General Motors Fraud Calls Bankruptcy Laws into Question

General Motors has played a dangerous game with the government and taxpayers by willfully hiding that fact that its cars had a recall for a deadly ignition switch defect — one that could stall engines or defer airbag deployment — keeping the judges and public ignorant until after they went bankrupt under Chapter 11. Be keeping mum on the problem, it did not figure into bankruptcy stipulations. The plan, we can imagine, was to emerge from bankruptcy, without the liability of what their company did prior. This, at least, is what the lawyers who are tackling this problem are claiming.

“This is an extremely complicated area,” said Jeffrey Davis, bankruptcy specialist at Levin College of Law at the University of Florida, as reported by the Daily Business Review.

How this changes bankruptcy laws for big business in the future remains to be determined. The National Highway Traffic Safety Administration has pressured Gm to establish a victims fund, but critics say this could undermine the 2,500 lawsuits brought against GM for other reasons before the bankruptcy.

Attorney Lewis S. “Mike” Eidson, a partner at Colson Hicks Eidson in Coral Gables, is on board in taking on GM. He was national co-lead counsel in taking on Firestone Tire co. over their 40 million defective tires.  He said “There will be a howl that you will hear forever from coast to coast if they pay these people but not the others.

Attorney Scott Baena explained that even the bankruptcy plans can be reopened once the fraud is exposed. But it must be within 180 days of the bankruptcy plan’s confirmation.

“To be honest, I’ve always had a problem of that 180-day limitation,” said Beana.

And why not? After all, GM kept their recall dilemma secretly until they were forced to divulge it in January. Now that their CEO Mary Barra claims that GM wants “to do the right thing” for the victims of the faulty ignition switch defect — over a dozen deaths have resulted — one has to ask how much of the “right thing” is a self-interested ploy at damage control.

“The law will not will not permit GM to hide the ball by concealing the dangerous defect that gave rise to the claims, and then argue that the claims based on that defect were extinguished by the bankruptcy,” said Prieto. “The law is not going to reward a party who hides the truth. You don’t escape by creating a new company. The new company carries the debts of the old company unless it gets discharged.”

Creating a victims fund will not stifle those others who are seeking retribution for other defects. Though creditors whose claims were discharged have not yet complained about the victims fund, that is in the air as well, and could influence on how the situation is redressed. The 180 days of confirmation may be called into question, as well as other aspects of Chapter 11, and what a company can and cannot do to hide behind it.

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Is Your Paycheck Making You Nervous?

IP Law 360 examined why we are seeing more layoffs in law firms recently, in an article titled “Lawyers Fear Layoffs” and published on Friday, May 30th (subscription required). When I was interviewed, I suggested that lawyers should be aware of the link between high associate salaries and the probability that more law firms will announce layoffs in the wake of a market compensation increase. I personally feel that the last so-called salary wars in early 2007 were so aggressive that a scaling back in personnel isn’t surprising, although it is certainly unfortunate.

Others in the article said that recent layoffs can be linked only to the lack of demand for legal services in particular practice areas. There is no denying the impact of the credit crisis on the market at large and law firms specifically. Do you think that associates’ increased salaries play any part in the current belt-tightening environment?

How to answer the “what do you want to make?” question

A number of my partner-level and counsel-level candidates loathe the “What do you want to make?” question. Associates at large firms typically don’t have to worry about this issue because of the lockstep compensation.

Like many types of negotiation, I believe the best advice is to never throw out the first number.

So how do you handle that uncomfortable moment when the firm asks, “So, what are you hoping to make?” You can simply respond along the lines of, “Well, I’m actually hoping to take your lead here. I’m looking for fair compensation based on my market value, which I’m still in the process of figuring out [if relevant, add 'with a number of firms']. But with regard to your firm, I imagine you’re in the best position to determine how I would best fit into your compensation structure.”

And if you want to end with a joke to lighten the mood, say something like, “How’s that for a gentle deflection?”

Have a great 4th of July weekend!

New Insight into Retaining Female Attorneys

In case you missed it, the National Association of Women Lawyers (NAWL) recently released a report which recommends policies and procedures to help law firms retain female attorneys (http://www.law.com/jsp/law/sfb/lawArticleSFB.jsp?id=1202422998543). The ability of law firms to retain female attorneys has long been an issue, and hopefully this report will provide law firms with some new policies and procedures to help them increase the number of female attorneys within their ranks.

