The National Law Forum

Cyber-Attacks: A Problem In 2016, Still A Problem in 2017

A survey of nearly 600 organisations across a variety of industries globally has revealed 98% of these organisations experienced some form of cyber-attack in 2016. (We are left wondering if the other 2% just didn’t notice?)

The survey, conducted by cyber-security company Radware, also found that many organisations are still not prepared to face the threat landscape including that 40% of organisations do not have an incident response plan in place.

Respondents indicated that ransom was the top motivation behind cyber-attacks (41%), followed by insider threats (27%), political hacktivism (26%) and competition (26%).

Radware’s Vice President of Security Solutions, Carl Herberger, says that money is the top motivator in today’s threat landscape. He says “attackers employ an ever-increasing number of tactics to steal valuable information, from ransom attacks that can lock up a company’s data, to DDoS attacks that act as a smoke screen for information theft, to direct brute force or injection attacks that grant direct access to internal data”.

Radware predicts that in 2017, we will see an increase in the use of IoT botnets, cyber ransom, telephony DoS, permanent denial of service for data centre and IoT operations, and public transport being held hostage.

Not the most positive outlook for 2017, but it would be a brave person to suggest they are wrong with those predictions.

ARTICLE BY Cameron Abbott & Allison Wallace of K&L Gates
Copyright 2017 K & L Gates

Inauguration Day 2017: President Donald Trump

One year ago, few people outside of candidate Donald Trump and his closest and most loyal supporters imagined that January 20, 2017, would mark his inauguration as the 45th president of the United States. Regardless, today an estimated 800,000–900,000 people were on hand to witness his inauguration on the west front steps of the U.S. Capitol. As is the tradition, the new president was sworn in by the chief justice of the Supreme Court of the United States, with Donald Trump repeating the 37-word, constitutionally mandated oath of office administered by Chief Justice John G. Robert Jr. There then followed the traditional rendition of “Ruffles and Flourishes” and the first “Hail to the Chief” for President Trump, as well as the howitzers of the 3rd U.S. Infantry’s 21-round gun salute while the First Lady and other members of the Trump family looked on.

Meanwhile, many continue to refuse to accept the election results—in which Trump won a wide majority of votes cast in the Electoral College (301–237) but lost the popular vote by over three million votes. Their protests were reflected by hundreds of thousands of demonstrators in inauguration marches in Washington, D.C., and elsewhere around the country, including the Women’s March on Washington, which an estimated 200,000 individuals—brought to the nation’s capital by 1,400 buses—attended. In contrast to the calls for unity and peaceful transfer of power, a few of the protests turned violent resulting in property damage and police action, including the use of tear gas, pepper spray, and flash grenades, and numerous arrests.

Despite the protests, on January 20, Donald John Trump became the new president of the United States, along with Vice President Mike Pence, and the Trump era was launched.

His relatively brief inaugural address—20 minutes—written by his own hand, lacked the rhetorical flourishes of the most memorable lines from several of his predecessors.

For a president whose national popularity rating of 40 percent, according to a recent poll—the lowest rating of any new president on Inauguration Day over the past six most recent presidents—President Trump’s desire for national unity is an important message to deliver, especially in the face of impending change.

In this regard, President Trump used expressions in his inaugural speech such as “always pursue solidarity” and “We share one heart, one home, and one glorious destiny.” Yet essentially, it was a speech that mirrored his campaign speeches calling to “Make America great again.” Perhaps the most memorable line was,

From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first, America first.

The Trump White House

President Donald Trump and Vice President Mike Pence plan to advance a conservative domestic social and fiscal policy agenda from the White House, and to redefine global relationships with our trading partners, foreign governments, and international organizations. President Trump has promised to quickly overturn President Obama’s executive orders and regulations, as well as repeal and replace the Affordable Care Act, which was passed by a strictly partisan congressional vote with no Republicans voting in favor. President Trump also enjoys a Senate Republican majority to confirm his Cabinet nominees, although confirmation of some may face difficulty. However, Senate confirmation of his choice for the Supreme Court of the United States will be more difficult since, unlike lower federal circuit court judges and administration appointments that cannot be filibustered and only require a simple 51-vote majority to confirm, Supreme Court nominees require 60 votes to overcome a threatened Senate filibuster.

The Republican Congress—Critical to Trump’s Agenda

The Trump era will rely on a Republican-controlled Congress to advance its agenda. Republicans enjoy majorities in both Houses of Congress, albeit by slimmer margins than the 114th Congress. In the new 115th Congress (2017-2018), Senate Republicans hold 52 seats versus 46 Democrats and 2 Independents who caucus with the Democrats, which is 2 fewer Republicans than in the 114th Congress. The slim 52-vote majority makes Senate Republicans susceptible to a 60-vote super-majority vote necessary to invoke cloture to end a legislative filibuster blocking the Trump agenda. In the House the margin is 241 Republicans versus 194 Democrats, which includes 6 fewer Republicans than there were in the 114th Congress but more than sufficient to move the Trump agenda.

What is the Trump Agenda?

President Trump’s Inaugural Address echoed themes he had sounded over the course of his candidacy. Key excerpts from his speech reflect his priorities:

“We assembled here today are issuing a new decree to be heard in every city, in every foreign capital, and in every hall of power. From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first. America first.”
“What truly matters is not which party controls our government but whether our government is controlled by the people.”
“January 20th, 2017 will be remembered as the day the people became rulers of this nation again.”
“When you open your heart to patriotism, there is no room for prejudice.”
“A new national pride will stir our souls, lift our sights and heal our divisions.”

