International law: on anonymous hot lines, 93–94; contracts and, 275–276; I defined, 260; on employment, IBM, 92–93 93–94, 262–263, 294; extraterritorial, Ignorance: characteristics of, 26; legal 266–269; on intellectual property, Hasl.bindex 2/6/06 11:24 AM Page 364

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262, 302, 303–304, 306; legal tradi- Kohler Company, 290 tion differences and, 263–266; Korea, international labor law and, primer on, 260–269; on product li- 294 ability, 39–40, 262; on unfair com- KPMG, 147–148 petition and antitrust, 26–27, 37, Kraft Foods, 131 169, 262, 263, 300–301 Krzyzewski, M., 201 Internet: copyright issues and, 309; counterfeiting on, 302; piracy on, L 192; privacy concerns and, 60–61, Labor unions, 294 116; spyware law and, 57. See also Language: clarity and accuracy in, Electronic documents and e-mail 118–120, 140, 272; foreign, misun- InterTrust Technologies, 141 derstandings and, 111; respectful Intranets, 186 versus disrespectful, 105–108 Islam, 264 “Last in time rule,” 274 Israel, international business dealings Latent legal liabilities, 36–62; business and, 266, 267 policies and, 39–43, 179–186; com- Italy, class actions in, 45, 265 munications as, 98–133; costs of, ITT, 224 36–38, 55, 56; electronic docu- ments as, 49–51; hostile legal cli- J mate and, 43–55, 56; intellectual Japan: Citibank in, 248; international property rights and, 36–38; litiga- labor law and, 294; labor pool of, 73 tion forces and, 135–140, 154; liti- Jeep Grand Cherokee plant, sexual ha- gation prevention and, 140–153; rassment at, 292 personal costs of, 53–55; smoking- Job functions: discrimination and, gun communications as, 98–133, 182 290–291; matching legal compe- Law and Order, 47 tency requirements to, 95, 257–259 Law education: business training ver- Johnson, S., 177, 198 sus, 5; focus of, 203; preventive law Johnson & Johnson, 127–128 in, 214; risk perspectives in, 5, 204 Joint and several liability, 284–285 Lawsuits: advantages and disadvan- Judges, unpredictability of, 51–52 tages of, 140–141, 152–153; costs Junk science, 51 of, 17, 48–49, 55, 56; employee, Juries: antibusiness bias of, 46–47, 66; basis for, 289–293; forces that drive, CSI effect and, 47–48; and feigned 135–140, 154; frivolous, 284; hostile ignorance defense, 185 legal climate and, 43–55, 56, 284; Justinian Code, 66–67, 263 leveraging, 152–153; preventing and managing, 140–153; risk met- K rics for, 194 Kahneman, D., 20, 21, 29 Lawyer jokes, 201–202, 205, 210 Kaplan, R. S., 70 Lawyers: contingency fees and, Kellogg’s, 72 264–265; discriminatory stereotypes Kennedy, J. F., assassination, 22 of, 199–200, 201–202; hardball tac- Key card entries, 109 tics of plaintiffs’, 48–49; legal lever- Knowledge management: components age with, 198–214; mindset of, of, 186–192; document retention/ 203–205; need for, 198–199, 200; destruction and, 177–178, 179–186; relationship-building with, 211–213; for expectations management, 192, roles of, 211–213; timing of calling, 196; for legal leverage, 177–197; 7–8, 18, 19; value-added billing for, quantifying, 193–197; strategic sig- 205–208 nificance of, 179, 180; value of con- Lay, K., 126, 183, 184, 240 tinuous learning and, 192–197 Leaders and leadership: blind spots of, Koehler, D., 21 238–245; commitment of, 216–222, Hasl.bindex 2/6/06 11:24 AM Page 365

