Category: Uncategorized

The Impeachment Process: Politics, Procedure and Next Steps

The US House of Representatives is set to vote this week on impeaching President Donald Trump, and the impeachment vote is expected to pass.  This will set the stage for the next step in the impeachment process;  the third-ever Senate impeachment trial.

We thought this would be a good time to recap the steps in the impeachment process to better understand, procedurally, how the impeachment case against President Trump reached this point, and what is expected next.  Also, we wanted to dig into some of the issues which have been brought up as problematic by the Republican minority in the House related to the impeachment process and the structure of the House hearings.

Jeffrey S. Robbins, a litigation partner at the Boston offices of Saul Ewing Arnstein & Lehr LLP, served as Chief Counsel for the Minority (the Democrats) for the United States Senate Permanent Subcommittee on Investigations, and Deputy Chief Counsel for the Minority for the Senate Governmental Affairs Committee during its 1997 investigation into allegations of fundraising improprieties by the Clinton-Gore Administration during the 1996 presidential campaign.  Mr. Robbins was kind enough to share his expertise on past congressional investigations to help sort through some of the procedural issues raised and help us understand if the process, so far, has proceeded in a usual manner.

NLR: Impeachment is a three-step process, beginning with an investigation in the house and then a vote on articles of impeachment, then a trial in the Senate. What kind of evidence is the House looking for during the investigation stage prior to voting on articles of impeachment?

Robbins: The House committees are looking for the strongest quantum of evidence possible that the President engaged in conduct which amounts to an identifiable “crime,” since a conservative reading of the Constitution holds that some form of crime, at least, is necessary for impeachment.

House Republicans have complained about the limited access to closed-door House impeachment investigation and depositions leading up to the House’s impeachment vote should all be public and the transcripts should be released. Access to the House’s investigative hearings has been limited to members of the three House committees involved– Foreign Affairs, Intelligence and Oversight, and Reform which have a majority of Democratic House Members but Republican committee members can participate in the investigation and question the parties being deposed. Intelligence Committee Chairman Adam Schiff, D-Calif., said private sessions are needed to prevent witnesses from hearing each other, the same protocol used by prosecutors in criminal investigations.  House Minority Leader Kevin McCarthy, R-Calif., called Schiff a liar and a partisan leading a witch hunt and that the venerable Intelligence Committee has become the partisan Impeachment Committee.

NLR: How much of the House’s investigation needs to be in the form of public hearings?

Robbins: There is no Constitutional requirement that impeachment hearings be public or private, but as a practical and a political matter, it is obvious that impeachment hearings need to be conducted in public; after all, building public support for impeachment is a sine qua non (an essential condition) of a vote to impeach, let alone a vote to convict. On the other hand, there is nothing remotely nefarious about what the Minority refers to as “closed door” depositions; Congressional investigations routinely utilize depositions, by definition closed to the public, as a device to ascertain which witnesses have relevant evidence and what that relevant evidence is, in order to assess the strength of a “case” and to more effectively organize any public hearings associated with the investigation.

Intelligence Committee Chairman Adam Schiff said private sessions are needed to prevent witnesses from hearing each other. House and Minority Leader Kevin McCarthy said “I can’t even go down there and read the transcript,” alleging that Republicans have not been allowed to cross-examine the hearing witnesses, which is not accurate.

The reality is that Republicans have participated in each deposition, but their role is limited by the Democratic committee majority. Both Republicans and the Democrats get equal time to ask questions.  Forty-seven Republicans from the Intelligence, Foreign Affairs, and Oversight Committees have been allowed to attend and participate in the depositions.

NLR: What actually goes on in Congressional hearings? What is the timeline between the hearings and the public testimony?

Robbins: From personal experience, I can tell you that the preparation to question witnesses in a Congressional investigation is an intense process, made all the more intense by the volume of material that has to be consumed in order to question effectively and by the shortage of time within which to consume it. Here, for example, there is a steady drumbeat of witnesses being called for deposition on only a few days’ notice to all concerned, and then only a week or so between the deposition and the public hearing. The process is made more intense by the fact that there are other staff lawyers, and Members, and communications experts, all of whom quite properly want to weigh in on the thrust of the questioning, the messaging of the questioning, and the like.

In the hearings, according to the Wall Street Journal, Adam Schiff opens with remarks and then invites a Republican counterpart to do the same.  Each party receives a block of time to ask questions, and a timekeeper keeps track and moves the proceedings along.  Rep. Mark Meadows (R., N.C.), told the Wall Street Journal that each party gets equal time.  “There is a clock, with a timekeeper,” he said.  Other Republicans, including Reps. Jim Jordan of Ohio and Scott Perry of Pennsylvania have been attending the hearings regularly.  Besides Mr. Schiff, Reps. Jamie Raskin of Maryland, Sean Patrick Maloney of New York, Eric Swalwell of California and Gerry Connolly of Virginia have been attending for the Democrats.  Eventually, the committee voted down party lines to advance the impeachment proceedings.

Complicating the evidence-gathering process is the lack of cooperation from the White House, including Trump administration officials defying subpoenas.  Per Adam Schiff, the White House isn’t cooperating and is defying several subpoenas, which Schiff predicted would be considered obstruction and additional evidence “of the wrongfulness of the President’s underlying misconduct.”  When the House Leadership unveiled the articles of impeachment on December 10, 2019, they first focused on the Trump’s pressuring of Ukraine to investigate Joe Biden before the 2020 election by delaying a White House meeting and $400 million in US Security Aid, but the second focused on the obstruction related to the investigation into his misconduct.

