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Pa. Justices to Hear Philadelphia’s Civil Payments From – INSIDE THE LEGAL – REGIONAL Bill Cosby’s Bid to Impact of SCOTUS LGBT Ruling...... 3 Police Abuse Likely to Accelerate As LGBTQ rights advocates celebrated last week’s landmark ruling from Overturn Conviction the U.S. Supreme Court, making it a BY MAX MITCHELL violation of Title VII to fi re someone for BY MAX MITCHELL Of the Legal Staff being gay or transgender, some in New Of the Legal Staff Jersey might have wondered about the ver the past decision’s local impact. The Pennsylvania Supreme Court has month, front NATIONAL agreed to consider Bill Cosby’s efforts to pages of news- O Berman’s Career Prospects ...... 4 overturn the sexual assault trial that re- papers across the coun- Geoffrey Berman may be out of a sulted in a lengthy sentence for the famed try have been splashed job following his very public spat comedian. with dramatic pictures with the U.S. Attorney General The justices on Tuesday agreed to of police clashing with William Barr over the weekend, but hear Cosby’s appeal, granting allocatur protesters, and on so- not many people believe he’ll have any on two issues the former TV star has cial media there seems trouble fi nding work. raised throughout the criminal proceedings to be an endless feed against him. of graphic videos de- Photo by Shutterstock IN-HOUSE COUNSEL The one-page order specifi es that the jus- picting violent police Philadelphia skyline. Complying With CCPA Regulation. . . . 5 tices will consider whether the trial court encounters. From a Businesses that are subject to the CCPA improperly admitted the testimony of sev- purely legal perspective, attorneys know have been the victim of civil rights abuses but have not taken any compliance steps eral women who claimed Cosby sexually that behind each image is a potential by police. should strongly consider complying by July 1, Malia Rogers and David M. assaulted them decades ago, and whether lawsuit, and in front, looking on, is a “The movements overall are helpful in Stauss write. a purported agreement between Cosby and potential juror. bringing to light what we civil rights attor- a former Montgomery County district at- That is why civil rights attorneys expect neys and defense attorneys have known for CYBERLAW torney to not press charges against the cities and towns across the country will see some time—that there are a lot of problems Safe Zoom Calls ...... 7 comedian in 2005 barred a subsequent a growing number of lawsuits and payouts with the system, where offi cers can abuse Companies using Cosby continues on 9 in the coming years to those claiming to Payments continues on 10 Zoom should be focused on minimizing the risks to not only their own data but that of their employees, Lit Funder Legalist clients, customers or patients, If Cash Is King, Do Firms Need to contributors Jeffrey N. Rosenthal, David Hits 100-Case Mark Change Business Model to Keep Up? J. Oberly and Heidi G. Crikelair write. INDEX Classifi ed ...... 12 As Posner Departs BY DAN PACKEL news of a major fi rm making cutbacks, al- Public Notices...... 14 most always including reductions to partner The American Lawyer Legal Listings ...... 15 BY DAN PACKEL compensation. The American Lawyer Self-sacrifi ce, at least of the rhetorical vari- Couched as preparations for an uncertain ety, is the order of the day among partners future, a small number of fi rms have pared San Francisco-based litigation funder Legalist in a number of top law fi rms. As fi rms back nonlawyer staff. More have zeroed has cracked the milestone of over 100 cases began to feel the fi nancial effects of the in on compensation. And where this has under investment, three years since the busi- COVID-19 pandemic in the early weeks of happened, a disproportionate amount of the Postal ID on Page 8 ness was founded by two Harvard dropouts. lockdown, scarcely a day went by without Cash continues on 11 Legalist continues on 10 www.TheLegalIntelligencer.com

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developers and owners, national retail and To apply for the BLI, candidates had to is seeking contributors to provide anal- SPEAKERS office tenants and private equity funds. demonstrate leadership ability, commit to at- ysis and insight into recent Delaware Klehr Harrison Krouse received his Juris Doctor from tendance and participation in the required Court of Chancery decisions, as Harvey Branzburg Duke University School of Law. events, be currently licensed to practice law in well as litigation and issues cur- managing part- Pennsylvania, be a PBA member, and be age 40 rently of interest to the business law ner Brad Krouse years or younger or practiced five years or less. community. is slated to mod- EVENTS The BLI was originally developed by Potential topics that would be appro- erate the Jewish The Barristers’ Association of Philadelphia Arthur L. Piccone of Kingston in 1995- priate include, but are not limited to, Federation Real Inc. held a free, virtual “Know Your Rights 96 during his year as PBA president to arbitration, books-and-records requests, Estate Group vir- Town Hall” open to the public. strengthen the PBA’s ongoing efforts to re- breach of contract lawsuits, controlling tual panel discussion Moderated by KYW reporter Cherri cruit and develop leaders of the association. stockholder litigation, derivative claims, KROUSE titled “Navigating the Gregg, panelists American Civil Liberties The first chair of the institute,Gretchen A. discovery disputes in commercial litiga- Turbulence” on Thursday. Union of Pennsylvania executive direc- Mundorff of Connellsville, relaunched the tion, corporate dissolution, breach of fidu- The panel will discuss the challenges tor Reggie Shuford, Philadelphia Police BLI when she became the 2010-11 president ciary duty lawsuits, intellectual property faced by commercial real estate own- inspector Derrick E. Wood, Mincey of the PBA. litigation, jurisdictional battles in corporate ers today and will include panelists Ben Fitzpatrick Ross founding partner Kevin Its current purpose is to inform participants litigation, merger and acquisition lawsuits, Cohen, managing principal and CEO Mincey, and attorney Deborah Watson- on the day-to-day operations, governance, special committee decisions, corporate of Endurance Real Estate Group; Bill Stokes educated participants as to their resources and staffing of the association, as governance, limited liability company liti- Glazer, founder of Keystone Property rights when interacting with the police on well as provide introductions to its various gation and limited partnership agreement Group; Bradley J. Korman, co-CEO the streets, in a traffic stop and while pro- leadership opportunities. litigation. of Korman Communities Inc.; and testing, drawing upon the recent events in Examples of articles written for DBCI Michael Markman, president of BET Philadelphia as examples. are available online at www.delbizcourt. Investments. ANNOUNCEMENTS com. For more information, contact Kristie Krouse is the managing partner of Klehr The Delaware Business Court Insider Rearick at krearick@alm.com. • Harrison and previously served as the chair ELECTED AND APPOINTED of the real estate and finance department for Pennsylvania Bar Association president 19 years. David E. Schwager named 18 Pennsylvania He represents real estate developers, lawyers to the 2020-21 class of the associa- All potential items for owners, investors and private equity com- tion’s Bar Leadership Institute. panies and serves his clients as a strategic This year’s BLI co-chairs are Stephanie People in the News should be counselor, adviser and dealmaker. F. Latimore of the Legislative Reference Krouse’s practice includes a range of Bureau of Pennsylvania in Harrisburg and addressed to Aleeza Furman at real estate services, including acquisitions, Michael J. McDonald of McDonald & sales, leasing and financing and develop- MacGregor in Scranton. The Legal Intelligencer, [email protected] ment for an array of clients such as shop- Both Latimore and McDonald served in ping centers, apartment and office building a number of PBA leadership roles.