INDEX 365

225, 247–248; ethical, 230–250; in- ing the need for, 82–83; role of, in tegrity demonstrated by, 240–242; achieving legal leverage, 63–65, moral authority and, 232–248; or- 76–77, 251–255; for Sarbanes-Oxley ganizational communications and, Act interpretation, 313. See also 215–229; oversight by, 247–248. See Continuous learning; Knowledge also Chief executive officers management (CEOs); Managers Legal Literacy Tookit, 95, 257–259 Leadership in Ethics Award, 11 Legal obstacles: identifying, 165; prior- Learning: continuous, 192–197; from itizing, 166–167, 169–170; transform- mistakes, 94, 222; paradox of, ing, into strategic opportunities, 19–20, 179 157–173 Leeson, N., 247 Legal primer, 260–311; on contracts, Legal audits, 84–94; ad hoc internal, 269–281; on employment law, 287– 84, 85, 86–88, 95, 252; categories 295; on intellectual property, 303– of, 84–85; following up on, 225; 311; on international law, 260–269; knowledge management and, 187, on product liability, 281–287; pur- 188–189; legal risk/opportunity pose of, 95–96, 260; on unfair com- assessment, 84, 85, 90–93; metrics petition, 295–303 for, 194; regulatory compliance, 84, Legal rights: focus on, versus relation- 85, 88–90 ships, 140–141, 142; interests and, Legal billing, value-added, 205–208 141–143 Legal competency requirements, 95, Legal risk and opportunity assessments, 257–259 84, 85, 90–93; decision-making pro- Legal environment: hostile, 43–55, 56; cesses and, 156–173; knowledge scrutiny of, 8–9 management and, 187, 188–189; Legal leverage: with business docu- metrics for, 193–197 ments, 103–133; decision traps that Legal risk management: benefits of, sabotage, 21–35; factors in achiev- 65–74, 75; best practice tools and ing, 63–65, 74, 76–78; failure of, procedures for, 232; business train- example of, 11–12; rationale for, ing in, 6, 15; case for, 3–17; costs of 74, 76–78, 253; value chain concept ignoring, 3–4, 18–19, 55, 56; finan- and, 9–10; for value creation and cial benefits of, 70–74; latent liabili- competitive advantage, 17, 63–78; ties and, 36–62; measuring progress winning with, 12–17 in, 245–247; metrics for, 193–197; Legal leverage process portfolio: com- new environment for, 8–9; proac- munications in, 215–229; decision tive approach to, 88–93, 251–255; making in, 156–173; document cre- reactive approach to, 86–88, 94–95; ation and retention in, 98–133; responsibility for, 6–7; unmeasur- ethical leadership in, 230–250; able benefits of, 65–70; value chain expectation management in, 134– and, 9–10 155; knowledge management in, Legal risk metrics, 193–197 177–197; lawyers in, 198–214; legal Legal risk prioritization, 166–167, literacy in, 63–65, 76–77, 81–97; 169–170 overview of, 74, 76–78, 253 Legal risk profile, determining, 84–94 Legal leverage triage, 166–167 Legal understanding, stages of, Legal literacy, 81–97; for business com- 251–252 munications, 116–118; in decision Legalese, translating, 5–7 making, 94–97, 167–168; employee Leno, J., 23 performance and, 70; implement- Letter-of-the-law versus spirit-of-the-law, ing, 94–97; lawyers and, 198–199; 248–250 learning paradox and, 19–20, 179; Levitt, A., 71 legal audits and, 84–94; recogniz- Lexar Media, Toshiba suit of, 49–50 Hasl.bindex 2/6/06 11:24 AM Page 366