First 100 Days

On the first day, the Senate will confirm two of President Trump’s Cabinet nominees: retired United States Marine Corp general, James “Mad Dog” Mattis as Secretary of Defense and retired Marine General John Kelly as Secretary of Homeland Security.

Although President Trump will take executive actions on Inauguration Day following his swearing in, he has stated that he considers his “first day” to be Monday, January 23.

President Trump’s first 100 days in office are likely to include a laser-beam focus on:

confirming his Cabinet and sub-Cabinet nominees;
repealing the Affordable Care Act (or “Obamacare”) and replacing it with a slimmed-down version;
overturning most, if not all, of President Obama’s executive orders and instructing the Trump Executive Branch agency heads to undo Obama regulations by reverse rulemaking or by withdrawing their agencies’ legal defenses of such regulations before the federal appellate courts where they have been enjoined permanently (e.g., the persuader rule) or preliminarily (e.g., the government contractor “blacklisting” rule);
redesignating the chairs of the National Labor Relations Board (NLRB) and the U.S. Equal Employment Opportunity Commission (EEOC), and filling vacancies in those two agencies;
nominating a new Supreme Court justice and candidates for the lower federal circuit courts of appeals;
beginning work on immigration policy, infrastructure, tax reform, and trade policy; and
negotiating a spending bill to fund the federal government before the continuing resolution expires in April 2017.

How Might Labor and Employment Policy Change Under President Trump?

Under President Trump, expect a significant reversal of Obama labor and employment policies at the U.S. Department of Labor (DOL), NLRB, and the EEOC.

Traditional Labor. In terms of labor policy, for example, a recent study concluded that over 4,559 years of judicial precedent was overturned in eight years by the Obama Board in favor of pro-union policies. Expect gradual reversal of many of those decisions by a new Trump Board. Reversals will be slowed, however, by the need for a “live” case (the NLRB is not permitted to issue advisory opinions) and by incumbent pro-union Democratic General Counsel Richard Griffin, whose term expires in November of 2017.

Joint-Employer. Also, expect reversal of the Obama policy on “joint-employer” status, which saddles franchisors with the collective bargaining obligations and labor law violations of their franchisees. The ubiquitous Obama joint-employer standard has been developing government-wide by the NLRB (in its Browning-Ferris Industries decision) as well as by the DOL’s Wage and Hour Division and Occupational Safety and Health Administration, and by the EEOC. Business groups argue that the joint-employer standard would destroy the franchise model. We can likely expect the Trump administration to move quickly to reverse these joint-employer policies, especially if the chief executive officer of CKE Restaurants, Andy Puzder is confirmed as Secretary of Labor.

Wage and Hour Issues. On issues such as the “salary basis” for the Fair Labor Standards Act’s overtime exemption for white collar employees (executive, administrative, or professional employees), and the minimum wage, expect the Trump administration to propose significantly lower increases than those proposed by President Obama. Similarly, expect Trump to advance some version of a federal paid family leave law, although without some of the onerous provisions previously advocated.

Executive Orders. On issues like “government contractor blacklisting” (Executive Order 13673, “Fair Pay and Safe Workplaces” and its implementing regulations and DOL guidance), President Trump has promised to quickly rescind the executive order, perhaps on his first day in office. The same is true with Obama’s other labor and employment executive orders starting with those from the first days of the Obama presidency.

Persuader Rule. As for the “persuader” regulations, expect Trump to instruct his Justice Department and Department of Labor to withdraw their appeals in the Fifth Circuit of the permanent injunction granted by a federal district court in Texas. The same is true of the appeal of a preliminary injunction of the Labor Department’s overtime regulation entered by another federal district court in Texas. By withdrawing from the litigation, the Trump administration would effectively end those regulations without going through a burdensome and time-consuming reverse rule making.

Immigration. In addition to reversing and replacing Obamacare and rescinding other Obama labor and employment executive orders and regulations, immigration reform is a high priority for the Trump administration. Under President Trump, immigration policy will focus on boarder security, restrictions on entry, and deportation of undocumented aliens.

Court Vacancies. Finally, the composition of federal courts, including the Supreme Court of the United States, is important to labor and employment policy. Filling the vacancy on the Supreme Court, and the 100 vacancies in the lower federal courts, will be a priority. Currently, for example, only the Fifth, Sixth, Seventh, and Eighth Circuits retain majorities appointed by Republican presidents. Now, after the “nuclear option” was rammed through the Senate by then-Majority Leader Harry Ried (D-NV), it is possible that the Senate confirmation of judicial appointments will not be filibustered and will only require a simple 51-vote majority. We can likely expect President Trump to move quickly to fill those vacancies.

Post- Inauguration Day 2017: The Trump Era Begins

The next four years potentially will bring dramatic changes in domestic and foreign policy. One of the most significant changes likely will be in labor and employment policy. As with all of his predecessors throughout U.S. history, President Trump enters the White House hoping to bring about change. Time will tell.

ARTICLE BY Harold P. Coxson of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

2017 Automotive Forecasts Unveiled During Detroit Auto Show Week

It is “Auto Show” week in Detroit, as the city hosts the 2017 North American International Auto Show. This week includes press unveils of new and updated models, the latest mobility technologies at the AutoMobili-D pavilion, the charity preview featuring 17,000 auto industry players in tuxedos and long dresses and, of course, predictions for where the automotive market in North America is going in 2017.