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Even With Robust State LGBTQ Anti-Bias Laws, SCOTUS Ruling Will Be Felt in NJ

BY CHARLES TOUTANT who represents plaintiffs in employment under New Jersey’s LAD, but now they sexual orientation or gender expression a New Jersey Law Journal litigation. have a comparable level of protection for more viable option, said Thomas Prol, a “There are thousands and thousands of sexual orientation and gender expression Sills Cummis & Gross attorney who has s LGBTQ rights advocates cel- workers in New Jersey, at a minimum, who, discrimination, said Costello. Also, em- analyzed the Bostock case in his class on ebrated last week’s landmark rul- until today, did not have the protection of ployees who work in New Jersey for certain law and sexuality at Seton Hall University Aing from the U.S. Supreme Court, this decision,” Costello said. federal contractors are exempt from New School of Law. After last week’s ruling, a making it a violation of Title VII to fire Some of those workers in New Jersey Jersey’s LAD, but now they are covered by litigant in federal court can cite the court’s someone for being gay or transgender, are employed by multistate companies that a comparable level of protection under the decision, rather than merely rely on Equal some in New Jersey might have wondered have their employees sign agreements bind- Supreme Court ruling, he said. Employment Opportunity Commission about the decision’s local impact. ing them to the laws of other states where The ruling will also have an impact on opinions, which are generally supportive to The decision will have the greatest im- their company operates, which may not defendants in New Jersey employment liti- gays and lesbians but are subject to shifting pact in roughly half of the states in the political influences, Prol said. United States—those that provided no Having similar positions from state and legal protections to gays, lesbians and federal laws on discrimination against transgender persons. But in New Jersey, The ruling will also have an impact on defendants LGBTQ people makes for a case that is where state law bars discrimination against “more sturdy,” without the “hybrid analy- gays, lesbians and transgender people, in New Jersey employment litigation who attempt sis” in which state laws find discrimination the court’s decision will have a more where federal law does not, Prol said. subtle impact. to introduce case law on Title VII from other states, “For New Jersey, it just harmonizes fed- New Jersey amended the state Law eral and state law in many respects. New Against Discrimination to forbid workplace Costello said. Jersey has been so prescient on this that the discrimination based on sexual orientation federal courts will look to our analysis with in 1991 and barred firing someone over favor,” Prol said. their gender expression in 2006. The June 15 Supreme Court decision will But last week’s Supreme Court decision have laws protecting LGBTQ workers from gation who attempt to introduce case law on be felt by federal employees in New Jersey in Bostock v. Clayton County will provide discrimination, said Costello. After the June Title VII from other states, which tends to who aren’t covered by the LAD, said Leslie additional protection in some areas outside 15 ruling, those workers are still subject to be less friendly to workers, Costello said. Farber, a labor and employment attorney the reach of New Jersey’s LAD. Some laws of the other jurisdiction, but that won’t “It sends the signal to employers who are in Montclair, New Jersey. Employment workers in New Jersey who experience leave them without protections based on attempting to import federal Title VII ju- disputes involving those employees have discrimination who are not covered by their sexual orientation or gender expres- risprudence around these issues that those relied on EEOC rulings, but the ruling the LAD now have a comparable level of sion status, he said. cases are over,” Costello said. gives those rights a more solid foundation, protection, said Kevin Costello of Costello In addition, employees who work in New In addition, the ruling makes federal court Farber said. & Mains in Mount Laurel, New Jersey, Jersey for a bistate agency might not fall litigation of discrimination claims related to LGBTQ continues on 11

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Some Think Spat Might Help Berman’s Career Prospects 9th Circuit Revives

BY DAVID THOMAS ‘Shape of Water’ New York Law Journal Copyright Lawsuit eoffrey Berman may be out of a job following his very public spat with Gthe U.S. Attorney General William BY ROSS TODD Barr over the weekend, but not many people The Recorder believe he’ll have any trouble fi nding work. That’s because Berman was already an A federal appeals court has revived a copy- attractive candidate to many law fi rms, right suit against the fi lmmakers behind the given his experience as a Greenberg Traurig Academy Award-winning movie “The Shape shareholder and then serving as the U.S. of Water.” attorney for the Southern District of New In an unpublished decision issued Monday, York, according to legal consultants and a three-judge panel of the U.S. Court of one former Manhattan prosecutor. Appeals for the Ninth Circuit reversed a “There’s no question that Berman will lower court win for studio Fox Searchlight be fi ne, and he would have been fi ne and Macmillan Publishers, which published even if this hadn’t happened,” said Elkan a novelization of the fi lm, in a case brought Abramowitz, a former prosecutor who is by the son of Pulitzer Prize-winning author a partner at Morvillo Abramowitz Grand Paul Zindel, who claims that the fi lm and the Iason & Anello. Photo by David Handschuh book infringe copyrighted elements of his Berman resigned June 20 following a Former U.S. Attorney Geoffrey Berman of the Southern District of New York. father’s play “Let Me Hear You Whisper.” daylong standoff between him and the The ruling is a win for Alex Kozinski, the Justice Department. Barr late June 19 an- A spokeswoman for Greenberg Traurig One high-ranking commercial litigator said former chief judge of the Ninth Circuit who nounced that Berman was resigning imme- declined to comment on whether Berman he doesn’t believe the spat helped anyone, represented the Zindel estate in the case. diately; Berman denied he had resigned and would return to the fi rm. including Berman. He said law fi rms might be “The decision was unanimous and clearly said he would stay on. Lauren Drake, a Washington, D.C.-based reluctant to bring on Berman if they do a lot correct,” Kozinski said in an email Monday. If anything, the standoff potentially en- legal recruiter with Mlegal Group, noted of business with the government. Abramowitz, “We look forward to presenting our case to hanced Berman’s standing in certain legal that Berman’s dismissal from the adminis- Binstock and Drake conceded while that might the jury, as happened in the LA Printex case, circles, said Abramowitz and Dan Binstock, tration is rooted in politics, as opposed to be the case for some fi rms, it’s not likely to be which the court cites. The jury in that case a legal recruiter at Garrison & Sisson. accusations of wrongdoing or misconduct. a signifi cant number of fi rms, they said. found infringement after the Ninth Circuit Because of the heavy volume of turnover Government lawyers who have been dis- “Most of the litigation departments of reversed the district judge’s grant of sum- that has occurred within the Trump admin- missed for wrongdoing have a harder time the fi rms in New York have alumni of the mary judgment. I expect the same will hap- istration, being dismissed by the president fi nding jobs at law fi rms, Drake said. Southern District. There is a strong alumni pen in this case,” Kozinski said. doesn’t carry the same weight as it would “I imagine he’s got plenty of fi rms calling bond. I would be surprised if he could not Oral argument in the case last year marked have in the Obama administration, Binstock him right now,” Drake said. land on his feet,” Abramowitz said. the fi rst time that Kozinski appeared before said. Drake doesn’t believe Berman’s resigna- One of Berman’s former clients at the court since his abrupt 2017 retirement “The overall sentiment in the legal mar- tion will affect how attractive he already Greenberg Traurig was Deutsche Bank, a fi - amid numerous allegations of harassment ket is that when an attorney leaves the was to law fi rms. If anything, his resigna- nancial institution that is being investigated by clerks and, in one case, a former judicial Trump administration, there are usually tion June 20 was “a very public announce- for its fi nancial ties to the president. If he colleague. multiple sides of the story,” Binstock said. ment that the person is unemployed.” Drake returns to private practice, former prosecu- Monday’s decision reverses U.S. District “In some circles, this could be seen as a net contrasted this with her usual work: Having tors like Berman are subject to a whole host Judge Percy Anderson’s dismissal of the case benefi t to his brand, in the law fi rm market.” confi dential conversations with government of rules regarding what cases and clients on a motion to dismiss. The Central District Berman began serving as the U.S. attor- offi cials about potentially entering the pri- they can and can’t work with, Abramowitz of California judge found no substantial ney in Manhattan in 2017 after President vate sector over the course of many months. said. Still, law fi rms like to tout former similarity between Zindel’s play, a work Donald Trump fi red his predecessor, Preet By way of example, Drake pointed prosecutors and judges to their clients like often performed in middle and high schools Bharara. In 2018, Berman was voted into to Munger, Tolles & Olson’s Monday an- they’re star members of the team, he added. featuring a female janitor who plots to save the post by the judges of the Southern nouncement that it had hired Jonathan It’s for that reason that Barr would a dolphin from a medical testing facility, and District of New York. Kravis, a federal prosecutor who quit in also be an attractive get for certain fi rms, “The Shape of Water,” where a female jani- Prior to that, he was a shareholder at protest after Barr intervened in the sentenc- Abramowitz said. tor aims to help an Amazonian river god she Greenberg Traurig who co-led its New ing of Trump ally Roger Stone. “If Barr left tomorrow, there would be falls in love with escape from a military lab. Jersey offi ce. Berman reported earning “That’s an example of somebody who fi rms that would want to hire him, too,” Anderson made his decision by comparing about $3.5 million in salary and bonus at had a very public departure from govern- Abramowitz said. the works, without taking any evidence or Greenberg Traurig, according to his fi nan- ment,” Drake said. “Clearly he didn’t have David Thomas can be contacted at holding oral argument. cial disclosure form. any trouble landing at an excellent fi rm.” [email protected]. • Copyright continues on 8