366 INDEX

Liabilities. See Latent legal liabilities Massachusetts Institute of Technology Liability insurance, overreliance on, (MIT), Sloan School, 71, 209 33–34 McCombs School of Business, 209 Libya, 267 McDonald’s: coffee case of, 282; trade- Licensing, 92–93, 141 mark of, 92 Lichtenstein, S., 22 McNeil Consumer Products Company, Lind, E. A., 139 127–128 Listening: to employees, 219–221, 224, Media Vision Technologies, 46 240–245; to internal warnings, Mediating Legal Disputes (Golann), 146 125–127, 240–245 Mediators, 151–152 Litigation-related metrics, 194 Medical charts, 105–106 Liz Claiborne, 71 Medical profession: apologies in, 143, London Stock Exchange, 111, 114 148–149; redundant procedures in, Loss aversion: apologies and, 148–149; 170 in customer collection case, 39; de- Merck, Vioxx withdrawal of, 43, 69, 71, cision trap of, 28–33, 157; em- 285 ployee noncompliance and, 217, Mergers and acquisitions case study 223–224, 233; employment law simulation, 236–238 and, 287–288; financial perfor- Merits of the case: factors in, 135–140; mance obsession and, 71–72; managing, 150–152 Sarbanes-Oxley Act compliance Merrill Lynch, 105 fears and, 314–315 Metrics: for legal risk management, Louisiana, 263 245–247; for legal risks, 193–197 Lucent Technologies, 126 Michigan, State of, DoubleClick law- Luck, 158–161 suit of, 60 Lundwall, R., 44 Michigan Lawsuit Abuse Watch (M-Law), 284 M Microsoft: antitrust issues of, 45, 92, Malden Mills, 3, 11–12, 37, 92, 169 141; litigation strategy of, 141, 142; Malpractice, 286 Xbox cord recall of, 65–66, 166, 169 Managers: lawyers’ relationship-building Mindfulness, 171–172 with, 211–213; lawyers’ views of, Miracle Bra, 36–37 200–201; mindset of, 208–211. See Miracle-Gro, 188 also Chief executive officers (CEOs); Mistrials, jury misconduct and, 47–48 Leaders Mitsubishi Motor Manufacturing of Managing (Geneen), 224 America, 62, 292 Managing the Unexpected (Weick and Model Law on Electronic Commerce, Sutcliffe), 171 130 Manufactures patents, 304 Moral authority, 232–248 Mark, R., 66–67 Morgan Stanley, 50–51, 69, 132 Mars, 107 Motion practices, 48–49 Marsh & McLennan, 69, 86, 88 Motive to sue: factors in, 135–137, Martha Stewart case, 30, 131. See also 139–140, 154; preventing and man- Stewart, M. aging, 140–153 Martha Stewart Living Omnimedia Movie and music industry, 192 Enterprises, 30 Murphy’s Law, 114–115 Maslow, A. H., 150 Myers, D., 54–55 Maslow’s hierarchy of human needs: compliance and, 233, 234–235, N 239, 241; concepts of, 149–150; Napster, 309 employment law and, 287–288 NASA, 243–245 Hasl.bindex 2/6/06 11:24 AM Page 367

INDEX 367

NASDAQ, 46, 314 ulatory noncompliance, 45–46; National Association for the Advance- sources of, 16 ment of Colored People (NAACP), Order contracts, 275–276 23, 24, 25 Order shipping case, 39–40 National Highway Traffic and Safety Organizational infrastructure: commu- Administration (NHTSA), 32, 128 nications and, 215–229; ethics and, Natural disaster, 271 122–125; knowledge management Negligence, 281–282, 286, 293 and, 177–197; leadership and, Negotiation: contract creation and, 230–250; legal versus illegal busi- 272; expectations management ness practices and, 121–122; role and, 139–141, 153–155; fairness in, of, in achieving legal leverage, 154–155; hidden agendas and, 142; 64–65 international differences in, 265; Overconfidence: characteristics of, 26; versus litigation, 140–141; prepara- decision trap of, 25–28; of leaders, tion for, 153–154 234, 238; legal consequences of, 26, Netherlands, product shipped 234; regression and, 27–28, 200 through, 39–40, 262 Owens Corning: breast implants of, 43; New York Attorney General’s office, pink trademark of, 306–307 52, 53, 69, 86, 88, 248 New York City hospitals, language P complications in, 111 Package shape trademarks, 306 New York Times, 184, 198 Pagers, 113 Newell Rubbermaid, 89 Palm, 152 9/11: impact of, on perceived risk, Paper Chase, 203 21–22; Riggs Bank scandal and, 41; Parmalat, Citigroup and, 46, 48–49 scrutiny of international business Parry, S., 193 dealings and, 266 Participatory management, 225–229 No Child Left Behind, 57–58 Past history consideration, 335 North Korea, 267 Patent rights and law: failure to secure, Nothing But Curves brand assimila- 11–12, 13–14, 18–19, 37, 162–163; tion, 37 infringement of, 117, 305; metrics for, 194; primer on, 304–305; secu- O rity leaks and, 116; types of, 304. See Objectivity, availability bias and, 25 also Intellectual property rights Obstruction of justice: document Patterson, N. L., 106–107 shredding as, 177–178, 179–186; Penalties, 89 panic as cause of, 30; Sarbanes- Perelman, R., 50–51, 132 Oxley definition of, 185–186 Performance evaluations, grade infla- O’Connor, K., 60 tion in, 102–103 Odom, M., 183 Perrier water bottle trademark, 306 Old Monastery Co. vs. United States, Perry Mason, 199 331 Pervasiveness of wrongdoing, 334–335 Ombudsman programs. See Hot lines Philip Morris, 131 and ombudsman programs Philip Morris case, 131 Online training, 190 Physicians: class action suit by, 34; dis- Only the Paranoid Survive (Grove), 238 paraging comments by, in medical OPEC oil cartel, 295 charts, 105–106 Open secrets, 88, 224 Pink Panther, 307 Operational excellence, 170–173 Pinochet, A., 41, 42 Opportunity cost, 4; from bad imple- Plaintiff’s bar, 44 mentation of policy, 180; from reg- Plea agreements, 344–346 Hasl.bindex 2/6/06 11:24 AM Page 368

