Category: Uncategorized

AB 1291 Forces California Cannabis Companies To Sign “Labor Peace Agreements” With Unions, But Statute May be Unconstitutional

 

On October 12, 2019, Governor Newsom signed Assembly Bill 1291 (“AB 1291”) into law, which requires companies to sign a so-called “labor peace” agreement with a union or risk losing their cannabis license; thereby, strengthening already union-friendly statewide cannabis law. AB 1291 was supported and endorsed by various unions, including the United Food and Commercial Workers Western States Council, a 170,000-member branch representing thousands of cannabis workers. This bill, as well as other California statutes and local laws, signals a growing insistence by state and local regulators that employers doing business in California accept pro-union requirements. However, many of these new pro-union laws, including AB 1291, may be unconstitutional.

The main takeaways of AB 1291 are as follows:

  1. Effective January 1, 2020, California cannabis license applicants must sign so-called labor peace agreements with a union within 60 days of their 20th hire or risk losing their cannabis license.
  2. Employers and business associations seeking to challenge AB 1291, and other similar state or local union-related ordinances, are encouraged to speak with experienced labor counsel to discuss their options.
  3. Employers seeking to comply with AB 1291 and sign labor peace agreements should conduct due diligence on the labor unions they are considering entering into negotiations with. Not all unions are the same. Additionally, businesses should be thoughtful about what they agree to put into a labor peace agreement to satisfy the requirements under California’s cannabis laws. For example, these agreements are frequently mistakenly referred to as “neutrality agreement.” Neutrality agreements typically contain a commitment from the employer to remain “neutral” through a union organizing campaign. In contrast, AB 1291 does not use the term “neutral(ity)” and, thus, arguments can be made that strict “neutrality” is not required under the statute and may not need to be included in the labor peace agreement. Thus, employers should speak with experienced labor counsel before negotiating labor peace agreements with unions.

Background

Since its adoption into law in 2018, the Medicinal and Adult Use of Cannabis Regulation and Safety Act (“MAUCRSA”) has required applicants for state cannabis licenses with 20 or more employees to “provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.”1 (Cal. Bus. & Prof. Code § 26015.5(a)(5)(A).) A labor peace agreement, as defined under California’s cannabis laws, must contain the following commitments, at a minimum:

  1. Employer shall not “disrupt” efforts by the union to “communicate with, and attempt to organize and represent” the employer’s employees;
  2. Employer shall give the union “access at reasonable times to areas in which the employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment;” and
  3. Union and its members shall not engage in picketing, work stoppages, boycotts, and any other economic interference with the employer’s business.

(Cal. Lab. & Prof Code § 26001(x).)

Effective January 1, 2020, AB 1291 requires an applicant for a state license under MAUCRSA with 20 or more employees to provide a notarized statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. If the applicant has less than 20 employees and has not yet entered into a labor peace agreement, AB 1291 requires the applicant to provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee. By expanding the scope of the crime of perjury, AB 1291 imposes a state-mandated local program and authorizes the Bureau of Cannabis Control, the Department of Food and Agriculture, and the State Department of Public Health to revoke or suspend a license for a violation of these requirements.

AB 1291 May Be Unconstitutional

AB 1291 poses substantial questions as to whether it is unconstitutional due to preemption by the National Labor Relations Act (“NLRA”) under two complementary preemptions doctrines: Garmon and Machinists. In San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), the U.S. Supreme Court declared that the states are constitutionally barred by the U.S. Constitution’s supremacy clause from regulating conduct that NLRA protects, prohibits, or arguably protects or prohibits. Garmon preemption exists to protect the National Labor Relations Board’s (“NLRB”) primary jurisdiction and to preclude a state’s interference with its interpretation and enforcement of the integrated regulatory scheme that is the NLRA. Indeed, Congress delegated exclusive authority to the NLRB because it sought to establish a single, uniform national labor policy that would be unaffected by the vagaries of state law or shaped by local attitudes or prejudices. (Garner v. Teamsters Union, 346 U.S. 485, 490 (1953).) In Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132 (1976), the U.S. Supreme Court similarly declared that the NLRA forbids states to regulate conduct that Congress intended “to be unregulated because left ‘to be controlled by the free play of economic forces.’” Together, Garmon and Machinists preempt state and local policies that would otherwise interfere with the “integrated scheme of regulation” and disrupt the balance of power between labor and management embodied in the NLRA.

It appears AB 1291’s purpose is to afford unions greater rights than provided under the NLRA and make it easier for unions to organize cannabis employers. AB 1291 arguably presents the type of state interference in labor-management relations that Garmon and Machinists preemption forbids. For example, in Golden State Transit Corp. v. City of Los Angeles (“Golden State I”), 475 U.S. 608, 616 (1986), the Supreme Court held that while the NLRA “requires an employer and a union to bargain in good faith, … it does not require them to reach agreement,” nor does it demand a particular outcome from labor negotiations.” The substance of labor negotiations, and the results therefrom, are among those areas Congress intentionally left to the free play of economic forces when it legislated in the field of labor law. (Id.) In that case, the Supreme Court found that Machinists preempted the City of Los Angeles’ (“City”) refusal to renew a taxi cab company’s license when it failed to reach an agreement with striking union members. By conditioning the renewal of the taxi cab franchise on the acceptance of the union’s demands, the City effectively imposed a timeline on the parties’ negotiations and undermined the taxi cab company’s ability to rely on its own economic power to resist the strike. (Id. at 615.) The Supreme Court held that the City could not pressure the taxi cab company into reaching a settlement and thereby “destroy[] the balance of power designed by Congress, and frustrate[] Congress’ decision to leave open the use of economic weapons.” (Id. at 619.)

The facts of Golden State I are instructive here. Like the taxi cab company in Golden State I, California cannabis businesses now face a Hobson’s “all or nothing” choice under AB 1291. If a cannabis business refuses to negotiate a labor peace agreement with a labor organization, it effectively loses the right to do business in California. But if the cannabis business negotiates a labor peace agreement, the union knows full well that it can hold out for significant concessions in exchange for its members giving up one of their most valuable economic weapons – the power to strike.

