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Novel Reflects Our Firm’s Value of Truth

Novel Reflects Our Firm’s Value of Truth

By:  Bill Pilchak – 10/30/14

          In one way, this blog article is a shameless plug for my new novel, Nothing But The Truth, which is being launched at a party on November 11, 2014, 5:30-8:30 at the Emagine Theater Royal Oak (11 Mile Road & Main). After all, a business blog is supposed to announce things like this.

          However, readers of the novel will find an underlying theme within its pages: my disdain for attorneys who attempt to distort the truth in order to enrich their clients and themselves. In this regard (however reluctantly), I distinguish criminal attorneys who are obligated to raise a “reasonable doubt” on behalf of a clientele that is 98%+ guilty and civil attorneys who foist a false version of the truth while pursuing dollars. Criminal attorneys doing so are protecting a Constitutional right of their clients. There is no equivalent justification in the civil realm.

          Discovering falsehoods has become commonplace in our caseload, possibly because we tend to not simply accept the facts related by our opponents and because we act on hunches when the plaintiff’s version does not fit the facts. Ideally, when uncovered, prosecutions for perjury would result, but that seldom occurs. It took catching a sitting mayor red-handed in lies about a sizzling affair with a staffer to spur one prosecutor to bring charges. Absent those dynamics, the legal system is not terribly interested in “outing” those who lie in litigation. The unfortunate truth is that when one scenario was brought to the attention of Michigan’s Attorney-Grievance Commission by our office, it provoked a ho-hum response.

          Undoubtedly, our opponents on the plaintiff’s side of employment litigation, some of whom will be at the launch party, will consider the perspective in Truth to be sanctimonious – as if our clients never fib. Past and present P&C attorneys and staff employees will be able to confirm the several episodes where potential clients suggested that the truth be covered up or misrepresented were told to leave our offices because they needed to find an unethical management-side lawyer, and since there are not many of them, they shouldn’t waste time sitting in our offices. Our court reporters will be able to verify the instances where (thankfully non-client) witnesses that our side hoped to call later at trial lied right in front of us at deposition, and we placed the true facts on the record revealing their lies. And with respect to our longstanding clients? I have fortunately never had the experience where a client was shown to have told a deliberate untruth. However, when the circumstances and/or independent witnesses don’t support or remember the same “truth” that our clients remember, that is when discussions about settlement are either initiated or pressed with greater urgency. (Not to suggest that completely innocent and truthful clients do not also settle for economic reasons.)

          Nothing But The Truth illustrates how the entire legal system and all those who work in it are dependent upon the truth being an unattainable commodity and illustrates some interesting procedural and legal principles that actually squelch the truth. Fortunately for the reader, these ethical and philosophical issues are discussed in the context of J. Carson Tucker’s investigation of a provocative sexual harassment case that leads to an exploration of sexual addiction and its psychological underpinnings and Tuck’s involvement with some fascinating characters: A Jamaican aerosol manufacturer who bottles voodoo-inspired sprays for the Haitian and Caribbean community and “Frankie Holland,” who has multi-personality disorder, is on the verge of gender reassignment surgery and believes at times that “she” is “Marilyn Monroe of Canada.”

          I would love to see you (and your book club) at the launch party November 11. I will be signing books, in case that means something to someone someday. If you are inclined to come, please send an e-mail to truthnovel@yahoo.com so that we bring enough paperbacks to the party…but come even if you forget to RSVP.

Indemnification Clauses Do Not Have to Be So Confusing

Indemnification Clauses Do Not Have to Be So Confusing

10/28/14 – Dan Cohen

          I recently read an article in the plain language feature of the Michigan Bar Journal about indemnification clauses and how they should be re-written from scratch. The more I thought about it, the more sense this started to make. I can’t tell you how many times I have been asked to review and comment upon an indemnification clause in a contract, which takes up a quarter of a page of single-spaced print and contains 250 words, all in a single sentence. I often have to re-read the language a few times before I know (or think I know) what it means. Invariably, such unwieldy clauses make me wonder if the attorneys drafting them are paid by the word.