Some of those predictions were reviewed at the Association for Corporate Growth’s “Automotive Outlook” event held on January 10^that the beautiful and buzzing Detroit Athletic Club. The featured speakers included Michael Robinet, Managing Director, Automotive Advisory Solutions at IHS Markit (IHS), one of the most respected forecasters in the automotive industry, and Dave Andrea, Executive Vice President of Research for the Center for Automotive Research (CAR), one of the most respected researchers in the automotive industry. As expected with speakers of this caliber, the content was excellent.

Several themes emerged from the forecasts.

The North American Automotive Industry Will Be Flat This Year.

In 2016, a total of 17.55 million cars and light trucks were sold in North America, a record. For 2017, IHS forecasts 17.6 million units and CAR forecasts 17.5 million units. These are great numbers by historical reference, but are further evidence of the “plateauing” of the industry that we have observed recently.

President Elect Trump Has Added Some Uncertainty to the Market.

This sounds like an understatement, but it is worth emphasizing. There is increased uncertainty regarding trade policy, including potential renegotiation of the NAFTA treaty and/or increased tariffs on cars imported from Mexico. There is also increased uncertainty regarding energy policy, including whether the higher Corporate Average Fuel Economy (CAFE) standards, due to become fully effective in 2025, will be relaxed (although product plans are becoming less alterable as we get closer to that date and hybrids already play an increasing role in those plans), and the impact of energy policy and oil prices on car buying decisions. Tax reform may also drive activity in unknown ways.

It is All About the Mix.

The overall automotive market in North America is strong, but not all segments are strong. Light trucks and SUV’s/CUV’s continue to do well; passenger cars/sedans are much softer; and the adoption of electric cars continues to be relatively modest (although the new Chevrolet Bolt, a 238 mile range EV that received the Motor Trend Car of the Year Award for 2017 earlier this week, is expected to be well received – pictured above). This mix impacts OEMs and automotive suppliers in different ways, and both IHS and CAR cautioned attendees to “look beneath the waves/look beneath the water line” (pick your metaphor) to see what is really going on in detail in the market.

Connected and Autonomous Vehicle Development is Accelerating.

The industry is in a modern “race to the moon” to achieve full vehicle autonomy, which is still a ways off, but within the planning horizon. We are moving to Level 3 now – autonomy with driver intervention. While widely adopted, on road Level 5, full autonomy without intervention, is still far out there in the mid-2020’s at best. In my mind, technology will continue to move faster than standards setting and harmonization, infrastructure improvements, and full consumer acceptance. In the interim, automotive companies must operate in the current market, adjust to the emerging ridesharing and car sharing models as Vehicle Miles Traveled continue to be split in different ways, and develop and implement enhanced connectivity and safety features (ADAS) as the march to autonomy continues.

Risk is Rising/Disintermediation Will Occur.

With mobility models changing, nontraditional players coming into the market, political and regulatory uncertainties increasing, and vehicle price increases (with the enhanced content) beginning to challenge affordability for many consumers, the risks in the market are increasing overall. Will OEMs and large Tier 1’s continue to be the technology integrators in the future, or will others increasingly play that role? Players that adapt to these risks most nimbly and correctly will be rewarded, while others will be challenged.

In 2017 overall, it will be a pleasure and thrill to be part of one of the most interesting and watched industries: the mobility industry.

ARTICLE BY Steven H. Hilfinger of Foley & Lardner LLP

Sanctions Imposed for Failure to Preserve Call Recordings

Sec. Alarm Fin. Enters., L.P. v. Alarm Protection Tech., LLC, No. 3:13-cv-00102-SLG, 2016 WL 7115911 (D. Alaska Dec. 6, 2016)

In this case, Plaintiff was sanctioned pursuant to Rule 37(e), as amended on December 1, 2015, for its failure to preserve relevant customer call recordings.

Plaintiff alleged that Defendant had “illegally ‘poached’” its customers and defamed the plaintiff. Defendant, in turn, alleged tortious interference with its contractual relationships and defamation by the plaintiff. In the course of discovery, Plaintiff produced approximately 150 customer call recordings (out of “thousands”) that were “generally favorable” to it but, when asked, was unable to produce any others and claimed that the recordings were lost, apparently as the result of the “normal operation of a data retention policy.” Defendant sought sanctions pursuant to amended Rule 37(e).

Taking up the motion, the Court first addressed whether the “newly revised or the former version of Federal Rule of Civil Procedure 37” applied. Concluding that the revised version was appropriate, the Court reasoned that it was “clearly not impracticable to apply the new rule” and that while it would be “unjust to apply a new rule retroactively when that rule governs a party’s conduct,” Rule 37(e) “does not govern conduct” but rather limits the Court’s discretion to impose particular sanctions, without changing the parties’ duty to preserve as it existed prior to the amendments.

Turning to whether Plaintiff had a duty to preserve, the Court noted that the recordings were destroyed after litigation was ongoing and reasoned that Plaintiff should have known and in fact knew of the calls’ potential relevance, citing its memorandum to employees asking them not to use certain words on calls with Alaskan customers (circulated around the time of the complaint and close in time to being accused by Defendant of defamation during contact with Alaskan customers) and—more importantly—the fact that Plaintiff “flagged the existence of the recordings” in its initial disclosures.