The U.S. Supreme Court’s decision in Chamber of Commerce v. Brown, 554 U.S. 60 (2008) is also instructive. At issue in Brown was California’s Assembly Bill 1889 (“AB 1889”), prohibiting certain private employers from using state funds to “assist, promote, or deter union organizing.” (Id. at 63 [quoting Cal. Govt. Code §§ 16645.1–16645.7].) The Court held that AB 1889 was unconstitutional. As explained by the Court, the current text of Sections 7 and 8 of the NLRA are amendments made to the NLRA in 1947 as part of the Labor Management Relations Act, also known as the Taft Harley Act, for the purpose of overturning earlier NLRB precedent. The NLRA was amended in in several key respects. First, it emphasized that employees “have the right to refrain from any or all” union activities. (29 U.S.C. § 157.) Second, it added Section 8(b), which prohibits unfair labor practices by unions. (29 U.S.C. § 158(b).) Third, it added Section 8(c), which protects speech by both unions and employers from regulation by the NLRB. (29 U.S.C. § 158(c).) Specifically, Section 8(c) provides:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this subchapter, if such expression contains no threat of reprisal or force or promise of benefit.

With the amendments, Section 8(c) “manifested a “congressional intent to encourage free debate on issues dividing labor and management.” (Id. at 6-7.) That Congress amended the NLRA, rather than leaving to the courts the task of correcting the NLRB’s decisions on a case-by-case basis, is “indicative of how important Congress deemed such ‘free debate.’” (Id. at 7.) In addition, Sections 8(a) and 8(b) “demonstrate that when Congress has sought to put limits on advocacy for or against union organization, it has expressly set forth the mechanisms for doing so.” (Brown, 554 U.S. at 67.) Moreover, “the amendment to §7 calls attention to the right of employees to refuse to join unions, which implies an underlying right to receive information opposing unionization.” (Id.) “[T]he addition of §8(c) expressly precludes regulation of speech about unionization so long as the communications do not contain a ‘threat of reprisal or force or promise of benefit.” (Id. [internal quotation omitted].) Thus, based on these overriding principles, the Court concluded that “California’s policy judgment that partisan employer speech necessarily interfere[s] with an employee’s choice about whether to join or to be represented by a labor union” and struck down AB 1889. (Id. at 68 [internal quotation omitted].)

AB 1291 is arguably no different. By forcing unwilling cannabis businesses to negotiate and accept labor peace agreements, AB 1291 compels a result Congress deliberately left to the free play of economic forces. The NLRA does not allow state and local governments to interfere with employer rights to communicate with employees regarding unionization under Section 8(c). Nor does it allow state and local governments to “introduce some standard of properly balanced bargaining power . . . or to define what economic sanctions might be permitted negotiating parties in an ideal or balanced state of collective bargaining.” (Machinists, 427 U.S. at 149-50.) Yet, this is exactly what AB 1291 appears to do. Accordingly, AB 1291 may be unconstitutional.

1 A labor peace (aka a labor harmony agreement) is essentially a contract between an employer and an organized labor union in which the employer agrees to help the union organize the employer’s workforce (i.e., unionize) by providing, for example, certain information or agreeing not to interfere with the union organizing efforts, in exchange for the union’s agreement not to strike or cause other disruption in the employer’s workforce during a union organizing campaign. Because these agreements open the door to union activity within the workplace, they should not be entered into casually. Rather, unionization may result in increased labor costs, contractual contributions to union pension plans, loss of flexibility, and adherence to union rules set forth in a legally binding contract. In addition, once a union is recognized or certified as the collective bargaining representative of employees, it is practically impossible to terminate that relationship. Indeed, only after a costly and divisive decertification election can a workforce return to the merit-based and flexible non-union environment.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

For more on union regulation, see the National Law Review Labor & Employment law page.

How to Write Gender-Neutral Contracts

“Men” is not synonymous to “person”, nor does “he” mean “she.”  It is important for contractual language to be not only precise but also accurate.  Many agreements govern multiple individuals, some of whose gender is unclear or variable.  This article will give you advice and guidance on how to adjust contract language to be gender-neutral.  As society moves towards treating all genders equally, legal contracts should too.

What is gender?

Gender is the socially constructed characteristics of “male” and “female” and includes norms, roles, and relationships of and between groups of men and women.

What is gender-neutral?

Merriam-Webster defines gender-neutral as “not referring to either sex but only to people in general.”

Why it matters:

Conversations around gender and gender-neutrality are becoming more and more mainstream.  Thomson Reuters reported that in the past year (2018), there has been an increase in the number of clients requesting gender-neutral documents.  Startups are at the forefront of change and industry disruption, so it is logical that they stay ahead of the trend.

As you operate business, there are a number of form contracts that you will use regularly.  These form contracts are agreements your attorney drafts with brackets and spaces for you to update depending on each use.  For example, common form contracts include (1) Employee Offer Letters, (2) Confidentiality, Nondisclosure, and Assignment of Inventions Agreements, (3) Equity Incentive Plan, (4) Stock Option Grants, and (5) Restricted Stock Purchase Agreement.

Traditionally, these form contracts used masculine pronouns.  It used to be that progressive contracts simply did not use “he” but rather “she” or “he or she.”  As Thomson Reuters reported:

“In the old days it was almost certain that your senior employees would be men; a contract would be drafted accordingly, and then the ladies would be given a metaphorical pat on the head by including in the boilerplate the reassurance that references to the male gender should be interpreted to include the female.”

Now, the shift towards non-gendered pronouns and away from binary choices of “he” or “she” means attorneys need to adopt new drafting techniques.  As entrepreneurs and leaders of your own business, you can encourage this shift.