368 INDEX

PNC Financial Services Group, 42–43 Quality control: product liability and, Polarfleece and Polartec, 10–11, 37, 92 283, 287; rule of law as, 57; Policies. See Business policies Sarbanes-Oxley Act as, 59, 161 Political risk, 261 Quantum meruit, 280 Politics, organizational, 224, 225, Quattrone, F., 15, 26, 29–30, 121–122 234–235 Quattrone case, 29–30 Porter, M., 9 Quid pro quo claim, 291–292 Post-sale duty to warn, 285–286 Practice of Management, The (Drucker), R 77 Racial discrimination cases: class Prentice, R., 209 action, 44; due to availability bias, Preventive law, 214 22–25 Price discrimination, 296–300 Raelin, J. A., 199 Price fixing, 267, 296 Rambus case, 131 Priceline.com, 126 Ratification, 293 Privileged information, 125 Re-export laws, 267 Process control technology, 195 Reactive approaches: learning and, Process patents, 304 94–95; risk of relying on, 86–88, Product liability: assessment of, 90–91; 94–95 defects that trigger, 283–284; de- Reasonable accommodation, 291 fined, 281; international law and, Reasonableness, 276 39–40, 262; joint and several, Reengineering Revolution Handbook, The 284–285; listening to customer (Hammer and Champy), 221 complaints and, 195–196; negli- Reengineering the Corporation (Hammer gence and, 281–282; post-sale duty and Champy), 221 to warn and, 285–286; primer on, Reformation, 280 281–287; regulatory compliance Regression: bad decision making and, and, 91; strict, 282–284 160, 200; concept of, 27–28 Product safety, reputation and, 65–66, Regulation, purpose and dynamics of, 68 88 Product warnings: defective, 284; fail- Regulatory compliance: good inten- ure to include, 39–40; post-sale, tions in, 158–159; inattention to, 285–286 40–43; increased enforcement of, Promotion policies, 95 52–54, 55; lost opportunities and, Property insurance, 33–34 45–46; metrics for, 194; product lia- Proprietary information, 116 bility and, 91; relying on, inadequacy Prosecution, increase in, 52–54 of, 10, 85; tipping point for, 317 Prudential Insurance Company, 87 Regulatory compliance audits, 84, 85, Public Company Accounting Oversight 88–90 Board (PCAOB), 313, 314–315 Relationship interests and manage- Punitive damages: insufficiency of cost- ment, 140–150 benefit analysis and, 31–33; trend Remediation, 340–341 toward high, 51–52, 264–265, 282. Remedies: apologies and, 147–149; See also Damage awards contract, 279–280 Purchasing policy case, 156–158 Remorse, as partial remedy, 147–148 Repeatability, 160–161, 246 Q Reputation: financial performance Quality: building, into processes, 6; and, 70; legal risk management for legal risk metrics and, 193–197; of improving, 65–70 legal services, 207–208; risk toler- Resale price maintenance, 296 ance and, 171–173 Rescission, 280 Hasl.bindex 2/6/06 11:24 AM Page 369