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www.TheLegalIntelligencer.com VOL P. 3589 WEDNESDAY, JUNE 24, 2020 THE LEGAL INTELLIGENCER • 5 IN-HOUSE COUNSEL Business Considerations for Complying With the Final CCPA Regulation

BY MALIA ROGERS not required to grant that request, it means “considered and determined that delaying AND DAVID M. STAUSS MALIA ROGERS is an associate in Husch that the final regulations could go into effect the implementation of [the] regulations is Corporate Counsel Blackwell’s Denver office and advises clients of anytime between July and Oct. 1, 2020, and not more effective in carrying out the pur- all sizes and across industries on data privacy with little to no notice. pose and intent of the n June 1, just one month before the and security compliance. She leverages her prior Faced with this un- CCPA.” The office California attorney general may professional experience in digital marketing to certain timeline, busi- explained that the develop and implement privacy programs compli- begin enforcing violations of the nesses subject to the modified rules were O ant with emerging and differing privacy frame- Careful planning California Consumer Privacy Act (CCPA), CCPA must determine released Feb. 10 and works, including the European Union’s General the California Attorney General’s Office how quickly to drive revised March 11, Data Protection Regulation and the California now can avoid serious finally submitted final regulations to the Consumer Privacy Act. compliance with the such that “businesses California Office of Administrative Law final CCPA regula- headaches later. have been aware that (OAL). Most anticipated that July 1 would DAVID M. STAUSS is a partner at the firm and tions. That decision these requirements also be the date that the final regulations co-leader of the firm’s privacy and data security is, of course, more dif- Businesses should evaluate could be imposed as would become effective. However, given practice group. He regularly assists clients in ficult for businesses part of the OAG’s the late submission of the final regula- preparing for and responding to data security that have been forced their current compliance regulations.” The tions, they could become effective anytime incidents, including managing multistate breach to furlough or fire em- stance and create a plan attorney general’s between July and Oct. 1, leaving busi- notifications. He also regularly counsels clients on ployees who have rele- position disregards nesses struggling to prioritize compliance complying with existing and emerging privacy and vant knowledge and re- for complying with the the fact that the of- while dealing with the ramifications of the information security laws, including the European sponsibility for CCPA fice repeatedly and pandemic. Union’s General Data Protection Regulation, compliance. It also is final regulations based on significantly modi- Traditionally, the OAL has 30 work- the California Consumer Privacy Act of 2018 more difficult for busi- fied the regulations ing days to review the rulemaking record. and state information security statutes. He can be nesses that have been that stance, the available thereby creating a However, in light of COVID-19, California reached at [email protected]. forced to reduce their moving target for Gov. Gavin Newsom issued Executive Order outside counsel and resources, and their risk compliance. Further, N-40-20, which extends that deadline by 60 Further complicating matters, the attor- vendor spend due to tolerance. the office stated that calendar days. Regulations then generally ney general’s final regulations submission pandemic-related bud- “to the extent that the become effective on one of four quarterly package included a “Written Justification get shortfalls. regulations require dates, the next of which would be Oct. 1. for Earlier Effective Date and Request for Worse yet, the incremental compli- Therefore, assuming that the OAL approves Expedited Review,” requesting that the OAL Attorney General’s Office has shown little ance, the OAG may exercise prosecuto- and files the regulations with the California complete its review within 30 business days to no sympathy for these challenges. In rial discretion if warranted, depending on Secretary of State (SOS), the regulations and make the regulations effective upon their responding to requests to delay enforce- the particular facts at issue. Prosecutorial would be scheduled to go into effect Oct. 1. filing with the SOS. Although the OAL is ment of the CCPA, the office stated that it In-House continues on 8

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How to Talk to Your Employees About Safe Zoom Calls

BY JEFFREY N. ROSENTHAL, graduations, fam- agencies. And more than a dozen class action DAVID J. OBERLY ily dinners, school lawsuits have been fi led on behalf of consum- AND HEIDI G. CRIKELAIR reunions, exercise ers and investors who, among other things, Special to the Legal classes, birthday allege they were injured by Zoom’s failure to parties, and happy adequately secure its platform or be transpar- ot long ago it would have been hours with friends. ent about its system and its limitations. unheard of for a judge to publicly Even weddings and At the same time, users—including compa- Nchastise attorneys for attending vir- funerals were held nies that permitted (or actively encouraged) tual hearings partially clothed, poolside or on the platform. employees to utilize Zoom meetings—have while still in bed. Now these are just some The upsides to been forced to evaluate whether the vir- of the anecdotes born of widespread remote ROSENTHAL OBERLY CRIKELAIR using the platform, tual connection is worth the attendant risks. videoconferencing in the time of a global JEFFREY N. ROSENTHAL is a partner in the Philadelphia offi ce of Blank with its easy-to-use Accordingly, companies should be attuned to pandemic. Rome and a member of the fi rm’s cybersecurity and data privacy and privacy class interface and ability the risks of outsiders gaining access to em- Another unforeseen consequence has been action defense groups. He concentrates his complex corporate litigation practice on to connect multiple ployee webcams, fi les or info shared verbally the meteoric rise of a videoconferencing com- consumer and privacy class action defense, and regularly publishes and presents people who may be during meetings—and consider implement- pany called Zoom Video Communications, on class action trends, attorney ethics and social media law. He can be reached at using different types ing the below steps to ensure employees are known simply as Zoom. [email protected]. of devices, includ- engaging in best practices. Founded in 2011, Zoom initially marketed ing mobile phones, its easy-to-use cross-platform videoconfer- DAVID J. OBERLY is an attorney in the Cincinnati offi ce of the fi rm and is a are clear; however, ‘ZOOMBOMBING’ AND OTHER encing capabilities—or “Zoom meetings”— member of the fi rm’s cybersecurity and data privacy and privacy class action de- cracks have also ALLEGED SECURITY FLAWS to large enterprises. It found a user base, fense groups. His practice encompasses both counseling and advising sophisticated begun to emerge. Due to its inherent shock factor, became profi table and went public last April. clients on a wide range of cybersecurity, data privacy and biometric privacy mat- News broke re- “Zoombombing” is perhaps the most highly Yet it was far from a household name. That ters, as well as representing clients in the defense of privacy and biometric privacy cently that Zoom publicized security threat associated with changed earlier this year, however, as stay-at- class action litigation. He can be reached at [email protected]. reached an agree- the platform. The term describes a cyberat- home orders forced millions to fi nd ways to ment to with the tack involving the sudden appearance of HEIDI G. CRIKELAIR is an attorney in the Philadelphia offi ce of the fi rm and connect virtually. New York attorney uninvited individuals into Zoom meetings. member of the fi rm’s commercial litigation practice group. She advises sophisticated By February, Zoom acquired more users general to resolve Zoombombing has frequently made head- businesses and individuals on a wide range of litigation matters and has signifi - in two months than the preceding year. By cant trial experience. She can be reached at [email protected]. certain privacy con- lines as public and private Zoom meet- March, Zoom usage was so commonplace cerns after her offi ce ings, including online classes and wor- The New York Times published a “Lesson of reached 300 million. Seemingly overnight, launched an investigation into Zoom’s prac- ship services, have been disrupted by hate the Day” titled: “We Live in Zoom Now.” In Zoom not only replaced places of work and tices. Meanwhile, cyberattacks began to be speech or pornographic/obscene images. April, Zoom reported its single-day use had study, but become the go-to “host” for virtual investigated by state/federal law enforcement Cyberlaw continues on 9