Regarding the threshold question of whether Plaintiff took reasonable steps to preserve, the Court rejected Plaintiff’s argument that its “general litigation hold” was sufficient, despite not encompassing the recordings. Moreover, the Court noted that “reasonable steps [to preserve] were available,” citing Plaintiff’s admission that the calls could have been extracted to avoid being overwritten and the fact that some recordings were saved. Recognizing that sanctions are precluded when the information can be restored or replaced through additional discovery, the Court indicated that there was no suggestion that the calls were available elsewhere and thus turned to the question of appropriate sanctions.

First, the Court took up the question of whether the recordings were destroyed with the intent to deprive the other party of the information’s use in the litigation and indicated that based on the “relatively murky record before the Court” regarding the nature of the parties’ discussions surrounding the recordings and their treatment in discovery, it could not conclude that Plaintiff overwrote the recordings with the requisite intent to deprive. Turning next to the question of prejudice, the Court considered whether the information was available through other means, but reasoned that the call notes and depositions of Plaintiff’s employees were “likely to be far inferior” compared to the calls themselves. Thus, the Court concluded that Defendant was entitled to a remedy “no greater than necessary to cure the prejudice” as allowed by Rule 37(e)(1).

To address the prejudice suffered by Defendant, the Court ordered that Plaintiff pay Defendant’s reasonable attorneys fees incurred in bringing the motion, that neither party would be allowed to introduce recordings made to or from Plaintiff’s call center absent stipulation or a subsequent order, and that the parties may present evidence related to the lost recordings at trial (although Defendant was barred from arguing that the jury may or should presume that evidence would have been favorable to it). The Court also indicted that it would instruct the jury that Plaintiff was under a duty to preserve the calls, but failed to do so.

ARTICLE BY e-Discovery Analysis and Technology Group of K&L Gates

Strategic Planning in Law Firms: Essential Steps for Success

Law firms doing the “same old thing” isn’t going to work anymore. Despite all the legal industry changes discussed in Part 1 and Part 2 of this series, 66% of Managing Partners report that their law firm’s strategy has not changed. It is imperative for today’s law firms to have a strategic plan that evolves with the firm and changes in the market; however, only 24% of law firms report having strategic plans, even though 71% of Managing Partners report that having a strategic plan improved their firm’s performance.

What makes a strong strategic plan?

Successful strategic planning is an ongoing process; the first step is creating the plan, but just as crucial is the follow-up. Steps include:

Implementation
Review
Making changes as needed (and things can change fast)

When drafting a strategic plan, it’s important to think about the process–and to incorporate measurable capabilities. The tenets of good goal setting should apply–keep things simple, realistic, and achievable, looking ahead three to five years with annual goals. As you create the plan, build it with the knowledge that it is a living document that must change, because the world is changing. It should function as a sort of guiding principal, and it reminds your firm of your priorities when crisis situations arise.

Chart, Data

With rapidly changing technology, crises and unexpected opportunities, keeping in mind your strategic objectives is a good way to keep your firm focused on your priorities. When surveyed, Managing Partners indicated the most important strategic objectives were Marketing and Business Development, Succession Planning, Firm Growth and improved lawyer productivity.

Where should a law firm allocate Marketing and Business Development resources?

With Marketing and Business Development as one of the most important pieces of the strategic plan; it’s important to describe what a solid strategy looks like. For many firms, marketing and business development is not a top priority–it should be. The research for Re-Envisioning focused questions on trends in allocating marketing resources in the following seven areas:

Website and Internet Marketing
Firm Events & Seminars
Organizational Involvement
Charitable Contributions
Rankings and Directories
Marketing Staff
Lawyer Sales Training

When asked about 2015 investments v. 2016 investments, it was clear that most firms are continuing to do what they have done before. According to Re-Envisioning, “firms are doing the same old things because ‘we’ve always done it this way,’ budgets are set by equity partners unwilling to support marketing expenses, or there is a ‘let’s wait and see what the other firms are doing’ attitude.” Investing in Marketing & Business Development can pay off in a big way, but of the firms surveyed, only 25% of them invested more than 4% of their revenue in Marketing & Business Development. To successfully move forward, law firms need to change their perspective and to truly innovate in terms of their Marketing and Business Development practices.

A good place to start is with the clients your firm already has–and wants to keep. Break them into A list, B list and C list–so you can identify who may be happier working with a competitor, and who you want to make sure stays with your firm.

What should a law firm consider when developing a business development model?

Beyond an inventory of current clients, it’s important to develop a BD model–representing how your firm views business development and how it works for your firm’s situation. Your model should answer the following questions:

Why do people buy?
How do they buy?
What are prospects and clients motivations and fears?
What is the process for finding prospects and transitioning them into clients?
Where does business come from?
How does your business development efforts focus on building relationships?
How does your firm become a trusted advisor to your clients and community?
What differentiates your firm and your lawyers, and how do those differences align with your clients’ needs?

Asking questions like this can help your firm ensure that your marketing and business development resources are going in the right direction–and can help your firm create a deliberate way forward, with an integrated approach to ensure goals are met and resources are not squandered. Additionally, creating a plan with measurable tenets can help your firm track return on investment so it’s clear what’s working and where additional investment might be warranted.

How does a law firm achieve buy-in for the marketing and business development plan?

Another area to consider is asking individuals in the firm–partners and associates– to create a personal business development plan. By asking individuals to think about marketing and business development, your firm is demonstrating its commitment to these principals. Additionally, asking partners and associates to think about how they can best contribute to business development encourages accountability and personal reflection, so individuals can find a way to contribute that is best for them, increasing the likelihood that the commitment will be lasting.