           Typically, I don’t re-write indemnification clauses presented to my clients. To the contrary, I evaluate them to determine if my clients can live with the added risk that is being shifted to them. Most of the time, I recommend mutuality if my client is presented with a one-sided, or shall I say, lopsided indemnity clause. This tends to work well and does not polarize the contracting parties, which is often extremely important since it is not my job to destroy contractual relationships before they actually begin. However, occasionally the risk shifted by the indemnification clause is just too great or uncertain because the clause overreaches or is unintelligible. Usually, the indemnification clause is not a deal-breaker and clarification or simplification is possible. But, if the language is non-negotiable, your options are to either live with it and obtain insurance for the added risk or walk from the deal.

          The starting point in attempting to simplify an indemnification clause is to understand the meaning of the key terms: indemnify, hold harmless, and defend. To “indemnify”, is “to protect (someone) by promising to pay for the cost of possible future damage, loss, or injury” or “ to give (someone) money or another kind of payment for some damage, loss, or injury.” To “hold harmless” means roughly the same thing: to make whole after causing a loss. Quite frankly, I think hold harmless language is probably unnecessary even though most indemnification clauses contain them. The word “defend”, relates to the responsibility of defending the indemnified party from lawsuits. The duty to defend does not come into play if the indemnified party wishes to defend its own lawsuits (although the indemnifying party may be required to pay for it).

          It seems to me that the starting point then is the basic and simple premise that: “ABC shall indemnify XYZ for losses caused by ABC.” From there, you can add the triggering events, the definition of loss and who is included as the indemnified party, so the clause would read: “ABC shall indemnify XYZ, its officers, directors and employees, for any losses and expenses, including judgments or settlements, arising out of ABC’s negligence, intentional misconduct, or violation of law. ABC shall not be responsible for any losses or expenses caused by XYZ’s own negligence, intentional misconduct or violation of law.” Then, you want to build in a notice provision and deal with payment of counsel. The end product might look something like this:

        “ABC shall indemnify XYZ, its officers, directors and employees, for any losses and expenses, including attorney fees, judgments or settlements, arising out of ABC’s negligence, intentional misconduct, or violation of law. ABC shall not be responsible for any losses or expenses caused by XYZ’s own negligence, intentional misconduct, or violation of law. XYZ shall notify ABC within 7 days after XYZ knows or reasonably should know of a claim for loss or expenses covered by this paragraph. Notice shall be in writing and may be by email. Upon receiving notification, ABC may choose and retain legal counsel, but may not settle any litigation without the written consent of XYZ if settlement imposes a penalty or limitation on XYZ, admits XYZ’s fault or does not fully release XYZ of all liability. XYZ may retain its own counsel at its own expense. ABC and XYZ shall cooperate with each other in good faith on all claims.”

           I think you probably all get the point. Indemnification provisions do not have to be so long-winded, confusing and ambiguous. Let’s keep it short and sweet so non-lawyers and even lawyers can actually understand what they mean.

 

Cooley Law School’s Troubles Are Good News For Michigan Businesses

Cooley Law School’s Troubles Are Good News For Michigan Businesses

By Bill Pilchak – 10/21/14

           I take no glee in Cooley Law School’s ongoing reports of bad news, even though they recently announced an affiliation with Western Michigan University, bitter rival of my alma mater, CMU. After all, La Toya Palmer of our firm is an award-winning graduate of Cooley. However, as early as July, Cooley announced that it was cutting faculty and staff positions in response to decreased enrollment and that it would not be enrolling a class at its Ann Arbor Campus this year. Then, last Thursday, Cooley announced that it would actually close its Ann Arbor branch.

          Unless the reader is a parent with a child aspiring to law school despite lukewarm grades, most businesspeople should be happy about the news about Cooley. One of the reasons for the current employment litigation feeding frenzy is an overabundance of lawyers. There will always be some lawyers who specialize in suing employers. Those who consult with us know that our goal when consulting on discipline and discharge is to include points that will tell successful, experienced employment lawyers that “this one” is not worth their effort. (It’s a bit like when Ben Obi-Wan Kenobi tells the storm trooper: “These aren’t the droids you’re looking for.”) Ideally, after a terminated employee has been referred to one or two experienced plaintiff attorneys and told they have no case, the person would stop searching out lawyers.

          However, an overabundance of attorneys fouls up that strategy in several ways. If the first attorney who reviews the case has no work on his/her desk, even a bad case might be “worth their effort,” because they are not giving up better, more profitable work by turning it down. Worse, if that attorney takes any work that comes along and has no experience in employment law, he/she may not know (let alone advise the prospective client) that the client has no case. Finally, if the employee visits one or two experienced lawyers who don’t take the case and there is still a line of hungry (i.e., desperate) lawyers ready to review the file, eventually one may take the “bad” case. As all who have been sued know, it still costs money to defend worthless lawsuits.