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stage, reasonable minds could differ” about plausibly alleged shared plot sequence,” the Copyright whether the works were substantially similar. panel wrote. “Though both works properly were pre- Neither Jonathan Zavin of Loeb & Loeb, continued from 4 sented to the district court, additional evi- who represents the filmmakers, nor Davis In Monday’s ruling, the unanimous dence, including expert testimony, would aid Wright Tremaine’s Kelli Sager, who repre- Copyright © 2020. ALM Media, LLC. All Rights Reserved. Further duplication without permission is panel, Ninth Circuit Judges Kim Wardlaw in the objective literary analysis needed to de- sents Macmillan Publishers, responded to prohibited U.S.P.O. No. 309260 Published daily, except and Kenneth Lee and U.S. District Judge termine the extent and qualitative importance requests for comment Monday. Saturdays, Sundays and holidays. Matthew Kennelly of the Northern District of of the similarities that Zindel identified in the Ross Todd can be contacted at rtodd@ 1617 JFK Blvd., Suite 1665 Philadelphia, PA 19103 alm.com. Phone: 215-557-2300 Fax: 215-557-2301 Illinois, sitting by designation, found “at this works’ expressive elements, particularly the • www.thelegalintelligencer.com e-mail: [email protected] [email protected]

Editor-In-Chief, the office stated that “the regulations leave consideration.” The phrase “other valuable Regional Brands & Legal Themes Hank Grezlak In-House flexibility for businesses to determine consideration” has been met with confu- Managing Editor Zack Needles how to present the required informa- sion because it is undefined and susceptible Global Director of ALM Events Sales continued from 5 & Sponsorships Donald Chalphin tion, including whether to draft a gener- to multiple interpretations. Unfortunately, Senior Director of Sales-West, discretion permits the OAG to choose ally applicable privacy policy that incor- the final regulations do not provide any Marketing Solutions Joe Pavone which entities to prosecute, whether to porates the requirements of the CCPA guidance on the definition. Rather, in re- Director Of Marketing Solutions, prosecute, and when to prosecute.” and the regulations as well as those of sponse to a request to clarify the meaning, ALM East Carlos Curbelo Associate Editor Alexa Woronowicz Ultimately, each business will need to other laws.” the Attorney General’s Office instead stated Copy Editor Aleeza Furman evaluate its own circumstance to determine Further, a GDPR-compliant program does that the “CCPA’s use of the terms ‘valu- Magazine & Supplements Editor Kristie Rearick a reasonable timeline for ensuring compli- not result in a CCPA-compliant program. able’ and ‘consideration’ are reasonably Staff Reporters Ellen Bardash ance. Businesses that are subject to the The Final Statement of Reasons explains clear and should be understood by the plain P.J. D’Annunzio CCPA but have not taken any compliance that the office considered and rejected a meaning of those words.” Max Mitchell steps should strongly consider complying limited exemption for GDPR-compliant On a positive note, the final regulations Erica Silverman by July 1, the CCPA enforcement deadline. firms “because of key differences between do not include an “opt-out button.” The Corporate Account Executive Shawn Phillips This is true particularly in light of the at- the GDPR and CCPA, especially in terms Attorney General’s Office published a pro- Key Account Executive Vivian DiStaso torney general’s prior public statements that of how personal information is defined posed opt-out button in its February draft Legal Notices Customer Service Anetra Smith Assistant Listings Editor Diane DeAngelo his office will be assessing CCPA compli- and the consumer’s right to opt-out of the regulations and withdrew that proposal in ance for the period since the statute became sale of personal information (which is not its March draft regulations after it was met effective (Jan. 1). required in the GDPR).” Consequently, with widespread criticism from privacy ad- Businesses that already drove compli- businesses that are subject to GDPR will vocates. The attorney general’s comments ance with the attorney general’s initial need to take additional measures to comply to the final regulations explain that the (212) 457-9400 proposed regulations issued in October with the CCPA. proposal was removed to provide the office 150 East 42 Street, Mezzanine Level 2019 could theoretically take more time In addition to having a CCPA-compliant with more time to develop the button. New York, NY 10017 to update their policies and procedures. privacy policy, businesses will need to Businesses also will need to provide ALM Senior Management That is because the last modifications to implement notices at or before the col- methods for California residents to submit President & CEO Bill Carter the regulations reduced the level of detail lection of personal information. Those CCPA requests and implement verification Chief Content Officer Molly Miller required for online privacy policy disclo- notices, which need to be both online and procedures for requests to know and delete. sures. However, that decision will likely offline as applicable, must identify the Businesses must provide at least two meth- Chief Financial Officer & President/Events Mark Fried depend on the business’s risk tolerance personal information to be collected and ods for submitting those requests, includ- President of Information Services Jon DiGiambattista as well as whether the business diligently the purposes for which it will be used. ing providing a toll-free telephone number Chief Sales Officer/Paid Content Allan Milloy followed the requirements in the initial Importantly, the summary and response to for requests to know (unless the business Chief Sales Officer/Marketing Solutions Matthew Weiner proposed regulations or took a makeshift comments accompanying the final regula- operates exclusively online). Businesses Chief Technology Officer Jimi Li approach to compliance. tions make clear that having a “Privacy that sell personal information must provide Senior Vice President, Human Resources Erin Dziekan Businesses also should keep in mind Policy” link on a website is not enough an online interactive form for submitting that the attorney general’s office made to satisfy the notice at collection require- such requests and a link titled “Do Not Newsroom: 215-557-2486 substantial and significant changes to the ment. However, just as with the privacy Sell My Personal Information” or “Do Not Display advertising: 215-557-2340 regulations from the initial draft issued in policy disclosures, the office gives busi- Sell My Info” on their website or mobile Classified advertising: 347-227-3147 Legal notice advertising: 215-557-2332 October 2019 to the final regulations issued nesses discretion on how to accomplish application. Trial listings: 215-557-2313 in early June. Consequently, the issue is the requirement. In responding to one Finally, businesses that transfer personal Subscriptions/billing/delivery: 877-256-2472 not whether businesses will need to update comment pertaining to an online notice at information to other entities will need to their policies and procedures but, rather, collection, the office explained: “The pro- amend or implement data sharing agree- The Legal Intelligencer has been designated by the Court of Common Pleas of Philadelphia County, the Philadelphia Municipal how quickly they must do so in light of vision does not require a cookie banner, ments to the extent that they want the other Court, the Commonwealth Court of Pennsylvania, the Superior Court the uncertain time frame for when the final but rather leaves it to businesses to deter- entities to be considered service providers of Pennsylvania, the United States District Court for the Eastern regulations will go into effect. mine the formats that will best achieve the under the CCPA. In that regard, the initial District of Pennsylvania, and the Bankruptcy Court for the Eastern District of Pennsylvania as the official newspaper for the publication Businesses will need to implement a result in particular environments.” draft regulations stated that service provid- of all notices in Philadelphia County. number of policies and procedures to com- Businesses with California employ- ers could only use personal information ply with the CCPA. As a starting point, ees also will need to provide a notice they collect for the purpose of providing For authorization to photocopy items for internal or personal use, please contact Copyright Clearance Center at: businesses will need to update their online at collection for the collection and use the services and to detect data security Phone 978-750-8400 | Website http://www.copyright.com privacy policies to disclose the information of employee information. Although the incidents or protect against fraudulent or il- required by the CCPA and the final regula- September 2019 amendments to the CCPA legal activity. In comparison, the final regu- For customized reprints and any additional questions, please contact: Syndia J. Torres-Peña, Director tions. Section 999.308 of the final regula- created an employee information exemp- lations significantly expand the permissible Phone 877-257-3382 | Email [email protected] tions prescribes many items that must be tion, that exemption does not apply to uses, including allowing service providers disclosed, including a description of the the notice at collection requirement. The to retain and employ subcontractors, use The Legal Intelligencer assumes no responsibility for failure to report any matter inadvertently omitted or withheld from it. rights provided by the CCPA, the catego- initial draft regulations issued in October the personal information for certain inter- Member of Pennsylvania Newspapers Association and American ries of personal information collected about 2019 did not provide guidance on provid- nal uses, and use it to comply with federal Court and Commercial Newspapers. Hand-delivery customers consumers in the preceding 12 months, the ing an employee notice; however, the office and state law. must notify the circulation department of non-delivery before 10 a.m. to guarantee same-day delivery. Periodicals postage paid categories of sources from which the per- subsequently amended section 999.305 to Further, the Final Statement of Reasons at Philadelphia, PA. sonal information was collected, and the provide such guidance. Indeed, the com- states that a service provider’s violation of business or commercial purposes for the ments to the final regulations confirm that a service provider agreement is not only a POSTMASTER, send address changes to: The Legal Intelligencer, 150 East 42 Street, Mezzanine Level collection. How a business presents this the October 2019 draft regulations did not breach of contract with the business but also New York, NY 10017 information in its privacy policy is a busi- incorporate the September 2019 legislative is a violation of the CCPA enforceable by ness decision. amendments, including the new employee the Attorney General’s Office. Specifically, SUBSCRIPTION RATES One Year Variable Rates In the summary and response to com- information and business-to-business infor- the office states that the “modification to Single Copy $5 ments accompanying the final regulations, mation exemptions. this subsection also clarifies that a service the Attorney General’s Office rejected Businesses that “sell” personal informa- provider’s breach of these requirements is TO SUBSCRIBE Phone 877-256-2472 | Email [email protected] a request to “harmonize and align the tion will also need to provide a notice of a violation of the CCPA and these regula- CCPA’s requirements with existing pri- right to opt out of sales. The statute defines tions and thus enforceable by the OAG. vacy laws” such as the California Online “sale” to mean the transfer of personal in- This is necessary to ensure that service Privacy Protection Act and GDPR. Rather, formation for “monetary or other valuable In-House continues on 9 VOL P. 3593 WEDNESDAY, JUNE 24, 2020 THE LEGAL INTELLIGENCER • 9