NLR: What are the consequences if a witness refuses to testify at a hearing, or otherwise ignores a subpoena? 

Robbins: Under law, there are to be consequences to refusal to testify or disobedience of a subpoena to produce documents, in particular, contempt findings that are appropriately enforced by federal courts.

Mr. Schiff, accused by House minority Whip Steve Scalise of “…trying to impeach a president of the United States… behind closed doors,” pointed out that the president’s former attorney, Michael Cohen, pled guilty to lying to Congress out of loyalty to the president, and was recently sentenced to three years in prison as a result. Still, the White House has consistently refused to cooperate with the inquiry, citing executive privilege as justification to keep those subpoenaed from actually appearing under oath. Citing executive privilege is a not-uncommon tactic to prevent disclosure of goings-on at the top end of the executive branch, but it doesn’t always work well for those using it, and the privilege itself remains a cloudy legal concept.

NLR: What privileges, if any, can a witness assert?

Robbins: With respect to privileges, there are, of course, the “Big Three”: the attorney-client privilege, the Executive Privilege, and the Fifth Amendment. When those privileges are invoked, as a practical matter they are beyond being challenged, except in extreme circumstances, and for the purpose of this impeachment proceeding, where the time constraints are what they are, if they are invoked their invocation will effectively block disclosure of evidence.

There have been many examples of witnesses invoking their Fifth Amendment rights to avoid answering questions in Congressional hearings.  One prominent example is the case of Lt. Colonel Oliver North in the hearings around the Iran-Contra affair during Ronald Reagan’s presidency.

NLR: If the House votes to ratify the articles of impeachment, the Senate will hold a trial.  Who acts as a prosecutor in this instance, and who acts for the defense?  How is that determined?

Robbins: Since the House is the indicting authority, it will choose who presents the case for removal to the Senate. It will in all likelihood be one or more members of the House.

By way of reference, for President Andrew Johnson’s impeachment trial in 1868, an impeachment committee was made up of seven members of Congress, led by Thaddeus Stevens.  President Bill Clinton’s impeachment featured a team of thirteen House Republicans from the Judiciary Committee.

NLR: Why does the Supreme Court get involved in impeachment proceedings, and what is their role?

Robbins: As for the role of the Supreme Court, it is the Chief Justice who presides over the trial, per the Constitution, and it is he who will be involved in those proceedings, and not the full Court—at least this has not occurred in our limited experience with impeachment.

While it may seem plain that the Supreme Court would have a larger role in the impeachment proceedings, that’s not truly the case. The chief justice is, of course, given the power to preside of the Senate trial by the Constitution as a part of the doctrine of separation of powers – as Justice Joseph Story argued – removing the Vice President from Senate leadership to uphold the trial’s impartiality. Should there be a conviction in the Senate, and the convicted president were to try and engage the highest court, SCOTUS has already found that the Senate’s impeachment procedures are nonjusticiable, because of Article I’s designation of the Senate as the “sole power to try all impeachments” (Nixon v United States, 1993).

Many thanks to Mr. Robbins for his time and for helping break down these complex issues during a complicated time.

Copyright ©2019 National Law Forum, LLC

Cryptocurrency is At The Center of Multi-Million Dollar Investment Security and Commodities Fraud

The Criminal Division of the IRS arrested Swedish businessman Roger Nils-Jonas Karlsson, for allegedly operating a fraudulent pension plan using cryptocurrency. Karlsson allegedly used fake websites “registered to a fictitious person” to advertise shares of a “Pre-Funded Reversed Pension Plan” (PFRPP). The criminal complaint states that Karlsson allegedly invited potential investors to buy shares of this plan at $98 per share. In exchange, Karlsson promised to eventually return 1.15 kilograms of gold per share to the shareholder as return on investment. In early 2019, 1.15 kilograms of gold was worth $45,000, making investors in the plan a 460 percent return for each share owned. The plan’s investors made payments using virtual currencies, also known as cryptocurrency. Bitcoin, Ethereum, and Litecoin prominent cryptocurrencies and were allegedly used to pay Karlsson. With the assistance of his company, Eastern Metal Securities, Karlsson allegedly defrauded victims into losing more than $11 million.

The U.S. Securities and Exchange Commission does not regulate cryptocurrencies, which are considered risky. The lack of regulation makes it sometimes impossible to get cryptocurrency refunded from fraudulent transactions because banks or government organizations do not guarantee these currencies. In cases where a company or individual commits securities or commodities fraud against the government, private citizens often play an essential role by acting as whistleblowers.

© 2019 by Tycko & Zavareei LLP

More on cryptocurrency enforcement actions via the National Law Review Criminal Law & Business Crimes page.

How Plaintiff Firms Can Make Names for Themselves in a Crowded Landscape

The competitive landscape for plaintiff lawyers is perhaps more challenging than any other area of law. The market seems to get more crowded every day, and the fight for clients is fierce. Moreover, plaintiff lawyers often have to overcome the unsavory, ambulance-chasing reputation inaccurately associated with this practice. With all of these obstacles, establishing your marketing strategy can seem like an uphill battle.