I believe one of the best methods to retain female attorneys is to create an effective flex-time program that does not leave either the firm or the attorney feeling short-changed. Specifically, the part-time attorney often ends up working a full-time schedule and ends up resenting the fact that s/he is being paid less than his or her full-time counterparts. One method to address this common gripe is to base a part-time associate’s compensation on the associate’s actual billable hours compared with the firm’s billing requirement. For example, if the part-time associate’s billable hours equal 75% of the firm’s billing requirement, then it seems only fair that the part-time associate should receive 75% of the compensation of a full-time associate. This is just one effective technique that I have seen a very well-regarded New York law firm use with great results. It is worth noting that this law firm is a long-standing member of the American Lawyer’s A-List, so it appears that it must be doing something right. Hopefully NAWL’s report will help law firms achieve the long-time goal of increasing their ability to retain female attorneys.

NYC Law to Expose Banks’ Dealings with the Poor Meets Resistance

It’s slow going getting the New York City law in place that would hold banks accountable for how they do business with poor neighborhoods. With the fervor of the Occupy Wall Street Movement, the City Council in 2012 passed the Responsible Banking Act, which amounts to legislating that banks must report details about where their branches are located, what foreclosures they are involved in, how they are modifying their loans, and so forth. Such information is relayed to a Department of Finance website which in turn informs the mayor and his team on what banks are doing the most to help poorer neighborhoods.

Despite that this Act does not necessitate the city choose higher-ranked banks who do more for the poor, it still has met with harsh rejections, first from the former Mayor Michael Bloomberg, whose veto held enough weight to stifle any implementation of the law until a successor took over, and then, when Mayor Bill de Blasio took the reins, it was opposed by the Bankers Association, who sought to squash it, claiming that state and federal laws regulating banking disallow cities from also regulating banks.

Nevertheless, supporters said the Act was not a form of regulation, and could be allowed; ultimately this view prevailed, and de Blasio is interested in implementing it.

“Mayor Bloomberg didn’t support it,” said Jaime Weisberg, of the Association for Neighborhood and Housing Development, “and then you had new leadership in place, but we’re thrilled that they’re going forward with it.”

Going forward includes the appointment of Jacques Jiha as commissioner over the Department of Finance. It is a slow moving law, and it is expected that a hiring contractor will require five and a half further months of effort.

As New York City currently invests its billions of dollars in cash deposits in 30 banks, choosing them based on financial soundness, it is uncertain whether they would change such an obvious tactic in order to encourage banks to reach out to poorer neighborhoods. Certainly the law does not require this, and though de Blasio, Jiha, and Comptroller Scott Stringer may consider the extra efforts certain banks might make, they are not required to choose a lesser qualified bank simply because they give back more to the city.

In other words, it appears a rather tepid bit of legislation, but enough, nevertheless, to raise the ire of the Bankers Association, who prefer no meddling or such transparent disclosure in how they do business. Banking legislation has some of the most interested and stalwart players, so such legislation moves at times at a glacier’s pace.

 

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Pro Bono Work Is a Wise Strategy

One of the best way to receive good gifts from life is to give good gifts to others. If you do pro bono work regularly, not only will  you build good karma with your higher power, but you will be networking. Those you work with will know that you care for more than a paycheck; you care also for justice. Ironically, this can help your paycheck.

Pro bono work is the best way to network, for you will be impressing judges and those who are happiest in the legal profession: those who do it for love of justice, who do it to help people. After all, helping others is more fulfilling than even the heftiest paycheck. Volunteer work is part of a healthy lifestyle.

Nevertheless, the spiritual always walks in step with the material, and you will find that the more you cheerfully give to others, the more others will want to cheerfully give to you, and will give you the connections you need to land the sort of job you thought you could never get. Mind you the new job might look like a compromise, but gold is hidden in ugly ore.

Don’t do pro bono simply to network and serve yourself. If you do, and those things don’t happen, you will turn sour. Do it for the sheer love of justice. You will find that your day will come.

Writing good quality articles and publishing them can work wonders for your firm’s marketability (and your own marketability as a partner or associate)

Adam Stock and Adrian Dayton recently published this article for the National Law Journal entitled, “Write, Share, Get Noticed.” Their article makes the point that it’s easier than ever to garner widespread dissemination of your work due to the internet and social media, but make the point that quality also really counts.  They encourage associates and firm marketers to write extensively on their practice areas, but to make sure that the content is excellent.  Below are the salient points they make in the article:

  1. Publish online content regularly. Content is the key to visibility online.
  2. Publish good, helpful content. The more people like it, the more they will share it and the more visibility you will get. Be smart, but be accessible.
  3. Write about what you know. No matter how specialized you are, there is an audience that you can now reach through the “magic” of the Internet.