even if the business does not enforce those made even more difficult given the attorney should evaluate their current compliance stance In-House restrictions.” general’s request for an expedited review and and create a plan for complying with the final In the end, the attorney general’s delay in immediate effective date, which leaves uncer- regulations based on that stance, the available continued from 8 submitting final regulations has created a diffi- tainty as to when the final regulations will be- resources, and their risk tolerance. providers comply with these restrictions cult situation for businesses trying to drive com- come effective. However, careful planning now This article first appeared in Corporate set forth in their service-provider contracts pliance with the CCPA. That situation has been can avoid serious headaches later. Businesses Counsel, an ALM affiliate. •

STEPS COMPANIES AND USERS aware of and use the latest version of legitimacy. And if they have not already, Cyberlaw SHOULD TAKE the software. they should install and run security soft- Second, to minimize the risk of ware on their work/personal devices, continued from 7 In an April 1 blog post Zoom announced “Zoombombing,” companies should man- including anti-malware software with Security experts have also revealed hack- a 90-day effort to increase user security date use of Zoom’s “Waiting Room” fea- phishing detection. ers constructed an automated tool to assist and privacy in the face of these and other ture—which enables hosts to control who Finally, even with all these precau- in guessing Zoom meeting IDs; concerns concerns. Its CEO sought to take owner- has access to a meeting. As of April 5, tions, users should be advised to operate about vulnerable webcams being hacked ship of the platform’s failings, conceding this feature is now enabled by default; under the assumption anything disclosed also abound. that in the midst of overwhelming and un- employees should be instructed not to in a Zoom meeting will be recorded and Another well-publicized security flaw anticipated user demand Zoom had “fallen disable it. And once a meeting begins could be disseminated. There is simply involved sending user analytics data to short of [its users’] ... privacy and security and all participants have joined, hosts no way to eliminate the risk of a meet- Facebook, even if the user did not have a expectations” and claiming the lawsuits should be instructed to lock the meet- ing being noticeably disrupted or surrepti- Facebook account. This flaw in Zoom’s iOS had “helped Zoom uncover unforeseen ing to outsiders and assign multiple co- tiously accessed by third parties. These version was first reported by Motherboard issues with the platform.” To combat its hosts, which will increase the ability to risks are amplified when employees are (who also revealed Zoom’s privacy policy such weaknesses, Zoom recently added regain control following an unexpected working from multiple locations and using failed to disclose such data collection was a series of features, including requir- disruption. personal devices via personal or public occurring). The news garnered even more ing passwords for all Third, employees WiFi connections. As a result, employ- attention when, a few days later, Zoom’s meetings and turn- should be reminded ees should be instructed to avoid sharing CEO admitted in a blog post that Zoom had ing on its Waiting to adhere to secure any type of sensitive personal or busi- only recently learned “the Facebook SDK Rooms feature and Used wisely, password practices. ness information over Zoom or any other was collecting device information unneces- host-only screen In the context of videoconferencing platform. sary for us to provide our services.” Zoom sharing privileges by videoconferencing Zoom, this means re- ended the collection and promised to do default. quiring meeting pass- CONCLUSION: NOT ALL DOOM better. But the incident suggested Zoom Although the com- has the capability to words; never posting AND GLOOM FOR ZOOM was not independently prioritizing users’ pany appears to be meeting passwords As employees continue to work from privacy and raised questions about internal moving in the right increase productivity on the Internet; and home in record numbers, Zoom and other controls. direction, it remains disabling the “Embed videoconferencing platforms will remain Zoom has also been widely criticized for to be seen if Zoom and expand customer/ Password in Meeting an essential tool for enabling employees to advertising “end-to-end encryption” (i.e., can convince secu- client bases. Link for One-Click remain productive and connected to their only the parties communicating can see/ rity experts and re- Join” feature (which coworkers. Increased use of videoconfer- hear the communications) when, in fact, searchers (much allows anyone to join encing platforms is likely to be one of Zoom itself can still access video and audio less litigants) it by clicking the link). the lasting effects of this current crisis as content shared over the platform. In other has adequately addressed these “unfore- At the same time, companies should ensure companies look for ways to decrease un- words, Zoom meetings were not completely seen issues.” In the meantime, as work- default login credentials for all routers and necessary travel, lower operating costs, and encrypted—and could potentially be ac- ers continue to work remotely, companies other devices employees use during Zoom accommodate employee need for flexible cessed by third parties via Zoom’s server. using the platform should be focused on meetings (and other remote work-related working conditions. Word also began to spread that Zoom minimizing the risks to not only their activities) are reset and replaced with strong Used wisely, videoconferencing has the meeting hosts were able to track partici- own data but that of their employees, cli- passwords. capability to increase productivity and pant activity without their knowledge. ents, customers or patients by taking the Fourth, employees should be edu- expand customer/client bases. As a re- Specifically, hosts could enable “attention following steps. cated about the threat of Zoom phishing sult, to remain competitive, while mini- tracking” to monitor who was clicking First, as Zoom continues to fix vari- scams—which occur when third parties mizing the risk of a devastating or em- away from the Zoom window during a ous security and privacy flaws over the share links that, if clicked, result in the barrassing security breach, companies meeting—without the participant knowing next 90 days, it is expected Zoom will downloading of malware onto a device or should take appropriate measures now— he was monitored. Relatedly, thousands of issue software updates. Companies with- lead to malicious websites where creden- rather than waiting until things “get back recordings and transcripts of meetings were out an internal IT department tasked with tials or other personal information can be to normal.” Videoconferencing is the new discovered to have been insecurely stored monitoring such things should consider stolen. Employees should be instructed “normal” for millions of people; com- by hosts, leaving the data easily discover- designating someone to regularly check not to click on Zoom meeting invitations panies should embrace this trend with able by third parties. for updates. Employees should always be or other links unless confident of their due care. •