What to do:

Replace the masculine pronoun with an article, for example using “the position” in place of “his position”

  1.  Use a neutral word or phrase such as “person” or “individual”

  2. Define the term and repeat that noun

  3. Rewrite the sentence in order to eliminate the pronoun completely

What to be wary of (for now):

  1. Using the singular “they” and its other grammatical forms to refer to indefinite pronouns and singular nouns, for example using “they” in place of “she” and “them,” “themselves,” and “their” in place of “her,” “herself,” and “hers.”

    1. Part of drafting a contract is using precise language.  While there is rising social acceptance of the use of singular “they,” a court has not ruled on its interpretation in contracts.  Likely, it will take legal precedent in Delaware interpreting such use to accept the use of the singular “they.”

    2. This same logic applies to the use of the singular “ze.”

  2. Using the plural “they.”

    1. Similarly, the use of the plural can be misleading.  For an employment offer letter, for instance, the offer is not to a number of people but rather to one individual.

  3. A catch-all clause like “Unless the context otherwise requires, a reference to one gender shall include reference to the other genders”

    1. It was offensive when the use of male pronouns were supposed to encompass women and men. Such use effectively reinforced gender stereotypes.  It is equally offensive when it is used to refer to all genders.

Gender neutrality facilitates accurate, precise contracts.  It is important that an individual who is subject to a contract feel as though the contract applies to that individual.  In addition, that individual should also feel respected.

©1994-2019 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Kati I. Pajak of Mintz.

Preparing for Performance Reviews

Every legal recruiter and professional development professional understands the importance of planning for significant initiatives.  Operating by the seat of one’s pants simply does not work within this industry.  In the days that precede your performance review, consider the following:

Before you think short, think long

By definition, any annual performance evaluation must include a review of your key undertakings during the previous 12 months.  That review, however, should only consume a fraction of the time that you spend with your supervisor.  As quickly as possible, move your conversation from a focus on wherever you were a year ago to wherever you hope to be at some future stage in your life.

This means that you must invest time developing your long-term professional goals before your evaluation begins.  If you are less than certain as to what your next career move might be, as soon as possible, do the following:

  1. Set some time aside and let your imagination go wild.  Create a virtual or actual whiteboard and post every work and career possibility that tickles your fancy.  It doesn’t matter how crazy any one option now appears.  Post all options somewhere and give yourself permission to seriously consider them.  Eventually, narrow your focus to your two or three best choices.
  2. Once you’ve identified your best options, move from thinking to doing.  Research your top three options and identify the skills, talents and experiences that you need to develop or acquire for you to make your dream position a reality.  Engage in “radical collaboration”—reach out to valued colleagues and peers as well as experts in a particular field.  Inquire about the benefits and costs that might be related to any career shift.  If it’s possible for you to gain hands-on experience, by all means do.
  3. Reframe problems.  Be prepared for naysayers, the people who will suggest a multitude of reasons that should keep you from imagining a future that is different from your status quo.  When others point out potential obstacles, welcome their feedback.  Then, go off on your own and carefully consider whether a perceived obstacle is a proverbial mountain or a minor molehill.
  4. Realize that we are all on a journey.  All of the knowledge and experience that you have acquired thus far in your life has helped you arrive at exactly the position where you are right now.  But your journey is not over.  There’s nothing wrong with a periodic pause to consider whether you should turn left or right.  But just pause; don’t come to a complete stop.  Every experience that you have, every piece of knowledge that you acquire today will help you arrive at your next resting point.

To the extent that you invest in this effort before your performance evaluation, you can make the limited time that you have with your supervisor more useful and valuable.

[Two resources that might help you jumpstart your thinking include Start with Why (2009) by Simon Sinek and Designing Your Life, How to Build a Well-Lived, Joyful Life (2016) by Bill Burnett and Dave Evans.  Both books are thought-provoking, and the authors have created workbooks that can help you think through your general purpose in life and where you may wish to venture.  Burnett and Evans are responsible for the term “radical collaboration.”]

At your performance evaluation

Be prepared to address your performance during the previous 12 months, including activities in which you know that you exceeded expectations.  For activities in which you met or fell below expectations, be prepared to:

  • Analyze what you did well;
  • Analyze what did not go as well as you had hoped and why;
  • Identify what you could do better; and
  • Suggest what you plan to do next.

Throughout your evaluation, listen deeply to your supervisor’s perspective regarding your performance, which may be completely different from your own.  In a world in which we are all moving at the speed of light and distracted by a million-and-one requests, I am increasingly amazed at how frequently two people participate in a singular event and yet experience it very differently.  Your performance review should move you and your supervisor toward a shared understanding of the past and give you the opportunity to collaborate on creating your future.

If you’re blindsided

If your supervisor blindsides you—brings up some issue(s) about which you are totally unaware and unprepared to address—do not respond immediately.  Instead, give yourself the opportunity to participate in a future thoughtful and responsive conversation by stating the following:

  • I appreciate your feedback. 
  • Can you give me one or two specific examples when I didn’t hit the mark?
  • I’d like to take a day or two to process this information. 
  • May we schedule a follow-up meeting?

Be prepared to self-promote

Muhammad Ali once famously said, “It’s not bragging if you can back it up.”  If you’ve retained appreciation emails from firm partners or key firm decisionmakers that recognize your good performance, bundle these and carry them to your performance review.  If you’ve had numerical targets that you were challenged to meet during the previous 12 months, gather your quantifiable verifiables and be prepared to share them.

If your next professional move involves your current employer, be prepared to document that you have the natural talents to succeed in this new capacity.  The Top 5 CliftonStrengths assessment tool is an easy, affordable instrument that will help you confirm your unique talents.  Given your understanding of your employer’s wants and needs, be prepared to show a match … how you and your talents can help your supervisor and your employer accomplish their strategic missions.

© 2019 Mary Crane & Associates, LLC

For more on legal performance reviews, see the National Law Review Law Office Management page.

