May 27, 2006
Ten Tips for Avoiding Litigation
Businesses rarely enjoy the litigation process. Even when they win, it's expensive, time-consuming, disruptive, and annoying. Dalton McGrath and Michael McCachen of Blake, Cassels & Graydon LLP, offer ten practical tips for avoiding litigation or (if it's unavoidable) making it less painful and dangerous.
May 26, 2006
Risk and Reward in Offshore Wind Energy Construction
In building a big project, there's a lot of risk. Sometimes it make sense for the contractors to bear all the construction risks, entitling the developer to a turnkey operation. A tool for doing this is the Engineering Procurement Construction contract (EPC), which has become a popular tool for construction of high-value processing plants. Contractors have found them useful because where they can accurately gauge the risks, they find them to be more profitable.
But according to Keith Hartley of London's Pinsent Masons, in The Winds of Change -- EPC Contracts for Offshore Wind Farms, contractors have backed away from bidding on EPC contracts for new offshore wind energy projects, where weather risks and uncertain technology make the projects more hazardous and thus more difficult to bid. The solution? A more complex blend of risk allocation that may require separate contracts for different pieces of the project.
The Value of Transactional Lawyering
You can't do a major deal without transactional lawyers, and you can't get good transactional lawyers without law professors to teach them contracts. This is obviously a good thing. But what exactly is it that these lawyers do for the money?
Duke's Steven L. Schwarcz (left) offers his own empirical take on the question in Explaining the Value of Transactional Lawyering. Here's the abstract:
This article attempts, empirically, to explain the value that lawyers add when acting as counsel to parties in business transactions. Contrary to existing scholarship, which is based mostly on theory, this article shows that transactional lawyers add value primarily by reducing regulatory costs, thereby challenging the reigning models of transactional lawyers as "transaction cost engineers" and "reputational intermediaries." This new model not only helps inform contract theory but also reveals a profoundly different vision than existing models for the future of legal education and the profession.
Smithsonian Contract Creates "Tremendous Hullabalo" for Congress
Smithsonian officials were summoned before the House Administration Committee to explain a 30-year television contract with Showtime Networks. The 170-page deal created an on-demand cable station that will feature Smithsonian programs and collections. The deal gives the new network the right of first refusal on commercial documentaries that “rely significantly” on the museum's archives, curators or scientists. The Smithsonian said, however, that researchers and scholars will continue to have access to the archives and other Smithsonian resources. But commercial filmmakers can make only "incidental" use of the materials unless they are working with Showtime or get special approval.
The main objection to the deal is that the resources of the Smithsonian are being made exclusively available to Showtime. However, Smithsonian officials responded that only a very small number of filmmakers would be affected, and that, of the 900 media contracts signed between 2000 and 2005, only 17 had more than an incidental use of Smithsonian resources.
Objections also aimed at the secrecy of the deal and the 30-year duration of the contract. The contract was never made public and had been kept in secrecy due to a confidentiality agreement, but the Smithsonian handed it over to the Committee yesterday.
As a sign of Congress' disapproval, the Committee reduced the proposed Smithsonian budget by $20 million. The secretary of the Smithsonian apologized “for the tremendous hullabaloo” the deal had caused Congress. He added: “If we have even an idea we will come to [the Committee].”
[Meredith R. Miller]
Commerce 1, Artistic Integrity 0
Film auteur Woody Allen lost a round in his long-standing contract dispute with former best friend Jean Doumanian, producer of six of Allen's films. New York state judge Bernard Fried ruled that under the terms of a 2003 settlement agreement, Doumanian has the right to edit the six films for television and airline use. Doumanian wants to overdub offensive words, while Allen insisted on using bleeps to cover them up.
The six films, which came out from 1995-1999, are Bullets Over Broadway (with John Cusack), Mighty Aphrodite (Helena Bonham Carter, Mira Sorvino), Everyone Says I Love You (Julia Roberts, Drew Barrymore, Natalie Portman, Alan Alda), Deconstructing Harry (Robin Williams, Jennifer G arner), Sweet and Lowdown (Sean Penn, Uma Thurman),and Celebrity (Leonardo di Caprio, Charlize Theron, Winona Ryder, Melanie Griffith, Kenneth Branagh). Allen claimed in 2001 that Doumanian and her partner had skimmed $12 million in profits from the films.
If true, it would have been an impressive feat, since according to the web site Box Office Mojo the six had a combined total lifetime domestic gross of about $48 million, or less than 2/3 of what The Da Vinci Code grossed just last weekend. Doumanian had counterclaimed for $19 million she said Allen owed her.
May 25, 2006
New Hampshire Makes Nineteen
As predicted a day or two ago, Governor John Lynch signed HB 719 today (5/25/06), making New Hampshire the 19th state to have enacted Revised UCC Article 1 (and the 19th to have rejected the uniform choice-of-law provision R1-301). The new law will take effect on January 1, 2007.
Dilbert on Non-Compete Agreements
The cartoon strip Dilbert has been spoofing legal matters for the past week or so. Here, you'll find its take on non-compete agreements. Very funny. FWIW, I suspect the referenced provisions aren't enforceable...