Yet, even in this difficult atmosphere, it’s possible for plaintiff firms to stand out from the rest. This was the topic of “David vs. Goliath: The Competitive World of Plaintiff Firm Marketing,” a session at this year’s Legal Marketing Association Annual Conference. Speakers Pamela Foster, Director of Marketing and Business Development at Howie Sacks & Henry LLP; Danelsy Medrano, Marketing Manager at Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP; Adrian Dayton, Founder of ClearView Social Inc.; and Erin Watson, Director of Communications and Marketing at Motley Rice LLC discussed best practices and lessons learned from their years as legal marketers for plaintiff firms. We recapped the session on our LMA Conference webinar and broke down their strategies into three areas:

Use Marketing 101: Differentiation

There are lots of firms that do plaintiff work, from auto accidents to slip and falls to medical malpractice. A quick Google search can tell you as much. So, when compared to all the other firms out there, what makes you different? It could be that you’ve been doing it the longest, that you’re more hands-on than anyone else or that your firm is all women. It doesn’t matter what makes you different; it only matters that you know what that differentiation is and then market it.

This is marketing 101, because you can’t communicate a message without understanding exactly what you bring to the table. Being clear and focused in your message not only resonates better with prospective clients, but it also makes your marketing budget go further, too. Truly understanding what makes you unique will make the rest of your marketing strategy fall into place and differentiate you in the minds of prospects.

Go Beyond SEO

A decade ago, it was possible to write a few blog posts with keywords and do reasonably well in search rankings. That’s no longer the case. Online marketing has gotten more complex and detailed, and it takes expertise to do it well. Today’s legal marketers need to understand much more than SEO; they also need to understand syndication, what kind of content ranks high and which algorithm changes can upend their approach.

Especially in plaintiff law, where the landscape is crowded and firms need to rank high to survive, DIY search marketing doesn’t cut it. Whether you have an in-house marketing team or hire an outside agency to help, you need to be sure that the person in charge of your search strategy is a true expert.

It’s true that investing in good marketers and digital strategy can be costly, but the return on investment is just too good to pass up. Digital marketing offers so much insight and opportunity for measurement. Where are your clients coming from? What search terms are they using to find you? Once clients do find you, where are they losing interest—or where are they making contact? Digital tools can help you find the answers to these questions and track clients at every stage of the decision-making process.

Be Proactive, Not Reactive

Plaintiff lawyers know better than anyone that the best time to seize an opportunity is before anyone else does. The same goes for your marketing. Rather than waiting for things to come down the pipeline, anticipate and identify where they’re coming from before your competitors do. It’s all about being proactive rather than reactive.  When you’re ahead of the curve you’re at an advantage, at least for a little while—and that time can make all the difference.

Click here to watch our LMA Annual Conference Webinar Recap.

© 2019 Berbay Marketing & Public Relations

For more in legal marketing, see the National Law Review Law Office Management section.

Chicago Workers to Earn $15 Minimum Wage by 2021

On Nov. 26, the Chicago City Council approved Mayor Lori Lightfoot’s proposal to increase the city’s minimum wage from $13 per hour to $15 per hour. This puts the Chicago minimum wage four years ahead of those mandated by the state of Illinois, which will not hit a minimum wage of $15 per hour until 2025. Our previous coverage of the Illinois minimum wage hike cited a 2017 report by the National Employment Law Project finding that 41 percent of all workers in Illinois currently earn less than $15 per hour.

Chicago’s minimum wage will increase in waves, first to $14 per hour on July 1, 2020 and then to $15 per hour on July 1, 2021. After that, it will rise annually with the consumer price index. For tipped workers, sub-minimum wages will increase to $8.40 per hour in 2020, up from the current $6.40 per hour, and to $9 per hour by 2021. Tipped wages will also increase annually after 2021, to remain at 60 percent of the minimum wage.

Mayor Lightfoot stated that these wage increases would address wage stagnation, affecting hundreds of thousands of workers, as the cost of living in Chicago continues to increase. It would likewise eliminate exemptions for disabled workers and minors. Specifically, employers will no longer be able to pay disabled residents below the minimum wage, starting in 2024. Workers below the age of 18 will receive a gradual increase in wages, starting at $10 an hour in 2020 and ultimately reaching $15 an hour by 2024, until the minimum wage exemption for minors is eliminated in 2025.

There is some relief for small employers, as employers with fewer than 20 workers will have until 2023 to increase wages to $15 per hour, and businesses with fewer than four employees are exempt from all increases, with a few exceptions.

Mayor Lightfoot cited support for her proposal from elected officials as well as labor and business leaders, but some employers are concerned that the higher wages will harm their businesses or force them to hire fewer workers. However, Mayor Lightfoot views her proposal as a compromise, as it keeps tipped workers below the minimum wage – a move the restaurant industry applauded. While employers are legally required to pay the difference if an employee’s tips do not add up to the minimum wage, workers’ advocates allege that this does not always happen in practice.

The minimum wage increases in Chicago and Illinois will have far-reaching consequences for employers and employees alike. Employers will need to adjust their budgets and financial projections to prepare for these anticipated wage increases. Employers should also consider reviewing their payroll practices, both to verify they will be paying the appropriate wage and overtime rates for employees affected by the minimum wage increases and to ensure their tipping practices comply with the new law.

© 2019 BARNES & THORNBURG LLP

More on minimum wage increases across the US, via the National Law Review Labor & Employment law page.