against him first surfaced. But the appel- with the District Attorney’s Office that he said a credibility judgment was inherent in Cosby late court stood by the Montgomery County would not be prosecuted in exchange for his ruling. Court of Common Pleas’ decisions on Cosby testifying in a related civil lawsuit. In addition to pointing to the agree- continued from 1 those issues. Bruce L. Castor Jr. was district attorney at ment as part of his appeal, Cosby’s de- administration from prosecuting Cosby A main focus of Cosby’s appeal, among that time, and he made a public announce- fense team also cited it in an effort to nearly a decade later. other arguments, was that the trial court ment when his office chose not to bring recuse O’Neill from overseeing his In the spring of 2018, a Montgomery erred in allowing five women who have charges against Cosby based on Constand’s sentencing. County jury found Cosby guilty of three accused him of sexual assault to testify at allegations. In a statement to the press, Steele said, counts of aggravated indecent assault, based trial, in addition to Constand, whose allega- Current District Attorney Kevin Steele “The Pennsylvania Supreme Court has nar- on Andrea Constand’s allegations that he tions against him formed the basis of the reopened the case and brought charges after rowed the issues on appeal, limiting them sexually assaulted her in 2004. He was criminal case. Cosby was found guilty of portions of the civil deposition Cosby gave to prior bad acts and the sovereign edict. ultimately sentenced to three to 10 years in drugging Constand and sexually assaulting in 2005 and 2006, in which Cosby admitted We look forward to briefing and arguing state prison. her at his home in 2004. to giving a woman drugs in order to have these issues and remain confident in the In December, a three-judge Superior Another recurring issue in the prosecu- sex with her, became public. trial court and Superior Court’s previous Court panel denied Cosby’s efforts to over- tion, which is set to now come before the Castor testified at a hearing in February decisions.” turn that verdict, saying, in a 94-page opin- justices, stems from an alleged agreement 2016 about that petition and said he made Brian Perry of Perry Shore Weisenberger ion, that the comedian’s sentence should he entered into with prosecutors more than a binding promise in 2005 that Cosby & Zemlock, who is representing Cosby, stay in place. a decade ago. would not be prosecuted. But after two did not immediately returned a call seeking Cosby’s case raised unusual questions Shortly after the charges against him days of testimony and argument, Judge comment. given the large number of additional ac- were filed, Cosby filed a petition for writ Steven T. O’Neill ruled in prosecutors’ Max Mitchell can be contacted at cusers, and a purported nonprosecution of habeas corpus, arguing that his attor- favor, denying Cosby’s petition to have 215-557-2354 or [email protected]. agreement from when the allegations neys in 2005 had an enforceable agreement the charges dismissed. O’Neill’s order Follow him on Twitter @MMitchellTLI. • 10 • THE LEGAL INTELLIGENCER WEDNESDAY, JUNE 24, 2020 VOL P. 3594