California’s New Statewide Rent Control – What You Need to Know

Summary:

As expected, California’s legislature passed AB 1482 this month, which imposes statewide rent control, restricting the ability of landlords to terminate certain tenancies without just cause, and further restricting the ability of landlords to increase rent on an annual basis. For those properties already subject to rent control, the new law is unlikely to change much if anything, but owners of other residential rental properties should be aware of the new restrictions.

Below is a summary of the key points of the new law.

When does it apply? 

AB 1482 applies to tenants that have occupied a dwelling unit for more than 12 consecutive months. If additional adult tenants are added during the lease term, it applies once the new tenant has occupied for 12 months, or one of the existing tenants has occupied the unit for 24 or more consecutive months.

What properties are exempt? 

AB 1482 applies to all residential properties in California, excluding the following:

  • Housing that has been issued a certificate of occupancy within the previous 15 years.
  • Transient and tourist hotel occupancy.
  • Housing accommodations in a nonprofit hospital, religious facility, extended care facility, licensed residential care facility for the elderly or an adult residential facility.
  • Dormitories owned and operated by colleges or schools.
  • Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property.
  • Single-family owner-occupied residences, as long as the owner does not lease more than 2 units (including ADUs).
  • A duplex in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy.
  • Residential real property that is alienable separate from the title to any other dwelling unit, provided the owner is not a REIT, corporation or limited liability company in which at least one member is a corporation, and further subject to certain tenant notice requirements.

What are the limitations on increasing rent?

The bill restricts the owner of residential real property from increasing rent during any 12-month period by more than the lesser of (i) 5% plus a cost of living adjustment based on the California CPI, or (ii) 10%. The percentage increase in any 12-month period is based on the lowest applicable rate during the preceding 12-month period, but the value of any rent discounts, incentives or other concessions made by the landlord are not taken into account when determining the lowest rate in effect during such period.

When can a landlord terminate a lease? 

A landlord can terminate the lease for at-fault just cause for (i) defaults in the payment of rent, (ii) a material breach of the lease, (iii) nuisance uses, (iv) illegal or criminal activities, (v) committing waste, (vi) refusal by the tenant to sign a lease extension, (vii) refusal by the tenant to allow owner entry as required by law, (viii) assignment or subletting in violation of the lease, (ix) failure to vacate after signing a vacation agreement, or (x) failure to vacate upon termination of employment.

A landlord can also terminate for no-fault just cause if (i) the owner or certain family members intend to occupy the property (for leases entered into after July 1, 2020 other requirements must be satisfied), (ii) the property is withdrawn from the rental market, (iii) the owner is required by law to vacate the property (and if the tenant was the cause, the tenant will not be entitled to relocation assistance), or (iv) the owner intends to demolish or substantially remodel the property.

For any no-fault just cause termination, the landlord must provide the tenant with relocation assistance by either paying the tenant an amount equal to one month’s rent or waiving in writing the final month’s rent before the same is due. A landlord’s failure to strictly comply with the provisions relating to a no fault just cause termination renders the termination void.

© Polsinelli PC, Polsinelli LLP in California

ARTICLE BY Herman Enayati and David V. Hall of Polsinelli PC.
For more on rental laws, see the National Law Review Real Estate law page.

To Stalk or Not to Stalk . . . That Is the Question – Using Social Media for Applicant Review

Now more than ever, employers are using social media to screen job applicants. According to a 2018 survey, 70 percent of employers use social media to research candidates. Using social media to research job applicants can provide you with useful information, but it can also get you into trouble.

When you review an applicant’s social media account, such as Facebook, LinkedIn, Twitter, etc., you may learn information regarding the applicant’s race, sex, religion, national origin, or age, among other characteristics.

As our readers are aware, a variety of state and federal laws, such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act prohibit employers from choosing not to hire a candidate based on a number of legally protected classes. Just as it would be unlawful to ask an applicant if he or she has a disability during an interview and fail to hire that applicant based on his or her disability, it would also be illegal not to hire an applicant because you observed a Facebook post in which she expressed her hope to be pregnant within the next six months.

Consider the following best practice tips for using social media to screen applicants:

  1. Develop a Policy and Be Consistent – Implement a policy detailing which social media websites you will review, the purpose of the review and type of information sought, at what stage the review will be conducted, and how much time you will spend on the search. Applying these policies consistently will help to combat claims of discriminatory hiring practices should they arise.
  2. Document Your Findings – Save what you find, whether it is a picture or a screenshot of a comment the applicant made. What you find on social media can disappear as easily as you found it. Protect your decision by documenting what you find. In case the matter is litigated, it can be produced later.
  3. Wait Until After the Initial Interview – Avoid performing a social media screening until after the initial interview. It is much easier to defend a decision not to interview or hire an applicant if you do not have certain information early on.
  4. Follow FCRA Requirements – If you decide to use a third party to perform social media screening services, remember that these screenings are likely subject to the Fair Credit Reporting Act requirements because the screening results constitute a consumer report. This means the employer will be required to: 1) inform the applicant of the results that are relevant to its decision not to hire; 2) provide the applicant with the relevant social media document; 3) provide the applicant notice of his or her rights under the FCRA and; 4) allow the applicant to rebut the information before making a final decision.
  5. Do Not Ask for Their Password – Many states have enacted laws that prohibit an employer from requesting or requiring applicants to provide their login credentials for their social media and other internet accounts. Although some states still allow this, the best practice is not to ask for it. Further, while it is not illegal to friend request a job applicant, proceed with caution. Friend requesting a job applicant (and assuming the applicant accepts the request) may provide you with greater access to the applicant’s personal life. Many people categorize portions of their profiles as private, thereby protecting specific information from the public’s view. If you receive access to this information you may gain more knowledge regarding the applicant’s protected characteristics. If you are going to friend request applicants, you should include this in your written policy and apply this practice across the board.

© 2019 Foley & Lardner LLP

More information for employers considering job applicants on the National Law Review Labor & Employment law page.