Three Ways Litigation Finance Can Help Corporate Legal Departments

Corporate legal departments are generally measured by their ability to control legal costs, manage risk, and deputize external litigation resources, especially when their company is involved in litigation. Although a common feature of modern business, litigation is an increasingly costly proposition that is fraught with risk. In recent years, commercial litigation finance has emerged as an effective means of shouldering case costs and redistributing risk. While the number of law firms that have seized the advantages of this type of financing has grown exponentially, general counsels (“GCs”) and corporate legal departments have been slower to recognize the many benefits that it can offer, which has handicapped their companies by keeping a potent tool needlessly out of reach. Here are three things every GC should know about litigation finance.

Litigation Finance Offsets Risk

Litigation costs and other financial risks inherent to the legal process pose a daunting challenge to GCs. As a result, companies often forgo bringing lawsuits due to their impact on financial performance. Yet even when legal departments decide to forge ahead with legal claims, their outcome is often far from certain. The decision to bring a lawsuit, therefore, has the power to make or break entire companies. This risk is even more acute for smaller companies and those facing financial headwinds. A victory could revive a company’s fortunes, while a poorly conceived effort might precipitate the firm’s demise. Litigation finance mitigates that risk through funding “without recourse,” which allows a company to shift costs to a third party and only share an agreed-upon portion of proceeds with the funder at the successful conclusion of the claim. If a case is lost and no proceeds are recovered, the company is under no obligation to repay the funding amount.

Consider the following example: Suppose a small tech startup sues an industry giant for theft of its trade secrets relating to a revolutionary new product. The startup’s case against its unscrupulous competitor is seemingly strong as the brazen theft greatly damaged the fledgling company. Unfortunately, the lawsuit comes with a steep price tag, forcing the startup to spend more than $100,000 each month on attorneys’ fees and associated costs. Small and vulnerable, the startup is quickly exhausting its cash reserves as its better-capitalized opponent employs a panoply of defensive tactics designed to delay and frustrate plaintiff’s efforts at all stages of litigation. As legal bills continue to mount, the startup may need to abandon its lawsuit or accept a paltry settlement far below the actual value of its claim.

Faced with an existential threat, what the startup really needs is a cash injection from a litigation finance provider to pay for the escalating litigation costs while also providing a much-needed insurance policy against unforeseen financial difficulties that can result from litigation. The startup’s GC is surprised to learn that this type of funding is an increasingly common financing option that is available to companies large and small. In a typical transaction, a third-party funder can finance most, or all of the legal expenses associated with the lawsuit in return for a portion of any recovery. The funds may be used to hire top legal talent or procure additional expert resources. Essentially a corporate finance transaction, this type of funding can even be used to supplement the company’s working capital or clean up arrears to legal service providers.

The example above is just one of the ways that litigation finance can be used to hedge litigation risk. More creative GCs have been able to offset their institution’s litigation costs entirely by using a portfolio-based approach to finance all of their legal claims.  This type of structure typically provides a much larger financing commitment but requires cross-collateralization of several litigation matters. Where portfolio financing is utilized, it may provide a greater degree of certainty about long-term future litigation spend.  If the funding amount is substantial enough, GCs may no longer need to allocate for litigation budgets on an annual basis and take a longer-term approach instead.

Litigation Finance Can Transform Legal Departments into Profit Centers Through Balance Sheet Management

Under GAAP, litigation costs are reflected as expenses, which can negatively impact a company’s financials and quarterly performance. This is especially troublesome for public companies that are valued on earnings or cash flow or require certain financial criteria to be met to comply with credit covenants. For such companies, litigation costs paid from company funds must be recorded as expenses immediately when incurred, thereby diminishing reportable earnings. Worse yet, recoveries from successful legal matters may not offset the adverse impact of lawsuit-related costs because such recoveries are generally treated as below-the-line items that do not increase earnings. Moreover, some actions may result in favorable judgments which then take months or years to enforce, leaving a temporary hole in a company’s cash flows despite a successful ruling.

It is no surprise then that corporate legal departments are frequently perceived by management as cost centers, necessary to put out fires or navigate the laws applicable to a particular industry, but not as potential revenue generators. Traditionally, GCs who have identified a roster of affirmative litigation likely to yield significant recoveries will still need to convince their c-suite to take on the risk and immediate financial burden of funding lawsuits from the company’s own balance sheet. Enter litigation finance. When both the risk and burden are shifted to litigation finance providers in exchange for a portion of any recoveries, a company’s legal department can focus on unlocking the hidden value of its legal matters without the risk of negatively impacting its financials, becoming a potential profit generator for the company.

An Experienced Litigation Funder Can Help Optimize Litigation Outcomes

The quality and breadth of resources that litigants are able to deploy can greatly impact outcomes in legal disputes.  For example, the skill of the legal team, the quality of expert witnesses and other litigation consultants are important drivers of how courts and juries perceive the merits of legal claims. With litigation financing mitigating the burden of paying for legal costs, GCs have greater flexibility in assembling a first-rate litigation team. A legal department buttressed by litigation finance can focus on the skill and effectiveness of its team without worrying about negotiating for the lowest possible fees. Access to the support of top-quality counsel and litigation consultants can improve a company’s overall likelihood of success and the magnitude of any recovery.

Experienced litigation funders can provide access to these top litigation support channels by leveraging their network.  In addition, they can provide an invaluable outside perspective on the merits of a case during the due diligence process and throughout the pendency of the claim. When choosing a litigation funder, consider the expertise of the funder’s team and if there are any practice areas which they target in their investment strategy.