those payouts jumped dramatically to $15.4 And that willingness to review old cases “Ironically, the ones being injured are Payments million in 2018, before falling slightly to and prosecute potential police misconduct paying for the injury,” she said. nearly $11 million in 2019. could further spur litigation, as well, ob- continued from 1 The vast majority of the increase is due to servers said. MINDS OF JURORS citizens and get away with it,” Mincey settlements stemming from overturned con- Unlike the numerous other protests that Fitzpatrick Ross attorney Riley Ross said. victions. According to the numbers, that ac- PROTEST EFFECTS have arisen out of high-profi le violent en- “When you have a movement that is moti- counts for $12.85 million in 2018 and $5.56 Observers expect there will be an uptick counters with police, the most recent move- vated by video evidence, it helps bring to million in 2019. It also added $1 million to in litigation simply because the protests ment has seen increased activities in the light the reality that offi cers do abuse their the $2.1 million the city paid out in 2013. have put a lot more people in direct, and rural reaches of the country. power, and that will of course help to tell According to Rudovsky, who has fi led confrontational, contact with the police. According to Ross, that indicates the the story that we as lawyers need to tell.” numerous civil right suits against the city, According to Teressa Ravenell of protests might have the most signifi cant Some municipalities have already seen an Philadelphia has a “terrible history of Villanova University’s Charles Widger impacts on civil rights litigation handled uptick in civil rights litigation. In Philadelphia, wrongful convictions,” which he attributed School of Law, who focuses on civil rights in federal court. Juries in those jurisdic- claims for malicious prosecution, false arrest, to “systemic problems” of obtaining false litigation and police conduct issues, wrong- tions, he said, are drawn from a wider false imprisonment and overturned convic- confessions, using misleading identifi cation ful arrest, false imprisonment and mali- swath of the state, including rural coun- tions have already been on the rise. procedures, poor forensics and system- cious prosecution are typically the more ties where jurors are typically seen as According to data The Legal recently atic withholding of exculpatory information diffi cult cases to make, as opposed to less sympathetic. obtained, payouts for those claims over the about people. excessive force claims, because they often “When video evidence or movements of past two years are more than double what However, the increase in settlement fi g- center around whether the offi cer had prob- this sort help bring to light what’s happen- the city paid out in the eight preceding ures was felt in nearly all categories. able cause, which, Ravenell said, is a low ing and what can happen, we hope it will years combined. In 2017, the city saw a spike in false arrest standard. help to open up the minds of the jurors But the recent wave of protests focusing payouts, totaling more than $3 million paid However, she said, especially when it to hear these stories we are presenting to on racial justice and police brutality—and to litigants. The peak in payouts for false comes to large protests, complications can them,” Ross said. the attendant media coverage—is likely to imprisonment claims came in 2018, with the arise because offi cers must have specifi c That could in turn impact the way law- drive new civil lawsuits. Those arrested city paying more than $200,000. Malicious knowledge of an individual’s conduct be- yers in more urban and rural counties feel and injured during the protests may seek to prosecution claims cost the city more than fore making an arrest. about their chances of bringing a civil rights sue the city, while at the same time, images $4.6 million in 2019—much higher than any “When dealing with huge crowds it be- case, which could also lead to more of these potential jurors have been inundated with year in the previous decade. And overturned comes a lot harder to sort out who’s doing lawsuits being fi led, Ross said. may be eroding the benefi t of the doubt convictions, which saw only one claim be- what,” Ravenell said. “That’s going to open up their minds as that juries had long given police, Kairys tween 2010 and 2015, ended up costing the Along with the facts of a given case, to how they assess the case, what might Rudovsky Messing & Feinberg attorney city more than $18 million by the end of the settlements can also be driven by the size be worthwhile and whether or not its win- David Rudovsky said. decade, including $12.8 million in 2018 alone. of the law department defending the police, nable,” he said. “People for years thought, perhaps to get History indicates that large-scale clashes Ravenell said. With some claims, the cost Despite the protests appearing to con- police protection, you have to give police between police and protesters—which of litigation alone is enough to drive up nect with a much wider audience, and even whatever discretion they wanted to exercise. Philadelphia experienced when it played the number of settlements, especially in spurring legislative changes at the state and I think that’s changing,” Rudovsky said. “I host to national political conventions in instances where there is a deluge of claims. federal level, the latest movement has not think people are getting a much more real- 2000 and 2016—can trigger litigation, and “We’re going to see so many more cases, been without its push back. istic view of the problems in policing and lead to increased costs for local govern- unless they plan on increasing the size of But Ross said he wouldn’t be worried how policing can be abused.” ments. Philadelphia, for instance, saw a their staff, I don’t know how they’re going about any backlash. large increase in settlements in 2017. to handle the volume of it,” she said. “If the idea that people, in this instance CIVIL RIGHTS LITIGATION Payouts for overturned convictions are Ravenell noted that civil litigation pro- Black people, shouldn’t be killed by police TRENDS likely to see an increase in Philadelphia vides a fundamental service to the public in a manner where they were unarmed and In Philadelphia, litigation and settlements in the coming years, in large part because in making sure constitutional violations can not showing a threat, if that’s polarizing have been on the rise in recent years, which of new efforts by the Philadelphia District be addressed. However, she said it has its enough to make a juror be adverse, hope- observers say could be attributed to mul- Attorney’s Offi ce to review and overturn limits when it comes to putting the pressure fully you’re going to be able to discern tiple factors. potentially problematic convictions. So far on police departments to make reforms. that from jury selection,” Ross said. “I According to data obtained by the City District Attorney Larry Krasner’s offi ce has She noted that law departments slammed wouldn’t be concerned. As long as I’m Law Department, Philadelphia has paid overturned 14 convictions during his 18- with litigation over specifi c tactics can only fi ghting for the rights of others so they can out nearly $40 million on malicious pros- month tenure. suggest those tactics be changed and have have their civil liberties and rights upheld, ecution, false arrest, false imprisonment Krasner’s offi ce has also shown a will- no power to force departments to address I can’t imagine a backlash that would and overturned convictions claims between ingness to prosecute police offi cers for al- problematic practices. Also, she said, cul- outweigh that.” 2010 and 2019. The numbers show that, leged misconduct, most recently charging a pable offi cers rarely have to contribute to Max Mitchell can be contacted at between 2010 and 2017, the city paid out an Philadelphia police offi cer with assaulting the settlements, but instead those costs are 215-557-2354 or [email protected]. average of less than $5 million per year, but protesters. borne by the taxpayers. Follow him on Twitter @MMitchellTLI. •

According to the company, it currently Shang said that Legalist has continued Shang said. “Our focus means we’re able to Legalist has capital committed to more than 100 to rely on algorithms that scrape federal help more people.” cases via 81 investments, some of which and state court dockets for opportunities, Legalist is monitoring the surge of litiga- continued from 1 are in portfolios. Shang said that Legalist’s but both the technology and the underwrit- tion launched in response to the COVID- The company’s investment team now focus on cases that require less than $1 mil- ing criteria are constantly being adjusted. 19 pandemic, but the company has yet includes former litigators from Fox lion in funding has opened the doors to a Particularly during the COVID-19 crisis, to dip its toes into the pool. Shang said Rothschild, Duane Morris, Gibson, Dunn & signifi cant number of opportunities. there’s been greater wariness about en- that’s because the business shies away Crutcher, Brown Rudnick and other fi rms. “We fi nd there aren’t a lot of funders suring that anticipated judgments will be from cutting-edge legal arguments, noting One departure, however, is famed former involved in cases that usually involve small collectible. that courts have yet to start issuing judg- U.S. federal appeals court Judge Richard businesses,” Shang said. The funder has seen particular suc- ments on issues such as the applicability of Posner, who was announced as an adviser That means the average investment size cess in cases involving partnership dis- force majeure clauses to pandemic-related roughly a year ago. hovers around $500,000, far less than for putes and earnout disputes, where de- disruptions. Founder and CEO Eva Shang said that industry giants such as Burford Capital, fendants are large companies that have “We like to say our cases are more stan- the retired jurist had to step away as a result which committed nearly $1.6 billion in tried to deny individuals their rightful dardized,” she said. “We’re not interested in of health concerns, but Legalist was in the capital to cases under its umbrella in 2019 share. exploring new case law.” process of bringing another former judge and closed investments in 99 new legal “Other funders don’t have the patience Dan Packel can be contacted dpackel@ on board. fi nance assets. or time for due diligence on these cases,” alm.com. •

To publish your Corporate Notices, Call: Brian Harris at 215-557-2496 | Email: [email protected] VOL P. 3595 WEDNESDAY, JUNE 24, 2020 THE LEGAL INTELLIGENCER • 11