These changes may be around the corner, many law firms are incorporating them already. Brent Turner, Client Development–Peer Monitor & Thought Leadership at Thomson Reuters, comments, “For the first time in many years, we’re seeing healthy acceleration in the marketing and business development budgets of US Law Firms, let primarily by AMLAW 200 firms. We’re also seeing evidence that these investments are starting to pay off in a big way.” Terry Isner Jaffe PR Law firm business development

ARTICLE BY Eilene Spear & Jennifer Schaller of The National Law Review / The National Law Forum LLC

Congress Attempts to Counsel Trump Concerning Removal of CFPB Director Cordray, While PHH Petition for Rehearing Remains Undecided

Today, Senators Chuck Schumer (D-NY), Sherrod Brown (D-OH), Elizabeth Warren (D-MA) and others voiced their opposition to any attempt by President-elect Donald Trump to oust Richard Cordray, the current Director of the Consumer Financial Protection Bureau (“CFPB”), before Cordray’s term ends in July 2018. They also sent a letter to Cordray outlining and praising his accomplishments as CFPB Director.

The Senators’ opposition to the prospect of Cordray’s removal is just the latest volley between members of Congress and the incoming Administration concerning the CFPB’s directorship.

On January 12, Sean Spicer, a senior spokesperson for President-elect Trump, told reporters that the President-elect had interviewed former Representative Randy Neugebauer (R-TX) for the position of Director of the CFPB. With Richard Cordray’s term as CFPB Director not scheduled to conclude until July 2018, this strongly suggested that the President-elect is considering an attempt to oust Cordray sooner. While in Congress, Rep. Neugebauer introduced legislation aiming to replace the CFPB’s single director with a five-member commission.

Spicer’s statement came on the heels of a January 10 statement from Senator Brown, the ranking member of the Senate Banking, Housing, and Urban Affairs Committee, urging the President-elect not to attempt to remove Cordray or abolish the CFPB. Senator Brown cautioned President-elect Trump that, “Under Richard Cordray’s leadership, the CFPB has returned $12 billion to servicemembers, seniors, and working Americans . . . Firing Cordray and abolishing the consumer bureau so the special interests can get their $12 billion back would shatter President-elect Trump’s promise to hold Wall Street accountable and protect working people.”

Also on January 10, minority members of the House Committee on Financial Services released a letter to President-elect Trump in the same vein, commending Director Cordray and counseling the President-elect against attempting to remove him.

On January 9, Senators Ben Sasse (R-NE) and Mike Lee (R-UT) released a letter to Vice President-elect Mike Pence urging the opposite: “Given the CFPB’s unconstitutional structure, removing Director Cordray would be consistent with President Trump’s oath to ‘preserve, protect, and defend the Constitution of the United States’ and his duty to serve as an independent guardian of the U.S. Constitution. Removing Director Cordray would also uphold the American idea of limited government, because Director Cordray has vigorously supported the unconstitutional independence of the CFPB and pursued a regulatory agenda that is harmful to the American people.”

The prospect of Director Cordray’s removal is top of mind following the D.C. Circuit Court’s decision in PHH Corp., et al. v. Consumer Financial Protection Bureau, which ruled unconstitutional the provision of the Dodd-Frank Act establishing that the CFPB Director could be fired only “for cause,” i.e., for inefficiency, neglect of duty, or malfeasance in office.

As discussed in a prior post, Senators Brown and Warren are among 21 current and former members of Congress who filed an amicus brief in support of the CFPB’s petition for rehearing en banc of the PHH decision. On December 22, PHH filed a response to the petition, arguing that there is no need for the D.C. Circuit to revisit its original decision. The United States also filed a response on December 22, arguing that the D.C. Circuit’s decision “departs from” Supreme Court jurisprudence regarding the separation-of-powers and the removal of executive agency heads. The court granted PHH until January 27 to respond to the United States’ brief. Any decision on the petition for rehearing will thus not be made until after President-elect Trump’s inauguration on January 20, raising the prospect that the United States’ brief could be withdrawn if the Department of Justice’s position changes under the incoming Administration.

ARTICLE BY Jamie A. Heine of Covington & Burling LLP

What It Takes to Make It Rain: Rainmakers Now, and Rainmakers of the Future

In the rapidly changing legal industry, it is no surprise that broad conceptions of what it means to be a rainmaker are also evolving. Dr. Heidi Gardner, Lecturer and Distinguished Fellow at the Center on the Legal Profession at Harvard Law School, has been conducting research over the past decade on collaboration in law firms. Her findings have also revealed insights into rainmakers: what makes them successful, how their roles changed over time, and how the next generation of rainmakers can be primed to succeed. She will be presenting her findings on the myths and realities of rainmakers at the Thomson Reuters 24th Annual Marketing Partner Forum.

Successful Rainmakers: Extroverts, Introverts, and Cultural Understanding

A common discussion regarding rainmakers, and leadership in general, is whether they are born or made. Based on her decades long research, Dr. Gardner’s answer to whether rainmakers are born is a resounding no. What makes someone a successful rainmaker is their ability to exhibit other sides of their personality, or other strengths and traits, depending on their audience. Rainmakers are typically discussed as being highly extroverted—charismatic, forceful, possessing great salesmanship skills. However, these traits themselves don’t make rainmakers successful, but rather it is their enormous ability to connect with whomever the buyer of their services. Because buyers are not a homogeneous group, most successful rainmakers are able to adjust or adapt their style appropriately.