Law Firms and Millennial Attorneys: Strategies to Develop Leadership Pipelines for Smooth Firm Transitions

Next year millennials will make up one-third of the workforce.  A recent study released by ManpowerGroup provides some compelling insight about millennials in the workplace.   The study asked 19,000 Millenials and 1,500 managers across 25 countries how they viewed their careers and what were their career priorities, with the goal of offering practical advice for millennials and their employers in the quickly evolving work environment.  The results offer some statistics and finding for employers generally, and law firms, specifically, have some lessons to take to heart.

According to the survey, 23% of the millennial respondents said making a lot of money is their main goal, 21% want to make a positive contribution and 20% want to work with great people.  But only 22% of the millennials surveyed indicated an interest in growing into leadership roles and only 4% of millennial respondents valued “managing others.”

These factors, when combined with the boomer exodus out of the workforce is pointing to a leadership vacuum across industries, with 84% of organizations anticipating a shortfall of leaders over the next five years.  In fact, leadership transitions are becoming more frequent and complex, and developing a leadership pipeline in law firms needs to become a top priority.  Law firms, when working with millennial attorneys, would be well-served to find ways to incentivize leadership, increase transparency surrounding firm decisions, especially the partnership process in order to create a leadership pipeline to ensure successful succession planning and relationship management.  To examine this issue, we spoke to several law firm consultants on the state of leadership in law firms,  how firms can engage and cultivate their millennial talent to take on leadership roles, and how marketing and business development teams fit into this process.

Importance of Developing Millennial Leadership and Talent at the Associate Level

Jonathan Kirschner, CEO of AIIR Consulting, points to conditions in law firms, that may make developing leadership habits in millennial attorneys more challenging.  In a traditional law firm structure, leadership at the associate level is not incentivized. Associates are valued for their ability to work hard and long, creating a situation where young lawyers are not encouraged to reach out and develop leadership skills, but rather rewarded for keeping their nose to the grindstone.  Kirschner says, “If a newly minted lawyer has to choose between a single billable hour and coaching a colleague or peer, the former is a much more useful currency in today’s traditional firm.”  Alycia Sutor of GrowthPlay points out that many of the characteristics that comprise good leaders are important to millennials–just divorced from the authoritarian and hierarchical packaging associated with a traditional law firm. Kirschner says, “firms need to do a much better job defining what leadership is and why it is important.  If leadership isn’t treated as a significant factor in promotability, then there is a strong chance it won’t be cultivated.”

The Role of Transparency and Feedback in the Law Firm Leadership Pipeline

Sutor points out that firm looking to secure their leadership pipeline would do well to “exemplify the kind of behaviors that millennials value–being more transparent . . . and being relationship-focused and investing in the success of the people at the firm.”  In doing so, firms can cultivate their high-potential talent and help ensure the firm’s leadership for years to come.  By providing young lawyers with feedback and offering mentorship and advice, Kirschner says, “associates become more self-aware of their strengths to leverage, develop key leadership skills, and cultivate client management skills, and firms will, in turn, build up bench-strength.”  Finding ways to offer feedback and evaluation–in a positive, affirming way can show young attorneys that they are an important part of the firm’s future.  John Remsen, Jr of the Remsen Group points out that providing positive feedback in a public setting can be an easy, inexpensive way to cultivate the kind of behavior law firm leadership wants to see, and help younger attorneys feel invested in turn with the firm.

As part of embracing transparency,  Kirschner suggests that eliminating some of the mystery around the Partnership approval process can help. Young attorneys are often likely confused and frustrated–they have the ambition and desire to reach that level, but don’t know what else is required beyond hard work.  Kirkschner says, “firms with great succession planning practices favor transparency over keeping a black-box around both the process as well as the necessary skills and competencies.”   By clarifying advancement criteria law firms can develop a system where important metrics are met, and this can open the door to non-billable activities the firm may want to encourage–such as pro-bono work or legal marketing activities.  Remsen  agrees, saying, “Everyone will give you what you want, if you indicate that it matters, set the expectations, apply metrics and ultimately reward the desired behaviors.”

Creating a Law Firm Culture to Develop Leadership Talent

According to Remsen: “There are things law firms can do beyond dollars to build a culture where young lawyers want to go and thrive.”  Law firms find extreme value in taking steps to craft a leadership pipeline, such as shifting the hierarchical structure to create a space for younger attorneys to flex their leadership abilities and shape the firm into a place where they want to be.

There are plenty of ways to do that, and Sutor says, “firm leaders can give millennials opportunities to practice leading on a small scale.”  Remsen agrees, suggesting law firms create “deputy” positions with the firm to encourage younger attorney engagement.  By getting more creative about leadership development, firms can reconfigure talent pipelines to create new leadership levels, Kirschner says, “this can increase career optionality and make mobility less of a zero-sum experience.”

Firms should also consider asking younger attorneys for input on firm culture issues–especially in relation to changes to make the firm more attractive to attract and retain talent.  Sutor suggests: “create opportunities for millennials to reverse mentor or teach others . . . charge them with connecting to others across the firm for the purpose of feedback and perspective on an issue up for discussion.”  Keep in mind this may open the door to some dramatically different suggestions about how the firm does things–especially surrounding work-life balance issues.  However, the changing dynamics of the job market coupled with millennials’ willingness to change jobs or even careers, large changes in workplace culture at law firms may well be worth considering.

Pro bono projects are excellent opportunities for young attorneys to take a leadership role, manage a matter, and contribute to their own development in a way that can make a difference both to the pro bono client and within the firm.  This can be a win-win for the firm and the attorney involved, as he or she can use their legal education to make a positive contribution (something a fifth of millennials surveyed want to do) while elevating the firm’s reputation in the community.