A trusted litigation finance firm should demonstrate the highest professionalism, abide by the explicit understanding that a third-party funder should have no involvement in the litigation or strategy, and should protect attorney-client privilege and confidentiality at all times.  When these essential confidences are met, engaging with a third-party funder can be enormously helpful in assessing the merits and risk of a case, budgeting litigation spend, and providing access to first-rate litigation support.

Conclusion

As litigation finance continues to gain popularity among law firms, GCs should also take notice. As businesses continuously seek to gain a competitive advantage over their peers, the ability to mitigate the risks associated with litigation should be an important consideration, especially since poorly conceived strategies can often carry existential consequences.  GCs, therefore, should recognize litigation finance as an indispensable asset that has the potential to offset the risk of litigation, provide effective balance sheet management while unlocking the hidden value of prospective legal claims, and improve outcomes for meritorious cases.

 

© 2019 LexShares, Inc. All rights reserved.

ARTICLE BY Matthew Oxman of LexShares.

NJDEP Releases Report on Sea-Level Rise in New Jersey

On December 12, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) released a report discussing historical sea-level rise (“SLR”) in New Jersey and estimating SLR for the next 100+ years. The Rising Seas and Changing Coastal Storms report (“Report”) was commissioned by NJDEP and prepared by Rutgers University’s New Jersey Science and Technical Advisory Panel.

The historical data provided in the Report evince New Jersey’s particular vulnerability to SLR, as SLR along its coast has consistently remained higher than the total change in the global average sea-level. For example, from 1911 to 2019, SLR along the New Jersey coast rose 17.6 inches (1.5 feet) compared to 7.6 inches (0.6 feet) globally. In addition, over the last 40 years, the average rate of SLR on the New Jersey coast was 0.2 inch/year compared to 0.1 inch/year globally.

According to the projections in the Report, it is likely that SLR in New Jersey will continue to rise but at even higher rates over the next 30 years. The Report estimates that there is, at minimum, a 66% chance that New Jersey will experience SLR of 0.5 to 1.1 foot/feet between 2000 and 2030, and 0.9 to 2.1 feet between 2000 and 2050.

Interestingly, the Report presents three different scenarios when taking into account SLR projections after 2050. The Report states that such projections “increasingly depend upon the pathway of future global greenhouse gas emissions.” Under a “high-emissions scenario, consistent with the strong, continued growth of fossil fuel consumption,” New Jersey will likely experience SLR of 1.5 to 3.5 feet between 2000 and 2070, and 2.3 to 6.3 feet between 2000 and 2100. Under a “moderate-emissions scenario, roughly consistent with current global policies,” New Jersey will likely experience SLR of 1.4 to 3.1 feet between 2000 and 2070, and 2.0 to 5.2 feet between 2000 and 2100. Under a “low-emissions scenario, consistent with the global goal of limiting to 2°C above early industrial (1850-1900) levels,” New Jersey will likely experience SLR of 1.3 to 2.7 feet between 2000 and 2070, and 1.7 to 4.0 feet between 2000 and 2100.

As stated by Governor Phil Murphy in NJDEP’s press release regarding the Report, “New Jersey is extremely vulnerable to the impacts of climate change and we must work together to be more resilient against a rising sea and future storms.”

© 2019 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

For more on state environmental concerns, see the National Law Review Environmental, Energy & Resources law page.

FDA Issues Warning Letters, Cautions Consumers on Unapproved CBD Products

Nearly a year after the 2018 Farm Bill legalized hemp nationwide, the legal status of one of its most popular products, cannabidiol (CBD), is becoming clearer.

On Nov. 25, the U.S. Food and Drug Administration (FDA) issued a revised consumer update regarding unapproved CBD products and issued a new round of warning letters to CBD retailers selling products in violation of the Food, Drug and Cosmetics Act (FDCA). The agency also warned of potential health risks and safety concerns associated with numerous unapproved CBD products. The FDA publicized its determination that CBD cannot be considered as Generally Recognized as Safe (GRAS) under federal law, foreclosing one of the regulatory paths available to the FDA for allowing CBD as a food ingredient.

These recent actions underscore the FDA’s interpretation that food products, unapproved drugs, dietary supplements and cosmetics containing CBD sold in interstate commerce often violate the FDCA.

FDA warning letters

In this recent round of enforcement efforts, the FDA issued fifteen warning letters to CBD companies selling a variety of products in interstate commerce, including balms, capsules, oils, tinctures, lotions, gummies, chews and sprays that were marketed for use by adults, children and animals.

The letters outline the FDA’s legal analysis which concludes that the products at issue were marketed in interstate commerce as unapproved new drugs, misbranded drugs, adulterated foods or improperly labeled as dietary supplements in violation of the FDCA. The crux of this analysis is that CBD is an active ingredient in an approved drug as well as other drugs under clinical investigation.

These products triggered FDCA violations in a variety of ways:

  • Unapproved new drugs – CBD products making claims to prevent, diagnose, mitigate, treat or cure serious diseases, such as cancer, AIDS, schizophrenia and diabetes.
  • Misbranded drugs – CBD products marketed as drugs that also fail to bear adequate directions for use.
  • Dietary supplement labeling – Improperly using the label “dietary supplement” when it does not meet the definition under the FDCA.
  • Adulterated human food – CBD products marketed as conventional human foods and contain a drug approved by the FDA.

Each warning letter identified an “unapproved new drug” violation with products making aggressive health claims surrounding cancer or other similar serious conditions, suggesting the FDA continues to focus its efforts at “egregious, over-the-line” health claims as referenced by former FDA Commissioner Scott Gottlieb.