Introverts are therefore not precluded from being successful because of their commonly thought of as “quiet nature”. In fact, introverts may make better rainmakers in some regard. Dr. Gardner points out that introverts tend not to think out loud and consider what they’re going to say before they say it. They often take time to reflect and appropriately listen to the person that is sitting across the table. This makes introverts very adept at identifying the buyer’s underlying issues and thinking through what it takes to connect the dots inside their firm to help clients solve complex issues. Dr. Gardner also points out that “Many buyers of legal services are also introverts, and they will appreciate someone who has similar a demeanor—not salesy or pushy.” Great rainmakers who are introverts are chameleons. It likely takes more energy for them to be outgoing and interact with strangers in a bigger setting, but they will have developed the capacity to be gregarious enough to make those connections.

Successful rainmakers have a foundation of being highly empathetic and have a strong motivation and interest in understanding other clients—it’s part of what makes them so successful. Dr. Gardner posits these skills are the “basic building blocks for being able to communicate across cultures” and make rainmakers more equipped to be successful with buyers from other countries. What’s required is an additional measure of cultural intelligence; successful rainmakers take part in and study the behavioral mimicry of their buyers in addition to having an appreciation for why different people approach different problems from different perspectives in general.

Evolution of Rainmaker: Toward Collaboration

During the course of Dr. Gardner’s research, she has discovered an interesting trend, or rather non-trend, in the legal industry: the rainmakers at law firms are largely the same people. During the past ten to twelve years, firms have moved away from mandatory retirement. Partners are staying longer than ever, so the rainmakers at firms now are the same ones from a decade past.

There is a new generation of rainmakers coming in now, but there is a lot of frustration in the profession regarding the structure and effectiveness of succession planning (which will be discussed further below). Despite the fact that the legal industry is currently dealing with the same cast of characters, one profound change Dr. Gardner has observed in the last decade involves a simultaneous broadening and narrowing of the role of the rainmaker.

According to Dr. Gardner, “clients increasingly expect a level of industry expertise” that requires attorneys to identify their practices with more specificity than ever. An attorney can no longer be an “environmental attorney”, but must become “an environmental attorney with a focus on extractive industries”, or an “intellectual property lawyer” must be an “IP attorney who specializes in the patent prosecution of computer hardware”. However, because clients’ problems are becoming increasingly complex, rainmakers are less able to be seen as the single go-to person for a particular client who puts together a team of experts in a single discipline, but rather as needing pull together teams of multidiscipline experts. So along with the narrowing of the rainmaker’s own field of expertise, successful rainmakers are broadening their ability to pull together diverse teams to tackle their client’s problems. The rainmaker is the conductor; as Dr. Gardner states: “The client counts on them to be a broker to all of the kind of experts that exist within the firm.”

In order to be successful going forward, rainmakers of the future need to be more collaborative as far as seeking out complementary experts to serve clients. A common obstacle that prevents rainmakers from being successful in this is the reliance on bringing in the “obvious suspects” as a matter of prestige in front of the client. But when called upon to do work on the case, these attorneys are nowhere to be found. Dr. Gardner believes that a key to building a successful team will be to find the hidden gems at the law firm—rainmakers should seek out attorneys who are hungry for client service opportunities. She acknowledges that doing this can be a risky. It’s easier to put someone in front of your client who has an existing reputation as a guru in their sector, but their value to the process is limited if their participation is not complete.

People who are truly intent on becoming successful rainmakers should be investing the time and the energy on others who are not necessarily thought of as the “obvious suspects”. They must access the deeper well of talent that exists and bringing them through the system so that they become committed, loyal, deeply engaged attorneys who are serving the client. To continue to be successful, rainmakers will need to take the risks and bring different kinds of people on board; as Dr. Gardner stated “The legal industry is too fragile to rely on just small pool of experts.”

Rainmakers – The Next Generation

As stated previously, Dr. Gardner has found that effective succession planning in law firms has been found wanting. Even though this generation of rainmakers has been around longer than ever, it is critical for the continuing success of firms to take a hard look at bringing up the new generation of rainmakers on deck. The most effect way to begin doing this is through mentorship. Dr. Gardner states, “People need to accept responsibility for developing a pipeline of talent.” She experienced some of the effective mentoring while she was working as a consultant at McKinsey’s Johannesburg office. She worked under a partner that would take her to all the important meetings, where she wasn’t expected to participate, but allowed to observe. During her time under the tutelage of this partner at McKinsey, she learned a tremendous amount about the ins and outs of client handling. Today’s rainmakers need to make those types of investments in people that will eventually come after them.

Up-and-comers also need to be willing to take responsibility for the trajectory of their career. Too often, Dr. Gardner has encountered partners who have tried to give junior partners or associates the opportunity to participate in learning experiences, who are asked “Can I bill the time?” This is the incorrect mindset to have on the road to becoming a successful rainmaker. Dr. Gardner elaborates: “If you’re trying become a successful rainmaker, you have to invest some non-billable time in your own development as well.” Both the willingness of existing rainmakers to mentor and the tenacity of of rising rainmakers will be what dictates the success of the next generation of rainmakers.

Learn more about the Thomson Reuters Legal Executive Institute Marketing Partner Forum here.