INDEX 369

Research and development (R&D) Satisfaction and dissatisfaction, case: leveraged decision making in, 138–140 163–168; poor decision making in, Saudi Embassy, 41 162–163 Scandals, corporate: closure process Respectfulness, in business communi- for, 127–130; corporate governance cations, 105–108 and, 8–9, 10; directors’ and offi- Respondeat superior, 289, 293, 338 cers’ insurance premiums and, 34; Restitution, 340–341 ethics training in response to, 6; Retribution, fear of, 237–238, 241 fiduciary duty and, 286–287; in- Rhone Poulenc, 147 creased enforcement and, 53–54, Richardson, J., 23 59; leadership message from, Riggs Bank, 40–43 230–232, 233, 247–248; legal risk Risk perception: availability bias and, management in response to, 8; 21–25; context and, 29; loss aver- negative incentives and, 230–231, sion and, 28–33; overconfidence 233, 234; reputation and, 68 trap and, 25–28 Schmalensee, R., 209 Risk tolerance, 170–173 Schoemaker, P., 158, 159, 160, 161 Rogers, W., 36 Scientific breakthrough, 160–161 Rolling Stones, 138 Scorched-earth approach, 48–49, 141, Roman law, 263 147–148 Royal & Sun Alliance Insurance, 105 Scotts Company, 188–189 R.R. Donnelley & Sons, 105 Seamlessness, 254 Rule of law: international concepts of, Security leaks, 115–116 261; letter of versus spirit of, 248–250; Security surveillance cameras, 109 purpose and dynamics of, 55, 57–58, Self-actualization, 150 59; shortcomings of, 313 Self-dealing, 286–287 “Rule of reason” analysis, 296 Self-esteem, 150 Russo, E., 158, 159, 160, 161 Self-regulation, 168 Senge, P. M., 71, 94, 95 S Senior lawyers, 207 Safety net procedures, 169–170 Service marks, 306 St. Mary’s Hospital, London, 105 Service sector liability, 286–287 Sale of nonstaples, 304 Settlements, advantage of, 140–141 Salesforce.com, 198 7 Habits of Successful People (Covey), 119 Sarbanes-Oxley Act (SOX): compli- Sexual harassment: admitting error in, ance efforts for, decision-making 144–145, 150; company policies bias in, 314–316; costs of avoiding, and, 62; law on, 291–292; smoking 71; document retention and, 130; gun e-mail and, 102–103, 151 events surrounding the birth of, 59, Sharks, 202 60, 125, 170; FCPA enforcement Sherman Antitrust Act, 338, 346n.5 and, 267; going beyond, 10; grum- Simulations, 191–192, 227 bling about, 161, 231, 249, 312–313; Situational ethics, 122–125, 233, 247 impact of, on CEOs’ views on risk Six Sigma, 189, 195 management, 8; lessons of, 312–317; Skilling, J., 183 “obstruction” defined by, 185–186; Sloan School of Management, 71, 209 process controls and, 228; purpose Slovic, P., 20, 21, 22 of business and, 77; as quality con- Smoking guns: business documents as, trol mechanism, 59; Section 404, 98–133, 182; closure process and, 313, 314–315; Table of Contents of, 129–130; defined, 102–103; manag- exerpted, 325–328; whistle-blower ing expectations and, 140; range of protections of, 241 severity of, 102 Hasl.bindex 2/6/06 11:24 AM Page 370