FDA consumer update

The FDA simultaneously issued a consumer update, signaling that unapproved CBD products remain prohibited under the FDCA. The agency noted it has seen only limited data about CBD safety and that some of the data points to risks that should be considered before taking CBD.

The FDA warned that unapproved CBD products may pose safety risks and make unproven health claims. The FDA fears consumers may put off getting proper diagnosis, treatment or supportive care due to unsubstantiated claims associated with CBD products.

Additionally, the FDA noted the information it currently has “underscores the need for further study and high quality, scientific information about the safety and potential uses of CBD.” The consumer update further notes:

  • No FDA evaluation of CBD products – There has been no FDA evaluation of whether unapproved CBD products are effective for their intended use, what the proper dosage might be, how they could interact with FDA-approved drugs or whether they have dangerous side effects or other safety concerns.
  • Potential health risks – Specifically, the FDA also identified some of the potential risks associated with using CBD products, including liver injury and male reproductive toxicity. Other potential health risks remain unknown to date, including the effects of sustained daily usage by adults as well as the effects on children, breastfed newborns and developing fetuses.
  • Side effects – Other side effects include drowsiness, gastrointestinal distress and increased irritability and agitation.
  • Unregulated manufacturing process and product safety is unknown – The manufacturing process of unapproved CBD drug products has not been subject to FDA review and the effects of CBD containing potentially unsafe levels of contaminants, such as pesticides and heavy metals, are unknown.

CBD remains a legal product

Despite this recent action from the FDA, hemp-derived CBD remains a legal product under federal law, but it must be marketed without violating the FDCA. Additionally, the warning letters and consumer update highlight that the FDA is targeting its enforcement to companies engaged in interstate commerce and making egregious, unsubstantiated health claims.

As is the case with other cannabis issues, the disconnect between state and federal law means companies are finding ways to bring products to market while limiting their risk. However, stakeholders must be aware of the risks under state and federal law when marketing any product containing CBD.

Expect more information from the FDA soon

The consumer update also notes that the FDA is “evaluating the regulatory frameworks that apply to certain cannabis-derived products that are intended for non-drug uses, including whether and/or how the FDA might consider updating its regulations, as well as whether potential legislation might be appropriate.” More information will be coming soon from the FDA, but it may be awhile before CBD can be marketed legally as a food ingredient or dietary supplement under federal law.

Copyright © 2019 Godfrey & Kahn S.C.

More on FDA CBD Regulation via the National Law Review Biotech, Food & Drug law page.

Marketing Ethics for Lawyers to Follow in 2020 and Beyond

Advertising and marketing have always played an important role in increasing a company’s brand awareness and in helping them acquire new customers to reach their corporate financial goals. Law firms are no exception. With the increasing competitiveness among law firms, it is extremely important that they understand the fundamentals of marketing in a competitive marketplace.

As early as the 1970s, most states didn’t allow lawyers to engage in any type of marketing efforts. In 1977, the US Supreme Court case of Bates v. Arizona, 433 US 350, changed all this and held that advertising regarding attorneys’ services was “commercially protected speech,” according to the First Amendment, and that truthful advertising should be allowed as a matter of public policy. The court held that lawyers serve society and that allowing them to advertise their services would provide consumers with valuable information about available legal assistance.

After this landmark case, attorneys could advertise to obtain clients. They relied on traditional marketing methods, like display ads, brochures, business cards, and word-of-mouth advertising. Although these marketing strategies are still effective in 2019 and beyond, lawyers must also combine them with other creative marketing strategies—including, but not limited to, pay-per-click; search engine optimization; email, article, video, and digital marketing; and social media marketing.

Additionally, attorneys who want to stay ahead of the marketing game must have stellar and properly optimized web content, engaging social media and blog posts, informative guest articles, engaging display ads, and more. However, unlike regular corporations, law firms are held to a higher standard of responsibility, in terms of marketing, than their corporate counterparts.

Law firms have to remain in compliance with rules and regulations concerning ethics and professional responsibilities, especially in advertising. This means that attorneys and their law firms have to be careful when treading the path of marketing their legal services. They have to engage in ethical and truthful marketing practices and have to steer clear of false or misleading marketing strategies.

That said, what are the ethics of marketing legal services? What should attorneys avoid to ensure that they don’t engage in any professional responsibility violations? Well, let’s have a look at the dos and don’ts of legal marketing.

Abide by Prospective Clients’ and Existing Clients’ Wishes

As an attorney, you have to be mindful when engaging in electronic marketing strategies. In my home state of Illinois, attorneys can’t continue to contact prospective and/or existing clients if they tell that attorney to not contact them. See Rule 7.3(b) of the Illinois Rules of Professional Conduct for details.

Basically, this regulation stipulates that you should never spam someone’s email or regular mail, even if they initially agreed to give you their email or physical mailing address in exchange for a free report or other offering. Therefore, if the individual asks you to “Take me off your list,” you must do so immediately. If you don’t, you will be in violation of Rule 7.3(b) or another professional conduct rule in your state.

Also note that certain state professional conduct rules, like Rule 7.3(c) in Illinois, require the words, “Advertising Material,” on the outside of every physical envelope mailed to everyone, as well as at the beginning and the end of every recorded or electronic solicitation—unless said contact person is exempt from this rule.

