Pension Withdrawal Liability and EFCA Arbitration
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Inside 3Q2009 2...Oxymorons and Indexes 4...Pension Withdrawal Liability and EFCA Arbitration 5...Echoes of Echostar: Practical Issues Confronting Clients Accused of Patent Infringement After Seagate 8...Give Me Back My Stuff: Adding Bite to An Employer’s Demand Through the CFAA 9...Welcome New Members FOCUS President’s Message Mark Rogers There’s no doubt about it: I am taking the What that means, principally, is that we are including past easy way on this president’s letter for our providing world-class learning support in the list of items we will third quarter newsletter. I’m doing it for a and development opportunities consider in determining which very good reason, though. I want to share for our members. To that end, we firms will be selected as sponsors with the entire Arizona Chapter the letter are looking for sponsors to help us for the upcoming program year. that was sent two weeks ago to past, pres- meet that goal. For law firms, we ent and potential sponsors. Along with have three levels of sponsorship To all potential sponsors for an accompanying set of materials, it was opportunities (Platinum, Gold 2009–2010, please read through mailed to 21 law firms and eight businesses and Silver) this year (October the attached materials carefully that provide services to in-house counsel. 2009–September 2010), and, and send any questions well for the first time, we have in advance of the August 25th I am also very excited about the upcoming new categories of sponsorship deadline to accarizona@yahoo. 2009–2010 year. I hope to have a full year (Chapter Underwriter and com. Please be thoughtful and of high-quality CLE sessions scheduled by Law Department Services creative in suggesting programs, September 2009 and provide a number of Sponsorship) for other service and please know that we are other training and networking opportuni- providers. We are also looking very excited about the upcoming ties. to expand the number and type year. The chapter has grown of activities and events that we significantly in the past few years Finally, I’d like to extend thanks to Snell offer to members of the chapter. (more than doubling over the last & Wilmer for its long-standing support The available opportunities handful of years), our regularly of the Arizona Chapter and for providing are explained in the attached scheduled programs are well content for this newsletter. sponsorship program description. attended, and the meetings have become a regular stop for GCs Here is the letter sent to potential sponsors To our past and present sponsors, and other in-house counsel from for our upcoming year: you will have already noted at many companies here in Arizona. this point that our sponsorship We believe that sponsorship of the Many, many thanks for your program is significantly more chapter is a unique and valuable interest in sponsoring the formal than in years past. To a proposition for law firms and activities of the Arizona Chapter certain extent, this is a product providers of services to in-house of ACC America, and to our past of how successful the chapter legal departments, and we hope and present sponsors, many, many has become with your backing. that you’ll agree. Please send us thanks for the support you have Accordingly, while the chapter your best ideas soon! already provided. is actively looking for a broad mix of sponsors (international Thank you. The Arizona Chapter is dedicated firms, national firms, regional to being nothing less than firms, local firms, large firms, Mark N. Rogers preeminent organization of and small firms), you will note in the President, ACC America Arizona for in-house counsel in Arizona. attached sponsorship program Chapter Oxymorons and Indexes Susan Hackett Senior Vice President and General Counsel, Association of Corporate Counsel [email protected] I couldn’t decide which topic I really or public companies’ in-house lawyers In adopting this standard, the court wanted to write about most for this will be hamstrung with little alterna- seeks to promote greater convenience quarter’s chapter newsletter. One tive except to avoid any documentation for government investigators at the describes an incredible advance for in- of estimated litigation liabilities and, expense of the public interest in pro- house counsel and the value returned perhaps by extension, other forms of moting accurate and complete prepara- for their client’s legal spend; and the litigation reserves if the lawyer wishes tion of corporate financial documents other, which describes what may be the to be able to assert confidentiality over and audits. By ignoring or setting aside greatest bite into your practical ability such work product. clear precedent to protect attorney work to assert attorney work product protec- product, such as estimation of poten- tions in the history of my tenure here. Perhaps more importantly, from a tial liabilities, this court eviscerates