370 INDEX

Social needs, 150 Thompson Memo (DOJ), 316; text of, Social networks, employee, 220–221 329–346 Socratic method, 203 Time Warner, 141 Sony, 66, 169 Tipping point, 317 Sotheby’s, 15 Title 9, Criminal Resource Manual, Soviet Union, former, 217 316, 329–346 SOX. See Sarbanes-Oxley Act (SOX) To Kill a Mockingbird, 199 Specific-performance remedy, 279 Tollbooth cameras, 109 Spirit-of-the-law versus letter-of-the-law, Tort claim, 282 248–250 Tort reform, 285 Spitzer, E., 52, 53, 69, 86, 88, 248 Tortious interference of contract, Spyware, 57 301 State Farm Insurance, 128 Toshiba America Electronic Compo- Stewart, M., 26, 30, 131 nents, Lexar’s suit against, 49–50 Stock value, transparency and, 70–72 Trade dress protection, 306, 307 Storage tank manual case, 203–205 Trade secrets, 162–163, 170, 309 Strategic opportunities, transforming Trademarks and trademark law: bene- legal obstacles into, 157–173 fits of, 92–93; failure to secure, 38; Strict liability, 282–284 infringement of, 307; injunctive re- Subsidized goods, 300–301 lief and, 279–280; licensing of, Suffolk University School of Law, 146 92–93; primer on, 305–307; types Sullivan, M., 248 of, 306. See also Intellectual prop- Sullivan, S., 49, 54 erty rights and law Sumo wrestling match, 27 Training: metrics for, 194; regulatory, Sun Microsystems, 141 89; targeted, 84; types of, 190–192. Sunbeam-Coleman deal, 50–51 See also Business education; Law Survival needs, 150, 233, 234–235, 241 education Sutcliffe, K. M., 171 Transparency: financial benefits of, Sweden, class actions in, 45, 265 70–72; for trust and reputation SWOT analysis, 165, 167 building, 67–68, 70 Transparent Leader, The (Baum), 66–67 T Treaties and conventions, 261 Tailhook Association convention, Trespass, 288 144–145 Trooper case, 146, 147, 150 Taubman, A. A., 15 Trust and trust building: with employ- Tax law, translating, into bottom line, ees, 222–229, 235, 236–238; fear 5, 6 versus, 223–224; in lawyer-manager Taylor, G., 126 relationship, 201, 211; relationship Teledyne, ethics and compliance pro- of, to influence, 223; transparency gram of, 227–229 and, 67–68 Teledyne Relays, 228 Tuesday Morning, 71 Telephone communications, 112–113; Tutors, regulation of, 58 confidentiality and, 115–116 Tversky, A., 20, 21, 25, 29, 31 Temple, N., 183, 184 TW Services, 23 Termination provisions, contract, 276, Tylenol recall, 127–128 296 Terrorist attacks, risk perception for, U 21–22 UBS Warburg LLC, Zubulake vs., 50, Texaco, 44 131–132 Text messaging, 113 UL Underwriters Laboratory, 306 The Real Yellow Pages, 38 Uncertainty: decision-making biases Thermos, 307 and, 161; decision-making excel- Third-party suits, 289, 291 lence for, 171–172; international Hasl.bindex 2/6/06 11:24 AM Page 371