“If we look back to 2008-09, we’ll see that implications, to face the unexpected or to not just to partners but to all attorneys and Cash the industry has been very thoughtful and seize opportunities for growth, according to personnel. very deliberate to make sure that some of the chairman and CEO Michael Heller. “When you do that—and do that be- continued from 1 lessons learned in that prior period are being “We have always believed in retaining fore you have a time of economic disrup- burden has fallen on equity partners. “Reed acted upon currently,” he says. earnings, whether it’s to invest in people or tion—you create a common understanding Smith’s owners, rightly, continue to bear the For McKenney, the sea change lies in technology, and to provide a cushion should of where your business is going,” Malley largest share of the financial burden of the how firms view capitalization. Partners are there be a downturn,” he says. “We believe says. “That provides the starting point of firm’s actions,” reads an early-June mes- now expected to have much more skin in that’s just good corporate governance.” building partner consensus around invest- sage from managing partner Sandy Thomas, the game. Henderson doesn’t believe that fear of ment decisions.” announcing a second wave of cuts at that “They have a much stronger capital base the tax code should discourage other firms Henderson, who praises Perkins Coie, global firm. and a more solid relationship with the fi- from proceeding similarly. He notes that Baker McKenzie and a handful of other Indiana University law professor Bill nancial markets,” he says of law firms as a most major U.S. businesses, organized as C firms for their success retaining earnings to Henderson sees the fact the partnership whole. Firms that previously relied on “de- corporations, pay taxes on earnings and then invest in improved processes and technology, at many firms has preemptively moved to mand” lines of credit, where lenders can ask face a second layer of taxes when they pay describes a virtuous cycle: Firms that pos- reduce draws as a sign of a newfound collec- for repayment as they wish, now have solid out dividends. Were law firms to reorganize sess “firm-specific capital” are in a stronger tive responsibility. committed-credit facilities. These include in such a way in order to facilitate the reten- position to ensure their partners stay put “It’s one thing we’ve never seen before,” covenants serving as “financial guardrails” tion of earnings, partners’ tax burden would and comply with leaders’ forward-thinking he says, describing partners coming together for firms, obligating them to exhibit good fi- go up. A structural explanation, rooted in initiatives. to share risks and take steps to further their nancial health and operating characteristics. the technicalities of law firm organization, Outfits rich in that asset draw in cli- firms’ long-term viability. It’s also a re- Baker McKenzie offers one example of doesn’t do enough to account for that in- ents because of what the institution of- sponse to external pressures: “Everyone in that transition, according to chief financial grained practice of operating with limited fers, not individual partners. And clients the market has been affected similarly, so officer Paul Eichelman. At the time of the cash reserves. will stay put, regardless of whether or not that no one can decamp elsewhere.” Great Recession, the firm relied more on “I think it’s cultural,” Henderson says of partners move. But it’s also true that the cutbacks come debt than partner capital. And while its those firms that are still resistant to retaining “If your firm has firm-specific capital, after three consecutive years of strong finan- global footprint and diversified practice mix earnings. “So much of what it takes to get a they can retain earnings,” Henderson says. cial performance from the law firm sector. positioned it to survive the financial crisis law firm to go is law-firm lawyers building “That’s how Kirkland can recruit all those Data from the Am Law 100 firms shows with limited pain, the wider economic up- their practice around an area of specialty. laterals. That was fairly capital intensive, revenue increases of 5% in 2019, 8% in 2018 heaval pushed it to reevaluate its tactics. The larger it gets, the less you know the but they used retained earnings to fuel that and 5.5% in 2017. So do the sudden indus- “We felt too reliant on debt,” he says. people you’re sharing risk with.” investment in star talent.” trywide cutbacks reflect prudent fiscal man- In 2016, when a committee of partners re- That makes many lawyers hostile to the If Kirkland is one aspirational example, agement aimed at preserving profitability in viewed the firm’s financial mix, they elected idea of directing their hard-earned revenue another one is the Big Four. One factor fuel- unpredictable times, or are they emblematic to increase the size of the firm’s capital toward some nebulous priorities over which ing the accounting firms’ steady march into of an industry that, as a whole, is not set up reserves. In practice, that means that every they lack control. the legal services arena is their mastery of to withstand unexpected shocks? year partners return a portion of annual prof- “Give me a nice brand, some Class-A of- processes and efficiency, all a consequence There’s certainly a legacy of law firms its as their capital contribution, compared fice space, recruit some decent associates,” of hefty internal investment. Another factor stripping the balance sheet clean at the end with other firms where equity partners are he says of their thought process. “I know is their reputation for sterling client service. of the fiscal year, distributing all the profits responsible for making an upfront invest- how much I’m billing and collecting, and I That extends to other players in the wider to the partnership and starting fresh. ment upon joining the partnership. expect to keep the vast majority of it, except professional services sphere. “This is a historical artifact of law firms “It creates a level of predictability that our for the people helping me. Take too much of “At McKinsey, we really did live and that have grown up from a handful of part- partners like,” Eichelman adds. it, and I’ll lateral across the way.” breathe clients first,” says Gardner, who ners sitting around the table to global behe- There are other strategies for ensuring a That’s harder in the current moment, with spent five years with the company be- moths,” says Heidi Gardner, a distinguished firm’s cash reserves are replenished every the lateral market narrowing to focus on a fore she began researching professional fellow at Harvard Law School’s Center on year. At least one Am Law 100 firm draws on smaller number of proven stars in high-de- services firms. the Legal Profession. profits to prepay office rent for the upcom- mand practices. Still, whether a firm is hold- Indeed, many of the statements from firms But the number of firms that categorically ing year. Others will hold onto as much as ing onto promised distributions for weeks confirming their recent compensation cuts return all profits to their equity partners, 40% of their profits for the year after they’re longer than once expected, or making larger have taken pains to emphasize that resources without any financial engineering, is shrink- earned, and equity partners aren’t made structural changes to financial management, devoted to client services will remain amply ing. Instead, firms now take a variety of whole until four months into the next fiscal partners will need to be mollified. The ease funded. It’s rhetoric, but it also acknowl- approaches. Some operate with a model that year. “That’s a cushion the firm will use to of doing so varies by firm. edges a long-term outlook. involves holding on to a portion of profits at operate in the first half,” McKenney says. “Firms that are able to make big changes “Clients are better off when firms are led the end of each year to fuel investments and Gretta Rusanow, head of advisory services or bolder moves are going to need leadership and structured in ways that help people un- protect against exigent circumstances. Others for the Citi Law Firm Group, says their sur- to drive those changes, though—not just to derstand that it is not an individualistic play. employ workarounds that ensure some por- vey work across the industry since March introduce them but to make them sustain- They need to be structured and led in a way tion of earnings is retained but partners are reveals that firms have been holding onto last able,” Gardner says. that people understand there’s no conflict not forced to pay taxes on profits they aren’t year’s profits for longer than usual to help Leaders will find it easier to institute such of interest between what’s good for them, able to pocket. And still others delay distri- manage cash flow. changes in firms with an established track what’s good for the firm and what’s good butions beyond the end of their fiscal year to That option is not available to Cozen record of planning for the future. Perkins for the client,” Gardner says. “There’s a lot ensure a reserve for growth initiatives. O’Connor. Organized as a PC rather than an Coie managing partner Bill Malley only as- of conventions in standard legal practice Michael McKenney, who leads credit LLP, the firm has to return all profits to eq- sumed the top role at his firm in 2019, but he that make sure these three don’t have full origination as managing director of the Citi uity partners in the same calendar year they says he’s been aided by a partnership culture alignment.” Private Bank Law Firm Group, looks at these are earned in order to prevent partners from that recognizes the value of investing for the Maybe it’s a spot of good news in an oth- measures and concludes that the industry en- paying taxes on profits they don’t receive. long term. Consequently, not only does the erwise bleak time that some of those conven- tered the coronavirus crisis on much firmer Nonetheless, the firm and its partners have firm have a strategic plan that guides invest- tions appear to be eroding. footing than it stood on prior to the Great historically been comfortable with setting ment decisions in good times and bad times, Dan Packel can be contacted dpackel@ Recession. a portion of profits aside, regardless of tax it takes pains to communicate the specifics alm.com. •

protection for transgender patients from male but was fired from her job after telling Justices Brett Kavanaugh and Samuel LGBTQ discrimination by doctors, hospitals and her employer she planned to live and work Alito Jr. wrote dissents, with Justice health care providers, Farber said. full time as a woman. The court said an Clarence Thomas joining Alito’s. continued from 3 That rule is likely to be litigated, and employer who fires an individual merely for Charles Toutant can be contacted at “Now, it’s firmly ingrained for federal proponents for protecting transgender pa- being gay or transgender violates Title VII. [email protected]. • employees in New Jersey that this is the tients from discrimination can rely on the law,” said Farber. Supreme Court ruling, Farber said. In addition, the Supreme Court ruling could Last week’s 6-3 ruling, by Justice Neil strengthen health care rights in ways that are Gorsuch, concerns a man who was fired beyond the reach of the NJLAD, Farber said. from his job after joining a gay softball Follow us on Twitter The Supreme Court decision also calls league, another who was fired after men- www.twitter.com/thelegalintel into question a Trump administration regu- tioning he was gay, and a transgender lation, announced June 12, that eliminates woman who had previously presented as