Avoid Making Misleading or False Claims

An important ethical element of legal marketing is that you practice honesty and refrain from making unsubstantiated or false claims that can’t be verified. Rule 7.1 of the Illinois Rules of Professional Conduct states that a law firm or an attorney cannot engage in misleading or false communication in reference to their service offerings. Any such miscommunication is a clear violation of the Illinois Rules of Professional Conduct.

One rule of thumb: Would a rational person read such statement and be misled by it? What would they believe to be true? If they would be misled by such statement, then you must alter the content so that you don’t violate any ethics rules. Always double-check facts before making any statements. Additionally, if you include any statistical information in your ads, make sure that it is correct.

Don’t Set Unrealistic Expectations in Your Ads

Whenever you create online and off-line marketing strategies, make sure that you maintain high ethical standards and don’t engage in any type of marketing efforts that might lead the reader to false assumptions. That is, set realistic expectations for your clients and be clear that “Results may vary.”

Yes, you can have a testimonial page but don’t include statements like “My lawyer got me more money than I ever dreamed of.” Although it might be true for this one client, this statement might create an expectation in the reader that you can do the same for all your clients. Instead, you should only include testimonials that share verifiable factual information and don’t forget to add disclaimers to keep client expectations in check.

  1. Never Use Comparative Statements If Your State Disallows It

Some states have specific rules about using comparative statements in your advertising copy. So, if you’re in a state that disallows this wording, you should avoid it. For instance, in Illinois, you are not allowed to use comparative declarations, like, “We are the best bankruptcy law practice in Illinois.” The fact that such statements cannot be proven with verified facts leads them to fall under the category of “false and misleading communication.” On the other hand, you may be allowed to mention a few successes of your firm through statistical data, like recent court cases won. But make sure that such data is factual and verifiable and current. Either way, check your state’s professional conduct rules and then find a way to creatively convey your skills and instill confidence in prospective clients without violating any rules.

Avoid Claiming to Be an Expert

Several states have rules prohibiting attorneys from portraying themselves as an expert or a specialist. These rules have been created to ensure that no individual practicing law can make misleading claims in relation to themselves and/or their services.

I often recommend that law firms work with a marketing consultant that has legal experience for just this reason. I recently reviewed a prospect’s website and it stated among other things, that the firm specialized in family law. This is a big mistake in Illinois. Had the prospect worked with a marketing consultant who was also an attorney or who had legal experience, this could have been avoided.

In Summary

At the end of the day, effective marketing is the key to having a successful law practice. However, law firms must practice honesty in all their marketing and advertising efforts. By following the above-mentioned guidelines, firms can avoid ethics violations, can win the trust of clients, and can bolster long-term growth for their law firms, while assisting those who need the legal help the most.

Copyright © 2019 LawFull Marketing. All rights reserved.

For more on legal marketing, see the National Law Review Law Office Management section.

Dealing With “Attitude” at Work, Part 3 – Helping Staff Help Themselves

In the first two posts in this series, I looked at the law around workplace attitudes which might stem from some form of disability. But what if your employee is fit and well in all respects bar being exceptionally painful to work with?

He may be relentlessly negative, make heavy weather out of every instruction, or just operate on a very short fuse, often perfectly civil but prone to detonation when colleagues overstep some clearly very important, but also absolutely invisible, line in their dealings with him. He is, in every sense, grit in the gearbox of your business. But without obvious performance or conduct concerns, what can you do?

Probably the first point is to ascertain whether the employee himself recognises the problems he is causing to his colleagues. This won’t be an easy conversation but it forces him to confront the problem head-on. He may demand to know who has complained and require detailed examples of where others have been offended. By the very nature of a poor attitude, however, individual manifestations of it seem trivial and raising them individually with the employee like a series of miniature disciplinary charges is just going to lead to a precipitous further decline in workplace relationships. So I would suggest in many cases that the attitude issue is put as a collective perception without the identification of either individual complainants or specific examples. This is the view people have on you. You don’t need details of individual complainants or examples to decide whether you recognise that as having any truth in it. If you do accept that there is something in it, you can do something about it. If you can’t/don’t do anything about it, the employer will need to do so instead.

That meeting will best take place in private and without any offer of a companion, so it is not disciplinary action and cannot be relied upon as a warning at a later stage. It is intended to be no more than a word to the wise.

This leaves the employee with some choices. Is he going to be wise or not? If secretly he recognises that this is how he might come across, then without admission and without formal disciplinary proceedings he can amend his behaviours and all will be well at minimum disruption and cost. Alternatively he may flatly deny those behaviours both to you and (more importantly) to himself. However, he will then have to address in his own head the question of why so many of his colleagues say otherwise. Or he may accept the behaviours in broad terms, but allege that they are the product of some treatment he has received from the employer or his colleagues. He withdrew from social interaction with them because they withdrew from such interaction with him, and they did it first, so there. He is being passive-aggressive because they are being aggressive-aggressive. He doesn’t trust them because they didn’t support him about something a long time ago which he has been unable to get over, and so on.

Of course, you can make such a response the subject of a formal grievance and disciplinary process, but this will have more oh yes you did and oh no I didn’t than the average Christmas panto and at the end of it you will find the same two things every time: first, that no one is completely blameless and second, that by conducting the effective artillery duel which those formal procedures encourage, you have converted a relationship which didn’t work very well into one which no longer works at all.