INDEX 371

law on, 26–27, 37, 169, 262, 263, for Organizations: compliance pro- 300–301; loss aversion and, 30–31 grams and, 217; excerpts from Unfair competition: defined, 295; (Chapter 8-Part B), 318–324; man- primer on, 295–303. See also Anti- agement commitment and, 240; trust law penalty calculations in, 158–159. Unintended consequences, 39–40 See also Thompson Memo United Airlines, 168–169 U.S. Federal Trade Commission (FTC), United States: high damage awards in, 190; DoubleClick probe of, 60 51, 264–265; intellectual property U.S. Food and Drug Administration rights in, 303, 304, 307–308; state (FDA), 30 law in, 281 U.S. House Ethics Committee, Gin- United States, Old Monastery Co. vs., grich inquiry by, 115 331 U.S. International Trade Administra- United States vs. American Radiator & tion, 300–301 Standard Sanitary Corp., 339 U.S. International Trade Commission, United States Attorneys’ Manual, Title 9 300–301 §162 (“Federal Prosecution of Busi- U.S. Navy, 144–145 ness Organizations”), 316; text of, U.S. Office of Federal Contract Com- 329–346 pliance Programs, 290 United States vs. Automated Medical U.S. Secret Service agents, Denny’s Laboratories (AML), 330, 331, and, 24, 25 346n.5 U.S. Securities and Exchange Commis- United States vs. Basic Construction sion, 71; appearance of impropriety Co., 336, 346n.5 and, 52; Arthur Andersen/Waste United States vs. Beutsch, 338 Management investigation of, United States vs. Cincotta, 330–331 221–222; as compliance resource, United States vs. Hilton Hotels Corp., 340; Enron investigation of, 127, 338, 346n.5 182, 183–184; foreign government U.S. Attorneys’ Offices, compliance bribery and, 267; official registra- resources for, 340 tion statements and, 198–199; U.S. Congress, 8, 170, 338 Prudential and, 87; Quattrone U.S. Consumer Product Safety Com- investigation of, 121–122; restate- mission, 89 ment filing with, 46; Salesforce.com U.S. Court of Appeals, 104 investigation of, 198–199; Sarbanes- U.S. Department of Defense, 340 Oxley Act and, 313, 315; voluntary U.S. Department of Health and disclosure programs of, 336; Xerox Human Services, 340 investigation of, 126, 148 U.S. Department of Justice (DOJ), U.S. Supreme Court, 177–178, 180 190; Antitrust amnesty program of, University of Hertfordshire, 117 147; Denny’s and, 23, 24, 25; FCPA University of Pennsylvania, Wharton enforcement and, 267; Sarbanes- School of, 20, 208 Oxley Act and, 316 University of Texas, Austin, 209 U.S. Environmental Protection Agency Unselfishness, in lawyer-manager rela- (EPA), 336, 340 tionship, 200–211 U.S. Federal Bureau of Investigation USA Patriot Act, 266 (FBI): criminal liability and, 54; Utility maximization, 4 Riggs Bank and, 41 Utility patents, 304 U.S. Federal Energy Regulatory Com- mission, Enron investigation by, V 103–104 Value chain: business communications U.S. Federal Reserve Board, Citigroup and, 117–118; concept of, 9–10; and, 45–46 legal leverage and, 9–17; legal U.S. Federal Sentencing Guidelines weakness in, 37–55 Hasl.bindex 2/6/06 11:24 AM Page 372

372 INDEX

Value creation: intellectual property “We’ve always done it” rationale, 86–87 rights and, 309–310; lawyers’ role Wharton School of Business, 20, 208 in, 205–208; legal leverage for, Whistle-blowers: and ad hoc internal 63–78 investigations, 86; listening to, Value maximization, 4 240–242 Verification signature, 83 White-knuckled stage, 251–252 Vertical restraints, 296–297, 298, 299 Winning: loss aversion and, 28–29; Veterans’ Affairs Hospital, Lexington, through legal leverage, 12–17 148–149 Winning Decisions (Russo and Schoe- Vicarious liability, 291 maker), 158 Victoria’s Secret, 36–37 Wiseman, R., 117 Video conferencing, 114 Witness testimonies, actors for read- Vindication motive, 145–146 ing, 49 Vinson, B., 230–235, 241 Wolkoff, N., 314 Vitamin cartel, 147 World Trade Organization, 261 Voice mail, 113 WorldCom and WorldCom scandal, Voluntary disclosure of wrongdoing, 26; Arthur Andersen and, 49; B. 335–336 Vinson at, 230–235, 241; bank- ruptcy filing of, 59; Citibank and, W 247; criminal liability in, 45, 54–55; Wachner, L., 36 impact of, 53; insurance policies of, Wacky Warning Label Contest, 284 34; negative incentives at, 230–231, Wal-Mart, in Germany, 94, 263 233, 234 War for Talent, The (Michaels et al.), 73 W.R. Grace, 145–146 Warnaco Group, 36–37 Writing. See Contracts; Documents; Warning signs, costs of not heeding, Language 15 Wrongful death cases, due to overcon- Warnings, listening and responding to, fidence, 27 125–127, 240–245. See also Product Wrongful discharge, 292–293 warnings Warranties, 277, 281, 282–283 X Waste Management, 221–222 Xerox, 126, 148, 307 Watergate, 267 Watkins, S., 126–127, 183, 240, 241 Y Web logs (blogs), 109, 112 Yellow Pages, 38 Web sites, 112 Weick, K. E., 171 Z Welch, J., 26–27, 37, 189 Zubulake, L., 50 Wellpoint Health Networks, 34 Zubulake vs. UBS Warburg LLC, 50, West Nile virus, 215, 216 131–132