          It is worth putting Cooley’s production of lawyers into perspective. Cooley’s website states that it admitted 1129 students in its 2014 class. Assuming the Florida campus accounts for 20% of those students (although Cooley says Florida residents make up 6% of its applicants), that means Cooley admitted 903 students to its Michigan campuses in 2014. By contrast, University of Michigan Law School enrolled 318 freshmen this year, University of Detroit Mercy enrolled 331 students, and MSU admitted 501 students. For some reason, Wayne State Law School has not posted its 2014 data (as required), but it admitted 269 students in 2013. We will assume that WSU did not admit appreciably more students in 2014.

           This means that the four “traditional” and mostly non-profit law schools admitted 1419 law students in 2014, and for-profit Cooley admitted 903.[1] Not only is Cooley responsible for greatly inflating the number of lawyers in Michigan, but it extends the prospect of a law degree to students that would not qualify for admission in traditional schools. The median Law School Aptitude Test (LSAT) score for Cooley students was 145, vs 168 for U of M, 157 for MSU and WSU, and 150 for U of D. Those scores may not seem significant until one looks at the percentiles:

Law School Median LSAT Score Is at the X percentile
University of Michigan 168 95.9%
Michigan State 157 70.9%
Wayne State 157 70.9%
University of Detroit Mercy 150 44.3%
Cooley Law School 145 26.1%

          Essentially, Cooley dropped the intellectual bar by 18.2% for admission to law school in order to collect tuition from its 903 (or more) freshmen. For years, it has been flooding the state with attorneys that would not have been admitted to practice if it did not exist. Thankfully, less than half of those with degrees from Cooley typically pass the bar exam:

 

   Law School 2013 Bar Passage Rate
University of Michigan 94%
Michigan State 74%
Wayne State 67%
University of Detroit Mercy 52%
Cooley Law School 43%

           Law school applications have been dropping in Michigan and across the country for the past decade. In fact, law schools applications dropped 61.5% since 2002-2003. Several reasons account for that. First, so many law students graduate with huge debt and no prospect of a legal job, that applicants have been scared off. Some sources attribute the decline to the disclosures required by the American Bar Association, including the bar exam passing rate.

           As I noted, LaToya of our firm attended Cooley and received national recognition for her skills. Moreover, I have practiced against some very talented Cooley grads. So, my point is not that Cooley shouldn’t continue to train lawyers in Michigan. Instead, I merely suggest that they cut back to the admission levels of other schools. While that may result in ½ the tuition income it generates, Michigan businesses will not have to “feed” an extra 400-500 attorneys infused into society year after year after year. The closure of Cooley’s A² campus is a step in the right direction, a sign that market forces are prevailing.

 [1] When MSU’s law school was known as “Detroit College of Law,” it was a for-profit institution. Its present status is unclear.

Ebola At Our Doorstep: The Employer’s Responsibility

By: Dan Cohen – 10/14/14

          The first Ebola death on U.S. soil have all Americans wondering whether America is up for the challenge of stopping the spread of this dreadful disease. Although I am confident we can slow the spread of Ebola, I am not optimistic at all that we won’t have more cases. Let’s face it: we have a porous border; a government that places as much priority on our international reputation as it does our national security, and a population that has grown way too complacent with most everything that goes on! Does anybody really think screening passengers at five airports will be adequate, or do others like me think stopping trespassers from getting on to the White House grounds would have seemed far easier.

          Enough politics for now! I want to focus on the question that could come up if more Ebola cases occur here. What is an employer’s responsibility or exposure here? Is Ebola a disability under the Americans with Disabilities Act? Would an employee with Ebola pose a direct threat to the safety of the workforce? These are questions that have probably not been contemplated by the ADA. Even though it is of short duration if the infected individual survives the disease, which argues it should not rise to the level of an ADA disability, I will assume that the virus would gain status as a disability or at least create the perception of one. The direct threat defense certainly sounds like it would come into play, and would be my argument why an employer does not have to allow the threat into its workplace. I would have little difficulty standing in front of a court or jury and arguing that my client had no obligation to accommodate an employee returning to work from a three week vacation in Liberia. I would argue that the employee posed a direct threat to the safety of the other employees, and the consequences of not airing on the side of caution could be deadly.