The Role of Business Development in Law Firm Leadership Development

Client relationship management is very important for a firm’s bottom line, and the voice of the client–a voice that is increasingly demanding diversity from outside counsel can be instrumental in advocating for the kind of change many firms need to enact.  Sutor says, “Marketing and Business Development folks can champion millennial participation by encouraging senior partners and law firm leaders to consider who may not be represented at the table in key activities like client pitches or network building activities.”  Sutor explains that the demand for diversity coming from clients also includes a generational perspective.  Including associate attorneys in business development activities with clients–including networking or other events, not just at pitch meetings, the relationship between firm and client can be strengthened across generational lines.  Increasingly millennials are also making key decisions in retaining law firms.  By using the voice of the client, marketing and business development teams can make a compelling argument for law firm leadership to examine the gaps in their age, gender and cultural representation and encourage the participation and development of younger attorneys.

Law firms that are able to find ways to engage and develop their millennial attorneys through firm initiatives are building a competitive advantage in the increasingly competitive legal marketplace.  By harnessing the voice of the client, crafting pathways and pipelines for young attorneys to contribute meaningfully to the culture of the firm as well as providing newer attorneys with feedback and training opportunities to develop their own skills and abilities, law firms can smooth out some of the succession bumps and ensure the next generation of leaders will be ready to take the reins.    Kirschner says, “The best way law firms can gain leadership capacity is by growing it organically.”

Copyright ©2019 National Law Forum, LLC
For more legal career developments, see the National Law Review Law Office Management page.

California Tackles Big Pharma’s Anticompetitive ‘Pay for Delay’ Practices That Slow Down Lower-Cost Generic Drug Development

California Gov. Gavin Newsom has signed AB 824, known as the “Pay-for-Delay” bill, blocking pharmaceutical companies from paying generic drug makers to not develop and bring lower-cost medicines to market. The law makes these so-called “reverse payment” settlements of patent disputes – which the Federal Trade Commission says cost consumers $3.5 billion a year – “presumptively anticompetitive.”

The new law provides that an agreement resolving a patent infringement claim is anticompetitive if the generic drug or biosimilar drug makers receive anything of value from the brand name company that’s claiming infringement, and if the generic maker agrees to slow-walk or stop research, development, manufacture, marketing, or sales of a generic product for any period of time. Exceptions are made in cases in which an agreement promotes competition.

The state Attorney General is authorized to seek civil penalties within four years of any violations of the law. Other remedies would be available under California’s Cartwright Act, Unfair Practices Act, or unfair competition laws.

Sidestepping Competition

The FTC has prosecuted brand name and generic drug companies and has sued to stop these reverse payment agreements which allow drug companies to “sidestep competition.” Earlier this year, for example, the FTC announced a global settlement of three separate federal antitrust lawsuits involving subsidiaries of pharmaceutical manufacturer Teva Pharmaceuticals Industries Ltd.

There is no legitimate pro-competitive justification for pay-for-delay of generic drugs by brand name pharma companies. It's the consumer who pays the price. In one of the cases, Teva’s Cephalon company paid four generic drug manufacturers $200 million to back off on their plans to sell a generic version of Cephalon’s Provigil, a medication used to treat excessive sleepiness caused by sleep apnea, narcolepsy, or shift-work sleep disorder. Teva, which was able to delay the generic version for six years, agreed in its settlement to create a $25 million consumer fund and pay $69 million plus another $200,000 to cover the state’s legal fees. Teva was also barred from engaging in reverse-payment patent settlement agreements for 10 years.

In another instance, the FTC announced the settlement of its case against Endo Pharmaceuticals Inc., which paid Impax Laboratories $112 million not to go to market with a competing generic version of Endo’s Opana ER – a pain reliever in the opioid family.

Collusive Arrangements

Attorney General Xavier Becerra, AB 824’s sponsor, wrote that these kinds of pay-for-delay agreements are “collusive arrangements between brand-name drug companies and rival drug manufacturers” that allow the companies to charge monopolistic prices. “Pay-for-delay agreements hurt consumers twice – once by delaying the introduction of an equivalent generic drug that is almost always cheaper than the brand name and second by stifling additional competition because we know that when multiple manufacturers of generic drugs compete with each other, prices can be up to 90% less than what the brand name drug cost originally,” Becerra wrote.

Supporters of the bill included Health Access of California, the California Labor Federation, and the Small Business Majority. Another supporter, the California Public Interest Research Group, said brand-name drugs cost an average of 10 times and sometimes 33 times more than generics, adding that brand-name companies make billions in sales while generics are delayed.

All Those Opposed

The Association for Accessible Medicines (AAM) opposed the bill, saying it “penalizes procompetitive patent settlements that significantly expedite generic and biosimilar access.” Besides, the group argued, a federal framework already exists to review patent settlements, citing FTC v. Actavis, the 2013 decision in which the Supreme Court held that a brand drug manufacturer’s reverse payment to a generic competitor to settle patent litigation can violate the antitrust laws. The Supreme Court refused to call these agreements presumptively unlawful, instead saying the FTC had to prove its case as it would in any other “rule of reason” cases. The likelihood that a pay-to-delay settlement would have anticompetitive effects “depend[s] on its size, its scale in relation to the payor’s anticipated future litigation costs, its independence from other services for which it might represent payment, and the lack of any other convincing justification,” the Supreme Court ruled.

The pro-industry pro-tort reform Civil Justice Association of California called the bill “an enhanced, steroid infused codification” of the California Supreme Court’s 2015 decision in In re Cipro, which followed the U.S. Supreme Court’s FTC v. Actavis ruling.

Biopharmaceutical company Biocon opposed the bill for, it said, replacing the FTC with the State of California in the commission’s role as prosecutor of anticompetitive conduct.

The FTC’s Competition Bureau has been keeping track of the effectiveness of the Supreme Court’s FTC v. Actavis decision. In May 2019, FTC Chairman Joe Simons announced: “The data are clear: the Supreme Court’s Actavis decision has significantly reduced the kinds of reverse payment agreements that are most likely to impede generic entry and harm consumers.”