the So you get both — I told you I couldn’t policy perspective, this case could be a notion that the in-house lawyer should decide! watershed moment in establishing and create or share legal assessments with defining work product protections that internal financial colleagues or the Bad News First: “Work-Product truly make or break the role of lawyers company’s auditors. Protection” is now an oxymoron in a public company context. On August 13, 2009, the First Circuit As noted by the dissent in this case Court of Appeals issued an en banc The court’s ruling replaces a long- (who are the judges who wrote the panel opinion that has severe and negative standing test that protects documents opinion that this en banc court over- ramifications for corporate clients — prepared by attorneys because of or turns): “In adopting its test, the majority and even greater consequences for the in anticipation of litigation (constitut- ignores a tome of precedents from the in-house lawyers and financial teams ing protected attorney work product circuit courts and contravenes much that prepare corporate tax, accounting as defined in the US Federal Rules of of the principles underlying the work- and financial statements for them. Evidence, Rule 26(b)) in favor of one product doctrine. It also brushes aside that suggests a much narrower stan- the actual text of Rule 26(b)(3), which In US v. Textron, the court overruled dard, if any remaining protection at all. “[n]owhere . state[s] that a document its own previous panel decision (and The court argued that Textron’s attor- must have been prepared to aid in the departs from the precedent of virtually neys’ assessments of potential litiga- conduct of litigation in order to consti- every other US court), protecting the tion liability for tax positions were not tute work product.” Adlman, 134 F.3d at traditional and widely accepted inter- protected because financial reporting 1198.” The result is that companies that pretation of what constitutes attorney and accounting requirements dictate empower their lawyers and auditors to work product in the disclosure and creation of such liability estimates, and work together in an effort to ensure that financial reporting context. The IRS thus any resulting work papers are mere their financials and accounting disclo- sought production of Textron’s lawyers’ “business” documents created pursuant sures are accurate and well-informed estimates of the company’s potential to those requirements. are punished by this decision. The court liability for tax positions it pursued, thus suggests the inconceivable: that it is Textron asserted attorney-work product According to the court, “any lawyer” more advisable for lawyers to avoid doc- protections and refused to disclose the would call Textron’s counsel’s assess- umenting or sharing information that files, and the ping pong of decisions in ment of potential liability mere tax could be used against the company’s this case began. (ACC filed two amicus or business documents, not litigation interests in litigation. In citing to ACC’s briefs in the case, available online along documents. But by “any lawyer,” the amicus brief in this matter, the dissent with the court’s decisions, at the URLs court sure wasn’t talking about the notes further: “Thus, as amici worry, the listed at the end of this article.) 24,000 members of ACC. If a lawyer’s majority’s new rule will have ramifica- assessment of the company’s potential tions that will affect the form and detail This most recentTextron decision is legal liability for a position it asserted of documents attorneys prepare when final, unless the company decides to — which the government now chal- working to convince auditors of the take the case to the US Supreme Court lenges — isn’t attorney work product, soundness of a corporation’s reserves.” (and we’ll be there again as amicus, if what the heck is? The court makes a they decide to go forward). It is impor- twisted and Herculian effort to reach And that means that the role of in-house tant to overturn this ruling and have the the perverse result it adopts. counsel is not only hamstrung, it’s per- Supremes resolve this important issue, manently damaged. The court’s ruling continued on page 2 Arizona Chapter FOCUS 3Q09 continued from page 2 when you see those cases; that’s how we with a firm to members who want more diminishes the value of the important move the needle and make sure that the info on them. preventive and strategic roles that in in-house bar is your voice. house counsel play in complex, publicly If you are willing to help us traded companies. And calls into ques- I’d rather leave you with the pre-populate the system, go to tion the entire notion public policy pre- good news: The ACC Value Index is www.acc.com/evaluate and tell us how sumption that confidential legal counsel about to turn inefficient and non-aligned you feel about your firms and the value encourages better corporate decision- law firm business models “inside out.” they offer.