Here is the article:

http://www.law.com/jsp/tx/PubArticleTX.jsp?id=1202534594631

The Best Way to Prepare for a Job Search and Interviews

Several years ago when looking for a position in Los Angeles I interviewed with numerous law firms.  In virtually every one of these interviews I ran across an attorney who knew not one, not two, not three—but numerous, numerous attorneys in my current firm.  If this is the case in a market the size of Los Angeles (and the market in Los Angeles is huge), I cannot even imagine what it must be like in smaller markets.  For example, I am from Detroit.  I grew up in  a suburb of Detroit.  When it came time for me to decide where to work in law school, when I started interviewing with firms in Detroit I knew many of the attorneys before I even arrived at the interviews–they were the parents of people I grew up with.

The following are my suggestions for the best way to prepare for a job search and interviews:

1. Know you are always being watched, observed and judged

When I was in high school I remember that one of the best looking girls in my school was known to be a prude and someone who would date boys but never let anything all that exciting happen.  She was also a star athlete and a student counsel leader and a very respected student.  My parents were divorced and lived about an hour apart.  I lived with my father.  The funny thing is that this same girl also had parents who were divorced and spent a lot of time in one city visiting a parent.  The funny thing about this girl was she had the exact opposite reputation in the city where she did not live full time.  Her strategy it seemed, like the strategy of many, was to have two separate personas.  She knew that if she behaved one way in her school and around people there she would experience fall out.  She also knew that by keeping her “wild side” in another town this would not affect her directly in her own back yard.

In life we are always being observed.  We are being observed in our communities.  We are being observed in our jobs.  We are being observed by our peers.  We are being observed by our superiors.  There are a lot of people out there who understand that.  The smart woman discussed above certainly understood that (albeit, in a different context).

When I went to look for a job in Detroit, despite the fact that I had not spent time in the city since high school I already knew which firms I would likely get jobs in and which ones I likely would not.  This had nothing to do with the prestige of the firm-it had to do with the people inside the firms.  I knew that I had been close to certain people growing up and their parents like me.  I also knew that I had not been close with others and had made some enemies along the way.  Sure enough, when I started applying for jobs in Detroit I was preceded by my past.  The Detroit legal community is small enough that most people know one another.

In everything you do in the public arena you are likely being observed, watched and judged.  The people you need today will likely have some impact over events that may happen to you tomorrow.  It is as simple as that.  Like the woman discussed above, you need to do everything you can to maintain a strong public face at all costs.

One thing about interviewing in law firms is that there will likely almost always be someone there you have known from a time before.  That person will likely have a say in what is happening to you in your new position.  Be aware of this and you will be preparing for interviews every second of every day.

2. Remember that the best lawyers can spot other good lawyers and you cannot “fake it”-you are always preparing for interviews just by doing a good job with your current work

There are many people out there who go to work in jobs and for whatever reason are not challenged.  Most often the people who claim they are not challenged are the same people who go out of the way to not challenge themselves.  We all know the type of person who does not challenge themselves in the job.  These are the sorts of people always looking for shortcuts and other methods to do as little work as possible.  I have never understood this sort of person-but they are there.  This sort of person is also the same one who is likely to be very defensive when asked about something they do not know but think they should know-”oh, I already know that!” they will say.

When you are good at something and really doing your job you have the tendency to get “immersed” in your subject matter.  Over time the subject matter and its intricacies and innuendos becomes almost second nature to the good student.  You also become more astute and a level or presumed understanding emerges between people who understand the subject matter well.  Little tidbits and other bits of understanding emerge.  Two people who are very good at something share a similar understanding.

When you are interviewing with a truly excellent lawyer, they will also be able to tell if you share this level of understanding.  If you are a slacker and not a hard worker, or someone who does not consistently challenge their mind, they will see right through this.  This level of understanding is particularly important at the higher levels.  You need to always be working hard and doing good legal work even when you may not want to make long-term plans to be at your current firm.  This is essential.

3. You need to go into your job with a sincere and 100% desire to make it work and switch jobs infrequently-if at all

Until the 1980s, the majority of workers in America and in law firms rarely changed jobs-if at all.  One of the major changes that happened was when the Japanese started importing cheaper and better cars into the United States.  American car makers (a major industry at the time) could no longer afford to be as loyal to their employees and mass firings and layoffs became increasingly commonplace.  Furthermore, pensions were fairly rapidly phased out at most companies in favor of 401ks-because employees began to be more “portable” in their jobs.  Much of the changes that were occurring in corporate America soon found themselves into law firms and other legal hiring organizations.

Despite that fact that attorneys can switch jobs at a whim in the current economic climate, switch jobs is not always the smartest thing to do.  Young lawyers (especially) like to feel as if they are in control and more valued by their employers than they value them.  In addition, young attorneys are likely to move for a slight bump in salary, an attorney in the firm they do not like, or some other trivial sort of factor.

These are not good reasons to move.  In fact, there are few good reasons to leave most legal employers.  The best reason and the only reason is if there is something inside your current firm that is so endemic to the firm and so pervasive that unless you leave your career will never go forward.  These factors also should be near 100% beyond your control.  When you join an employer it is much like getting married.  If you show a lot of commitment to your current employer you will be respected if you have to leave due to factors outside of your control.