Commentary

There is simply no legitimate procompetitive justification for pay-for-delay settlements. There is simply no legitimate procompetitive justification for pay-for-delay settlements. They are explicit agreements between competitors to restrain competition and serve only to keep pharmaceutical prices unnecessarily high in this country. According to FTC data, pay-for-delay settlements cost consumers billions of dollars per year.

AB 824 simply aligns the law with the reality of this burden on the consumer, creating a presumption that such settlements are anticompetitive and requiring the settling parties to demonstrate why this is not the case. In fact, AB 824 essentially codifies the rule the FTC argued should govern pay-for-delay settlements in Actavis.

Critics of the law will challenge its legality, including its constitutionality under the dormant commerce clause. And while it may not withstand these legal challenges, AB 824 is an encouraging sign that lawmakers are beginning to understand the negative impact that pay-for-delay settlements have on competition in the pharmaceutical industry. We hope more states follow suit.

© MoginRubin LLP

ARTICLE BY Jennifer M. Oliver and Timothy Z. LaComb of MoginRubin. Edited by Tom Hagy for MoginRubin LLP. Photo of “worried man” by Nik Shuliahin via Upsplash.
For more on pharmaceutical regulation, see the National Law Review Biotech, Food & Drug law page.

UKIPO Knocks Undefeated Reds off Their Perch: The Liverpool Trademark and Lessons for Brand Owners

To the interest of many a scouser and football fan alike, Liverpool Football Club’s attempt to register as a UK trademark LIVERPOOL has been rejected by the UKIPO on the grounds that the word is of “geographical significance” to the city. Liverpool FC had filed its application in regards to various goods in relation to football and the filing had attracted significant public attention.

Other English football clubs (Everton, Chelsea and Tottenham) have managed to register several trade marks for each of their respective area names. In addition Southampton Football Club has managed to register SOUTHAMPTON as an EU trade mark. As a result, it is not surprising that Liverpool FC would seek to register a similar mark to help protect its valuable brand.

However, as a result of the filing the club received significant backlash from the people of Liverpool, including their own supporters, and – probably in a related move – Liverpool FC has said that it does not plan to appeal the refusal and it has withdrawn the application. An additional trade mark application for LIVERPOOL with different claims has also been withdrawn.

The matter presents a great case study for brand owners on balancing the need to protect their brand whilst being considerate of the potential adverse PR that will come with the application for certain trade marks.

Innovation in protecting your brand

Brand owners certainly need to adopt innovative tactics when looking to fight counterfeiters and to protect their brand and Liverpool FC has shown a keen eye to identifying new brand assets.

Liverpool FC may have been unsuccessful with this application but they recently successfully applied to trade mark the phrase “LET’S TALK ABOUT SIX BABY” in the UK. The saying was coined by Reds Manager Jürgen Klopp when he ended his run of six successive final defeats and claimed a first trophy as Liverpool FC’s manager with the UEFA Champions League triumph earlier this year. No doubt will form an important part of the club’s merchandise moving forward and is a cunning registration.

Consideration of PR implications

However, all innovative steps in brand protection must be considered in their context.

Liverpool FC argued that the trade mark application was purely “in the context of football products and services” and to stop counterfeiters from benefiting from the sale of counterfeit Liverpool FC products. However, this does raise the question as to why the existing portfolio of club name, mottos and logos would not be sufficient to defeat the majority of inauthentic products that are currently on the market.

In addition, the vitriol with which the application was greeted raises further queries concerning the club’s decision to apply to register the trade mark. The Liverpool FC supporters group ‘Spirit of Shankly’ called the UKIPO’s rejection of the application a “victory for common sense” and declared that the word LIVERPOOL belongs to the “city of Liverpool”. Supporters also took the decision to wear non-official items of clothing carrying the club’s name and logo during a match against Newcastle in protest.

As a result, the case highlights the perils brand owners face when pursuing a robust approach to protecting their brand, particularly when looking to register terms as trade marks with cultural significance. Applicants must bear in mind the negative PR that can accompany any new filing strategy.

Copyright 2019 K & L Gates

ARTICLE BY Simon Casinader and Niall J. Lavery of K&L Gates.
For more trademark law, see the National Law Review Intellectual Property law page.

Top 10 Questions Lawyers Ask About LinkedIn

Most lawyers know that LinkedIn is the most-popular social media site for business networking and meaningful interactions with people relevant to their practices. While LinkedIn has emerged as the primary business social media site, the do’s and don’ts of how to interact on the platform can be a bit of a mystery. Over the last several years, I have worked with attorneys across the country on how to use LinkedIn. The list here covers the most-commonly asked questions from attorneys about how to set up and manage a LinkedIn presence.

Q: If I’m not going to post anything on LinkedIn, why do I need a profile?

Even if you don’t plan on interacting and sharing information on LinkedIn, you should still create a profile. Think of LinkedIn as a free, high-quality directory listing that you control. When people search for your name online, LinkedIn profiles typically place high in search results. Therefore, having a well-optimized LinkedIn profile gives you strong online visibility.

Additionally, LinkedIn has more than 180 million members in North America and 645 million members worldwide. Members use the platform as a search engine to find people in specific job positions in areas around the globe. Not having a presence means missing out on becoming part of the most-inclusive business network available online.

The basic elements of a complete LinkedIn profile include:

  • A well-optimized headline — Use your title, but also include your generic position as well (lawyer or attorney) to help improve your visibility in LinkedIn searches.
  • A professional photo — No kids or pets, please.
  • Your location, industry and contact information.
  • Your experience — Tag your current employer in your experience section so your profile appears on the “Employees” list of your firm’s LinkedIn page.
  • Your education.

Q: Do I connect with everyone who asks?

No. While you don’t have to actually know everyone you connect with on LinkedIn, you do want to vet requests to make sure you share some level of business interest — you work in the same industry, have shared connections, live in the same region, etc. If a connection request comes from someone completely unrelated to your business world, you do not have to accept it.

Q: Should I personalize my connection requests?