May 24, 2006
Less = More
There's some controversy about relying on foreign law to interpret U.S. statutes. But what about relying on foreign architects? It was Ludwig Mies van der Rohe, after all, who said that "less is more," and the Ninth Circuit has just agreed, holding that the words "less than seven days" in a statute actually mean "more than seven days." The word "less" in the 2005 Class Action Fairness Act, said the court, was a "typogaphical error." The court thus concluded Congress did not mean to create a strict seven-day appeal window, but rather to provide an unlimited time for appeals. Five judges dissented from the full court's denial of en banc reconsideration.
Revised Article 1 Update
As of May 23, 2006, Arizona (SB 1250), Colorado (HB 1247), Kentucky (SB 154), and West Virginia (SB 742) have enacted Revised UCC Article 1, and both houses of the New Hampshire legislature have enrolled HB 719.
All five bills replace uniform R1-301 with language tracking pre-Revised 1-105. The California, Kentucky, New Hampshire, and West Virginia bills opt for the definition of good faith in uniform R1-201(b)(20). Arizona SB 1250 retains the per-R1 definition of "good faith" -- joining Alabama, Hawaii, Idaho, Nebraska, and Virginia in perpetuating different standards of good faith for merchants and non-merchants.
The Louisiana Senate unanimously passed SB 383 on May 8. It is now before the Louisiana House Commerce Committee.
The California Senate Commerce Committee unanimously approved SB 1481 on May 9. It now awaits a third reading and final approval in the Senate before moving to the other house.
Massachusetts HB 3731 continues to languish -- or, at least, that's what the Massachusetts legislature's web site (which is one of the worst this correspondent has had to navigate) indicates. The Joint Committee on Economic Development and Emerging Technologies, which held a public hearing on the bill on Oct. 26, 2005 (not a typo), has until June 23, 2006 (also not a typo) to report on the bill. Stay tuned.
May 23, 2006
Weekly Top 10
Three new papers land this week on our Top Ten, led by Stephen Schwarcz's look at what transactional lawyers really do. Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending May 21, 2006. (Last week's rank in parentheses.)
1 (1) Emerging Policy and Practice Issues (2005), Steven L. Schooner & Christopher R. Yukins (Geo. Washington).
2 (2) Contract Law Theory, Brian Bix (Minnesota).
3 (4) Corporation and Contract, Henry Hansmann (Yale).
4 (9) Formalism in American Contract Law: Classical and Contemporary, Mark L. Movsesian (Hofstra)
5 (8) Managing Risk on a $25 Million Bet: Venture Capital, Agency Costs, and the False Dichotomy of the Corporation, Robert P. Bartlett (Georgia).
6 (7) Constructing a Bid Protest Process: Choices Every Procurement Challenge System Must Make, Daniel I. Gordon (GAO).
7 (-) Explaining the Value of Transactional Lawyering, Steven L. Schwarcz (Duke).
Duke University School of Law,
8 (10) The UNCITRAL Electronic Contracts Convention: Will it be Used or Avoided?, Charles H. Martin (UDC).
9 (-) Post-Katrina Reconstruction Liability: Exposing the Inferior Risk-Bearer, Steven L. Schooner & Erin Siuda (Geo. Washington).
10 (-) Where do You Get Off? A Reply to Courting Failure's Critics, Lynn M. LoPucki (UCLA).
UH Taps Nimmer
Contracts and intellectual property law scholar Raymond T. Nimmer has been tapped to serve as interim dean at the University of Houston Law Center. It's the second time around for Nimmer, who is the school's Leonard Childs Professor of Law and co-director of its Intellectual Property and Information Law Institute. He previously served as interim dean from 1993-95.
Nimmer, a leading expert on e-commerce and technology licensing, is coming off a stint as a Fulbright Distinguished Chair in International Commercial Law at the Catholic University of Lisbon, Portugal. Among his recent books are Licensing of Information Assets: Cases and Materials (2005); Modern Licensing Law (with Dodd, 2005); and The Law of Electronic Commercial Transactions (with Towle, 2003).
A Nice Deal if You Can Get It
No one can accurately measure how much value a good CEO adds to a large public company. No one knows how many people there are out there who have the skills and training to run large public companies. No one can accurately tell, even after the fact, whether a particular CEO was good or bad, or merely lucky or unlucky. When you couple this with the fact that the employment relationship is the ultimate relational contract, where the parties are not bargaining at arms' length, it's not surprising that you see people getting paid very large amounts of money. Our colleage Richard Bales over at Workplace Prof Blog has an interesting post about a method companies are using to mask exactly how much money the CEO gets.
May 22, 2006
Even Castles Made of Sand...
Why build a home for your retirement when you could build a medieval castle? That was the Gunkels' attitude when they contracted with a construction company to build a 44-foot-high, 3,400-square-foot castle on Snow Lake in Indiana. However, it wasn't all fun and games when, according to the couple, the castle developed structural problems that delayed them from moving in. In 2000, the couple sued their contractor; at the time, they still owed the contractor $92,435 on another constructon contract.
The case made its way up to the Supreme Court of Indiana, which remanded it back to the trial court. The AP reports that the trial judge had to decide "if the contractor was responsible for work ordered by the Gunkels through other contractors, such as a new roof, carpet replacement and many doors and windows and furniture refinishing." The trial courtrecently published a ruling, awarding the contractor $211,935 for damages due to breach of contract, attorney fees and interest. The Gunkels were awarded $31,826 for attorney fees, repair work on windows and doors and interest.
A picture of the castle can be seen here.
[Meredith R. Miller]