ARTICLE BY Nicole Cudiamat Minnis of The National Law Review / The National Law Forum LLC

Department of State Releases February 2017 Visa Bulletin

No change in Dates for Filing chart again; scant advancement in Final Action Dates chart.

The US Department of State (DOS) has released its January 2017 Visa Bulletin. The Visa Bulletin sets out per-country priority date cutoffs that regulate immigrant visa availability and the flow of adjustment of status and consular immigrant visa application filings and approvals.

What Does the February 2017 Visa Bulletin Say?

The February 2017 Visa Bulletin includes both a Dates for Filing Visa Applications chart and an Application Final Action Dates chart. The former indicates when intending immigrants may file their applications for adjustment of status or immigrant visas, and the latter indicates when an adjustment of status application or immigrant visa application may be approved and permanent residence granted.

If US Citizenship and Immigration Services (USCIS) determines that there are more immigrant visas available for a fiscal year than there are known applicants for such visas, it will state on its website that applicants may use the Dates for Filing Visa Applications chart. Otherwise, applicants should use the Application Final Action Dates chart to determine when they may file their adjustment of status applications.

It is not yet clear which chart the USCIS will select for February 2017 filings. To be eligible to file an employment-based (EB) adjustment application in February 2017, foreign nationals must have a priority date that is earlier than the date listed below for their preference category and country (changes from the last two months’ Visa Bulletin dates are shown in yellow). In January 2017, USCIS announced that EB applications should be filed using the Application Final Action Dates chart.

Application Final Action Dates

EB	All Charge- ability Areas Except Those Listed	China (mainland born)	El Salvador, Guatemala, and Honduras	India	Mexico	Philippines
1st	C	C	C	C	C	C
2nd	C	15 NOV12 (was 15OCT12)	C	15APR08	C	C
3rd	01OCT16 (was 01AUG16)	01Oct13 (was 08SEP13)	01OCT16 (was 01AUG16)	22MAR05 (was 15MAR05)	01OCT16 (was 01AUG16)	15OCT11 (was 22JUL11)
Other Workers	01OCT16 (was 01AUG16)	01DEC05	01OCT16 (was 01AUG16)	22MAR05 (was 15MAR05)	01OCT16 (was 01AUG16)	15OCT11 (was 22JUL11)

Dates for Filing Visa Applications

EB	All Charge- ability Areas Except Those Listed	China (mainland born)	India	Mexico	Philippines
1st	C	C	C	C	C
2nd	C	01MAR13	22APR09	C	C
3rd	C	01MAY14	01JUL05	C	01SEP13
Other Workers	C	01AUG09	01JUL05	C	01SEP13

How This Affects You

On the Application Final Action Dates chart, the cutoff dates for EB-1 will remain “current” for all chargeable countries, including India and China.

The EB-2 cutoff dates for the worldwide allotment as well as El Salvador, Guatemala, Honduras, Mexico, and the Philippines will also remain “current.” Cutoff dates will remain at April 15, 2008 for EB-2 India and will advance by one month for EB-2 China to November 15, 2012.

The EB-3 cutoff dates for the worldwide allotment as well as El Salvador, Guatemala, Honduras, and Mexico will advance by two months to October 1, 2016. Cutoff dates will advance by three weeks to October 1, 2013 for EB-3 China. The cutoff date for EB-3 India will advance by one week to March 22, 2005. The cutoff date for EB-3 Philippines will advance by nearly three months to October 15, 2011.

The EB-5 China cutoff date will advance by one week to April 15, 2014.

As confirmed by the DOS, the EB-1 allotment should remain current in the coming months.

Read the February 2017 Visa Bulletin.

ARTICLE BY Eleanor Pelta, Eric S. Bord, A. James Vázquez-Azpiri, Lisa Stephanian Burton & Tracy Evlogidis of Morgan, Lewis & Bockius LLP

2016 Year In Review: Corporate Governance Litigation and Regulation

2016 saw many notable developments in corporate governance litigation and related regulatory developments. In this article, we discuss significant judicial and regulatory developments in the following areas:

Mergers and Acquisitions (“M&A”): 2016 was a particularly significant year in M&A litigation. In Delaware, courts issued important decisions that impose enhanced scrutiny on disclosure-only M&A settlements; confirm the application of the business judgment rule to mergers approved by a fully informed, disinterested, non-coerced shareholder vote; inform the proper composition of special litigation committees; define financial advisors’ liability for breaches of fiduciary duty by their clients; and offer additional guidance for calculating fair value in appraisal proceedings.
Controlling Shareholders: Delaware courts issued important decisions clarifying when a person with less than majority stock ownership qualifies as a controller, when a shareholder may bring a quasi-appraisal action in a controlling shareholder going-private merger, and when the business judgment rule applies to controlling shareholder transactions. In New York, the Court of Appeals followed Delaware’s guidance as to when the business judgment rule applies to a controlling shareholder squeeze-out merger.
Indemnification and Jurisdiction: Delaware courts issued decisions clarifying which employees qualify as officers for the purpose of indemnification and articulating an updated standard for exercising jurisdiction in Delaware over actions based on conduct undertaken by foreign corporations outside of the state.
Shareholder Activism and Proxy Access: Shareholder activists remained busy in 2016, including mounting successful campaigns to replace CEOs and board members at Chipotle and Hertz. Additionally, the SEC’s new interpretation of Rule 14a-8 has limited the ability of management to exclude a shareholder proposal from a proxy statement on the grounds that it conflicts with a management proposal. Also, some companies have adopted “proxy rights” bylaws, which codify a shareholder’s right to directly nominate board members.