When you’re asked to connect with someone, LinkedIn gives you the option to send the person a customized message. Including a note to a connection request gives an added layer of personalization and may initiate a back-and-forth conversation. Don’t overthink your message, though. Sometimes just a “It was great to meet you at the conference yesterday”-type message is adequate.

Q: Should I look at other people’s profiles in private or “full profile” mode?

LinkedIn allows you to control whether people see that you viewed their profile. Before you scope people out, think about your desired visibility. Do you want the person to know you viewed their profile or would you rather remain anonymous? Sometimes profile-viewing is the first step in connecting, so when appropriate, I usually recommend that people view in full-profile mode. Obviously, in certain circumstances, you may benefit from using private mode, but be aware that when you switch, LinkedIn disables the “Who Viewed Your Profile” feature and erases your viewer history.

Q: How often should I post?

Posting frequency on LinkedIn should be managed with thoughtful intent. Too many posts may clutter your connections’ feeds, leading them to block you, but posting only occasionally is a lost opportunity to stay top of mind with your network. I generally recommend that attorneys post no more than once a day unless there’s something really important that has to be shared, in which case it is often better to “like” or “share” someone else’s post. When you “like” a post, the original post shows up framed in your feed. This approach achieves the goal of sharing the content without seeming overly self-promotional and sets up the possibility of a reciprocated “like” in the future. Whether you share twice a week or seven times a week, remember that quality is much more important than quantity.

Q: Should I only post content from my firm’s website?

Mix it up a bit. Keep in mind the rule that “you are what you share” when determining what to post on LinkedIn. Just posting content from the firm’s website will come across as overly self-promotional, and doesn’t position you as a well-rounded thought leader who enhances their knowledge base from multiple sources. Good sources to consider include your firm’s resource information, mainstream media outlets, trade and business publications, local outlets, and any other reliable online publishers.

Q: Do I have to use an image with my posts?

Always try to accompany your post with a related image. Stock photos are fully acceptable on LinkedIn as long as there’s a connection between the text and the graphic. Original photos are ideal but not always possible. Some firms create an image template where they can swap out an attorney’s headshot and change the headline text. These enforce a strong brand presence — but shouldn’t be overused because they can lead to a dull uniformity in your post feed.

LinkedIn also allows you to embed videos in your posts, as long as they are under 10 minutes in length. Consider posting original video content in your feed, and become your own broadcast channel!

Q: Should I use hashtags in LinkedIn posts?

LinkedIn posts can include hashtags, but keep in mind that popular hashtags on one social media platform are not the same on another platform. For instance, you would almost never use Instagram hashtags on LinkedIn. When you compose a post, LinkedIn suggests related hashtags that you can choose from, or you can do your own hashtag research using the “#” symbol in the search field and seeing how many people follow a given hashtag. Find hashtags that are relevant to your post and have enough search volume to make them worthwhile.

Q: Should I use LinkedIn’s publishing section?

Yes! Whenever you publish an original blog or article on your firm’s website, you should always replicate it on LinkedIn’s publishing platform. Even third-party publications will often let you republish bylined articles on your LinkedIn account with attribution. After all, it gives them added visibility.

Q: Is it worth paying for a premium account?

If you are looking for basic visibility, networking and engagement functionality, a premium account is not necessary. For attorneys looking to deepen their prospecting capabilities and sales funnel features, upgrading to premium is definitely worth the cost. If you’re not sure, try out the free 30-day trial that LinkedIn offers.

If you still have questions about LinkedIn, the LinkedIn help center publishes a well-organized library of information about managing profiles and engaging on their platform. Feel free to connect with me on LinkedIn to recommend additions to my top 10 list.

© Copyright 2008-2019, Jaffe Associates

ARTICLE BY Melanie Trudeau of Jaffe.
For more on social media for lawyers, see the National Law Review Law Office Management page.

Small and Mid-Sized Businesses Continue to Be Targeted by Cybercriminals

A recent Ponemon Institute study finds that small and mid-sized businesses continue to be targeted by cybercriminals, and are struggling to direct an appropriate amount of resources to combat the attacks.

The Ponemon study finds that 76 percent of the 592 companies surveyed had experienced a cyber-attack in the previous year, up from 70 percent last year. Phishing and social engineering attacks and scams were the most common form of attack reported by 57 percent of the companies,  while 44 percent of those surveyed said the attack came through a malicious website that a user accessed. I attended a meeting of Chief Information Security Officers this week and was shocked at one statistic that was discussed—that a large company filters 97 percent of the email that is directed at its employees every day. That means that only 3 percent of all email that is addressed to users in a company is legitimate business.

A recent Accenture report shows that 43 percent of all cyber-attacks are aimed at small businesses, but only 14 percent of them are prepared to respond. Business insurance company Hiscox estimates that the average cost of a cyber-attack for small companies is $200,000, and that 60 percent of those companies go out of business within six months of the attack.

These statistics confirm what we all know: cyber-attackers are targeting the lowest hanging fruit—small to mid-sized businesses, and municipalities and other governmental entities that are known to have limited resources to invest in cybersecurity defensive tools. Small and mid-sized businesses that cannot devote sufficient resources to protecting their systems and data may wish to consider other ways to limit risk, including prohibiting employees from accessing websites or emails for personal reasons during working hours. This may sound Draconian, but employees are putting companies at risk by surfing the web while at work and clicking on malicious emails that promise free merchandise. Stopping risky digital behavior is no different than prohibiting other forms of risky behavior in the working environment—we’ve just never thought of it this way before.

Up to this point, employers have allowed employees to access their personal phones, emails and websites during working hours. This has contributed to the crisis we now face, with companies often being attacked as a result of their employees’ behavior. No matter how much money is devoted to securing the perimeter, firewalls, spam filters or black listing, employees still cause a large majority of security incidents or breaches because they click on malicious websites or are duped into clicking on a malicious email. We have to figure out how employees can do their jobs while also protecting their employers.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.

For more on cybersecurity, see the National Law Review Communications, Media & Internet law page.