          Even though my argument would likely be based on “stereotypes and assumptions” that ordinarily would be improper under the ADA, most would say the employer was taking the moral high road of protecting its other employees. Of course, if the employer placed the returning employee on a paid leave for the duration of the 21 day incubation period of Ebola, the employee would have no wage loss damages. A work from home accommodation might be an option as well during the incubation period. These alternatives make far more sense to me then taking no precautions and just welcoming the employee back into the workplace.

          Now, let’s shift gears and talk about the airplane cleaning crew that went on strike in New York. The NLRA allows employees to engage in safety strikes even where a collective bargaining agreement contains a no strike provision. While this is a rarely used exception to the general rule that an employer can discipline and even discharge an employee who strikes in violation of a collectively bargained no strike provision, I would suggest that employees who clean airplanes coming from West Africa and even Europe might have a valid safety concern. Moreover, in the absence of a contractual no-strike provision, an orchestrated safety strike is probably protected concerted activity and participants have the protection of Section 7 of the NLRA. Employers faced with this dilemma must refrain from overreacting and firing the protesting workers. Replacement workers are a possibility, but don’t be surprised if finding replacements is a challenge. I don’t know about you, but I am not rushing to respond to an ad to clean airplanes returning to the U.S. from international flights. Employers may just have to spend extra money to provide their employees with additional personal protective equipment.

          I hope this is merely an academic exercise for all of us, and that we are able to contain the Ebola disease, or better, eliminate the threat altogether.

Two Heads Are Better Than One!

Two Heads Are Better Than One!

                                                                         

Would Employers Pay A Bit More In Arbitration Fees For Improved Justice?

          Employers rejoiced when the U.S. Supreme Court announced its decision in Circuit City Stores v Adams in 2001, holding that arbitration agreements with employees were generally enforceable in civil rights actions. They welcomed the opportunity to avoid runaway juries and multimillion-dollar verdicts.

          Since 2001, Circuit City has disappeared from the landscape and employers everywhere are pulling back from using or enforcing arbitration agreements. Pilchak & Cohen understands why. We have not generally advised clients outside of Wayne County or Genesee County to adopt them.

          The main reason that employers have cooled to arbitration agreements is that they have learned that every case “goes to trial” in the arbitration process. Conversely, in litigation, P&C generally has a viable summary judgment theory at the close of discovery. While arbitration agreements and even rules of the arbitration forum may provide for a dismissal upon motion if there is a legal defect in the plaintiff’s case, dismissals seldom occur for one main reason: the arbitrator gets paid an admirable hourly rate for sitting through the proofs at trial and then writing an opinion. Attorneys often become arbitrators because corporate clients are not knocking down their door. They fill their otherwise open schedules and barren coffers by sitting as arbitrators. It is thus against the arbitrator’s financial interest to dismiss a case early on.

          Employers have grown to dislike arbitration for other reasons as well: Arbitrators must deliver a sufficient (i.e., artificially high) percentage of opinions in favor of plaintiffs, or their reputation will become known and plaintiffs will not agree to pick them on future cases. Additionally, employers are sometimes saved in litigation by appellate decisions, which are generally not available in arbitration. Finally, even when one picks a management-side attorney as an arbitrator, some have a nasty, well-known, habit of second-guessing his/her competitor’s strategy by delivering a verdict against the competitor.

          Given all of the above, P&C was interested in one item of chatter discussed by Worklaw® Network attorneys recently, regarding an arbitration agreement that provided for one arbitrator to be selected for discovery and dispositive motion proceedings and a second arbitrator to be selected if the dispositive motion was denied and the case went to trial. Wow! That certainly takes away the financial incentive for the arbitrator to deny a dismissal motion. The other problems may remain, but the concept is interesting enough to discuss further.

          Some have suggested that the two-tier process would increase costs. I’m not so sure. Arbitrators don’t need to know the history of discovery disputes to prepare for the “trial.”

          Certainly, there may be other hurdles. Arbitral forums have established (usually exorbitant) fees based upon their current model, and they may balk at a second round of selections, or increase their fees even more for the extra work. Moreover, the agreement would have to be carefully drafted, and not many models exist. Finally, one would have to flyspeck the Federal Arbitration Act and Michigan’s new arbitration act to see if any provisions preclude the two tier system.

          Nevertheless, it’s an intriguing idea that P&C would be willing to explore further for any company interested in an alternative to jury trials and the current arbitration system.