I. M&A

A.Enhanced Scrutiny of Disclosure-Only Settlements

In January 2016, the Delaware Court of Chancery issued an important decision, In re Trulia, Inc. Stockholder Litigation,¹ making clear the court’s renewed scrutiny of—and skepticism towards—so-called disclosure-only settlements of shareholder class actions. In Trulia, shareholders sought to block the merger of real estate websites Zillow and Trulia. After litigation was commenced, the parties agreed to a settlement in which Trulia would make additional disclosures in proxy materials seeking shareholder approval of the transaction in exchange for a broad release of present and future claims by the class and fees for plaintiffs’ counsel.

Chancellor Bouchard rejected the proposed settlement and criticized disclosure-only settlements as generally unfair to shareholders. Chancellor Bouchard noted that the Court of Chancery had previously expressed concerns regarding the incentives of plaintiff counsel to settle class action claims in which broad releases were granted in exchange “for a peppercorn and a fee”—i.e., for fees and immaterial disclosures that provided little benefit to shareholders.² According to the Court, “these settlements rarely yield genuine benefits for stockholders and threaten the loss of potentially valuable claims that have not been investigated with vigor.”³

Continue reading at the National Law Review…

ARTICLE BY Nathan Bull, Alejandra Contreras, Jaclyn A. Hall, Jason M. Halper, Hyungjoo Han & Adam Magid of Cadwalader, Wickersham & Taft LLP

The White House’s Revisions to its Breach Response Policy For Federal Agencies and Departments Also Affect Contractors

On January 3, 2017, the Obama Administration issued a memorandum to all executive departments and agencies setting for a comprehensive policy for handling breaches of personally identifiable information (the “Memorandum”), replacing earlier guidance. Importantly, the Memorandum also affects federal agency contractors as well as grant recipients.

The Memorandum is not the first set of guidance to federal agencies and departments for reporting breaches of personally identifiable information (PII), but it establishes minimum standards going forward (agencies have to comply within 180 days from the date of the Memorandum). The Memorandum makes clear that it is not setting policy on information security, or protecting against malicious cyber activities and similar activities; topics related to the recent fiery debates concerning the 2016 election results and Russian influence.

The Memorandum sets out a detailed breach response policy covering topics such as preparedness, establishing a response plan, assessing incident risk, mitigation, and notification. For organizations that have not created a comprehensive breach response plan, the Memorandum could be a helpful resource, even for those not subject to it. But it should not be the only resource.

Below are some observations and distinctions worth noting.

PII definition. Unlike most state breach notification laws, the Memorandum defines PII broadly: information that can be used to distinguish to trace an individual’s identity, either alone or when combined with other information that is linked or linkable to a specific individual. So, for example, the notification obligation for a federal contractor will not just apply if Social Security numbers or credit card numbers have been compromised.
Breach definition. Breaches are not limited phishing attacks, hackings or similar intrusions. They include lost physical documents, sending an email to the wrong person, or inadvertently posting PII on a public website.
Training. Breach response training must be provided to individuals before they have access to federal PII. That training should advise the individuals not to wait for confirmation of a breach before reporting to the agency. A belief (or hope) that one will find that lost mobile device should not delay reporting.
Required provisions in federal contracts. Federal contractors that collect or maintain federal PII or use or operate an information system for a federal agency must be subject to certain requirements by contract. The Memorandum requires agencies to update their contracts with contractors to ensure the contracts contain certain provisions, such as requiring contractors to (i) encrypt PII in accordance with OMB Circular A-130, (ii) train employees, (iii) report suspected or confirmed breaches; (iv) be able to determine what PII was or could have been accessed and by whom, and identify initial attack vectors, and (v) allow for inspection and forensic analysis. Because agencies must ensure these provisions are uniform and consistent in all contracts, negotiation will be difficult. The Federal Acquisition Regulatory Council is directed to work the Office of Management and Budget to promptly develop appropriate contract clauses and regulatory coverage to address these requirements.
Risk of harm analysis. Agencies will need to go through a complex risk of harm analysis to determine the appropriate breach response. Notably, encryption of PII is not an automatic exception to notification.
Notification. The rules for timing and content of breach notification are similar to those in many of the state breach notification laws. The Memorandum also advises agencies to anticipate undeliverable mail and to have procedures for secondary notification, something not clearly expressed in most state notification laws. The Memorandum also suggests website FAQs, which can be more easily updated and tailored. Agency heads have ultimate responsibility for deciding whether notify. They can consider over-notification and should try to provide a single notice to cover multiple notification requirements. They also can require contractors to provide notification following contractor breaches.
Tabletop Exercises. The Memorandum makes clear that testing breach response plans is essential and expressly requires that tabletop exercises be conducted at least annually.

Federal contractors and federal grant recipients that have access to federal PII will need to revisit (or develop) their own breach response plans to ensure they comply with the Memorandum, as well as the requirements of the applicable federal agency or department which can be more stringent. Of course, those plans must also incorporate other breach response obligations the organizations may have, whether those obligations flow from other federal laws (e.g., HIPAA), state laws, or contracts with other entities. Putting aside presidential politics, cybersecurity threats are growing and increased regulation, enforcement and litigation exposure is likely.

ARTICLE BY Joseph J. Lazzarotti of Jackson Lewis P.C.

The National Law Forum

Cyber-Attacks: A Problem In 2016, Still A Problem in 2017

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