The reason all of this is important is because the person interviewing you wants to trust you.  If the person or organization interviewing you does not trust you and believes you may leave for a trivial reason then they are will be unlikely to hire you.  If your reason for leaving is sound and the next firm who hires you believes you are likely to remain on board in the face of adversity then they are more likely to hire you.  People want to have people with staying power in their organizations.  No organization is perfect and all organizations go through ups and downs.

Conclusions
In everything you do-both inside and outside of work-you are always preparing for your job search and interviews.  You need to remember that the time to prepare for interviews and a job search is before you ever know you will need to prepare.  Being a good attorney and a job searcher is something that takes the same amount of time and effort to achieve.

Be Bold and Take a Move of Growth

In the legal profession, we might feel lucky to be where we are at. After all, so many would-be-lawyers are working as paralegals, if not pizza-men. Getting your JD might give you a shiver of trepidation nowadays: there is no promise you will make it in this profession. So you, as an established lawyer, may feel the best strategy is to hold to the familiar, to keep on the familiar track, and not take an unnecessary risks.

If you prefer comfort and will not risk the adventure of new jobs, new assignments, making the lateral move that will challenge you, you will not grow. Maturity is perpetual growing, perpetual improvement. We don’t quit growing until we die. And the brain keeps learning all our lives: the brain is plastic, and you can teach old dogs new tricks.

What matters is having the courage to keep challenging yourself, to throw yourself into situations and arenas where you could fail. Go ahead and fail: so what! Is failure so bad? Worse is it to have never tried in the first place.

If you are psyched out about the new position, if you are wondering, “can I really handle this? Will I just sink like a rock,” then be certain that this is the move you should make. Always do what you are afraid to do. Be confronting those fears, by doing what may even seem foolish or unlikely, we grow more bold and also surprise ourselves: we are stronger than we imagined. You never know how strong you are until you actually try your best, and take on challenges that are just a little too big for you, that require you to go back to the books, to educate yourself, to adjust your skills to meet the new demands.

At first, the old habits will resist and try to talk you out of it. They will quite reasonably remind you that you could greatly fail, you could lose so much. Old habits always have a reason to resist change. Nevermind them. Fan the flame of  the new habit, the new boldness, taking the job you think will make you sink. When you fan this small flame, when you feed it small successes, and give it more and more fuel, it will grow, and soon enough you will have built a boldness to try new and new challenges, to seek out adversity for the relish of the fight, for the sheer chance to expand and grow.

Of course you will fail along the way. Success is paved with countless failures. Use your failures as stepping stones. The stumbling block becomes a stepping stone. When you adjust your assessment of what failure means, what it says about you, when you realize that great people fail more precisely because they try harder and try new things, then you can relax and not be defeated when you lose, not give up when others laugh at you, or pity you. Hold to that inner spark, the inner voice that tells you to keep striving, to raise your head to face bolder challenges.

Take the new position, even if you think you might drown. Dare to seek the promotion, dare to ascend. This is the way to grow as a lawyer, this the way to grow as a human being, and though you might be afraid at first, you will be proud of yourself in the end.

When you force yourself to grow, force yourself into bold new situations, you will summon powers within you that you never suspected existed. You will realize you were more capable than you had suspected, you will have found that there is more to you as a lawyer, as a man or woman, than you previously believed.

 

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Lateral Move or Law Firm Loyalty?

There is nothing more tempting than a lateral move that offers you all the things your company lacks. Just as in marriage, when you take on a girlfriend who is right in all the ways your wife is wrong, you might think, “this is the one for me.” Be sure, however, that you are making the right decision. While the new company may outshine your company in the areas so noted, they may have their own set of problems you never imagined, and now you can’t go back to your original company and you are saddled with all this extra baggage that you have no idea how to handle. Not only do you have new problems you never had to face before, but you are stuck with them, unless you want to move to another company yet again, and risk even further bad surprises.

This isn’t meant to scare you: making a lateral move can be the most exciting career move possible for you at this time. But before you jump, consider some of the advantages of law firm loyalty. Having been part of this firm for so long, you know its quirks, or, as with a spouse, her hidden birthmarks. They may be a little ugly, but you are so used to them that they are even a little bit charming. You know where and how the company has problems, but you are used to compensating for them.

Instead of making a jump to a rival company, you might see if a new position exists or could be created in your own company that will take into account that you are a dynamic individual itching to grow. If your company can grow with you and keep pace with you, this career move might be better in the long run even if a rival company would offer a larger raise. Loyalty pays. Consider it before any career move. Never cease to dream that it could be better, but dream also that it could be better, even here.