Therefore if you can catch your employee’s attitude issue early enough to avoid having to go through a formal process, why not try to mediate a resolution? Use the safe space created by that process to exchange some views about how each side’s conduct makes the other feel. It may be the first time your employee has heard this “from the heart”. Ideally this should be in non-aggressive terms – “You intimidate me” cries out to be whacked back over the net with added topspin, but “I feel intimidated by you” cannot so easily be argued with because it is about what someone feels, not what someone else did.

You might reasonably expect emotion and tears at such a mediation (dawning self-awareness can be very painful) so it won’t necessarily be an easy process. But at the end, if it works, you will have a newly functioning working relationship and not the cratered and smoking wreckage of what used to be the team spirit.

If it doesn’t work? More next week.

 

See Parts 1 & 2:

© Copyright 2019 Squire Patton Boggs (US) LLP

For more on workplace attitudes, see the National Law Review Labor & Employment law section.

Media Education Is Crucial to Preparing Young Attorneys to Speak on the Record

Last month, a photojournalist for The Daily Northwestern, Northwestern University’s campus newspaper, captured photographs of student protestors who rushed a lecture hall where former Attorney General Jeff Sessions was speaking on campus. One of the pictures the photojournalist published featured a protestor sprawled on the floor. Students involved in the protest reacted with sharp criticism: being photographed in public had caused the protestor trauma, they argued. In addition, the reporters who used the student directory to attempt to contact protestors for quotes had invaded those students’ privacy.

In response to this pressure, editors at the newspaper took the photographs down and published an apology — steps that were immediately scorned by seasoned media professionals who explained that reporting on public events, through gathering quotes and taking pictures, is one of the most basic functions of journalism.

As with many stories that go viral, overheated Twitter commentary led to cross-generation attacks, straw-man arguments and handwringing over the death of traditional media. But when you push aside the noise around this story, it becomes clear that what happened at Northwestern illuminates an interesting disconnect between young people on the cusp of the Millennial-Z generations and the rest of us: we have different ideas about the purpose and function of traditional media.

What does this have to do with legal marketing? The oldest members of Generation Z are preparing to enter law school in the fall of 2020, which means firms are just a few years out from welcoming this new crop of lawyers. Forward-thinking law firms have long understood the value of media training in helping their attorneys build fruitful relationships with reporters and manage individual and firm brands across multiple channels. The Northwestern case, however, demonstrates that firms must also be prepared to offer some basic media education to their business development curriculum.

Younger lawyers may have a steep learning curve if they want to launch their careers with a productive media strategy. Here are three lessons firms will need to figure out how to teach them:

It’s hard to understand what you don’t consume. As social media has become such a central part of the way we broadcast and receive information, it fills the role traditional media used to play in some people’s lives. Not only does this mean that fewer people are reading the newspaper and relying on quality objective journalism to understand the world, but that inexperience with traditional media also breeds ignorance about what reporters, including specialists in the legal media, do all day and why they do it.

A young attorney who does not read the most important media outlets in the legal industry may not have a proper understanding of how law leaders use the information and data reporters publish to make business decisions and innovate at the practice and firm level. While managing partners may not always be pleased with the coverage of their firm, they understand and accept that the health of the industry relies on these sources of objective information. What’s more, for every article that makes a law partner squirm, there is one that amplifies a firm’s accomplishments for the entire industry to see.

Those media mentions are worth their weight in gold, but you have to respect and understand the institution of legal journalism as a whole to ever have a chance at winning one for yourself or your firm.

Not all media is the same. The media landscape of 2019 exists across four categories: paid, owned, shared, and earned. Paid media is sponsored content and pay-to-play awards and features. Owned media is the content your firm creates and distributes through your website and newsletter. Shared media is social media and all the content it spreads so rapidly. And earned media encompasses mentions in traditional media outlets.

A sophisticated communications strategy creates a plan for all four categories and, importantly, recognizes the strengths and weaknesses of each one. The first step to making sense of it all is to recognize the tension between control and authority. Media that allows your firm complete control over the content — your Twitter feed, for example — does not carry much authority. Consumers understand that anyone can make any claim they like on the internet. Media outlets that carry authority in the industry — such as Bloomberg Law or the Wall Street Journal — are not going to offer you much control over the content. Their independence is what gives them authority.

Attorneys who are too focused on controlling the message will miss out on the chance to see their work featured in an outlet that prospective clients and recruits actually trust.

Your right to privacy is not unlimited in scope. While individuals, of course, have the right to live their private lives free from interference, attorneys engaged in work on behalf of law firms and companies, which in many cases involves actions that are matters of public record, should expect to occasionally face questions about that work. Fearing these encounters or, worse, painting this healthy professional interaction as some kind of victimization, is bad for both the legal industry and an attorney’s own career development. Attorneys who understand the role traditional media plays in their business development make themselves available to reporters and are ready to speak off the cuff about their cases, clients and the broader context of legal questions they spend time on.

Savvy lawyers have confidence that their integrity and expertise will stand up to scrutiny by a reporter, and they extend professional courtesy to journalists doing the hard work of chronicling a complex and dynamic industry.

As the media landscape continues to evolve, marketers and firm leaders will have to work harder than ever to play in all four media categories — paid, owned, shared and earned — and prepare their attorneys to build productive relationships with the reporters who can help them reach their desired audience.

© 2019 Page2 Communications. All rights reserved.

This article was written by Debra Pickett of Page 2 Communications.
For more advice for young lawyers, see the National Law Review Law Office Management section.