A Complete Guide to Managing the In-house Counsel Function in the USA

Discover how leading in-house counsel in the United States are managing their legal function and

facing up to external regulatory pressures from within the USA and abroad

CONTENTS

General Counsel: Challenge to Stay Focused in a World of Organizational Distractions, Limitations and Restrictions

Bruce Ortwine, Joint General Manager & General Counsel, Sumitomo Trust & Banking Co

The General Counsel of any organization plays a vital role in the success—or failure—of the organization, and his or her responsibilities legitimately span the full spectrum of that organization’s activities and operations. Because of the unique role that the General Counsel plays—trusted and ethical advisor to management and independent ombudsman for the organization and its owners—the General Counsel must always remain focused on the priorities of the job and try to minimize the inevitable distractions, limitations and restrictions that he or she faces on a daily basis. To remain focused may be a critical challenge to the General Counsel, yet it is a challenge that must be successfully addressed.

Shhh - the Internet is listening: Has technology eroded Attorney-Client Privilege and what can You do about it?

Vince Catanzaro, Senior Counsel, Global Discovery Manager, E. I. du Pont de Nemours and Company, & Karine Tatoyan, E. I. du Pont de Nemours and Company

The year 1912 marked the first time that mail was delivered by airplane. Now, 100 years later, mail is sent with the click of a button, instantly delivered to a designated recipient. The advent of the Internet and its global immersion has rapidly changed the means by which society communicates. Communications that were once personalized in handwritten notes and materialized through poetic phrases has evolved into a culture of electronic communication shortened by acronyms such as “LOL,” “TTYL,” and “BTW.” With almost 2.3 billion Internet users, communication through electronic media has become commonplace, with each message transmitted nonchalantly through cyberspace.

Making Your Business One of the Most Ethical Companies in the World

Greg Coplans, Senior Vice President, Corporate Affairs, Hitachi Data Systems Corporation

On March 15, 2011, Hitachi Data Systems (HDS), a wholly owned subsidiary of Hitachi, Ltd. in Japan, was recognized by the Ethisphere Institute as one of the “2011 World’s Most Ethical Companies.” This award was given to HDS after Ethisphere had spent approximately six months auditing the HDS compliance program and conducting interviews with HDS employees all over the world. In 2005, the HDS compliance program consisted of certain policies (e.g., Competition, Anti-Bribery, Code of Conduct, etc.), a reporting hotline and some in-house training. However, after the development of a concerted initiative of policy and program development, training, strengthened internal controls, compliance tools and internal audits, HDS has been publicly acknowledged as one of the most ethical companies in the world. What practical steps can the reader take to enhance his or her company’s compliance program and build a strong ethical culture in their company?

FCPA, UKBA and Other Four-Letter Words: Anti-Corruption Laws in a Global Economy

Machua Millett, Senior Vice President & Susan Friedman, Senior Vice President & Employed Lawyers Practice Leader, Marsh Inc

Few subjects receive as much attention in legal, compliance and accounting circles these days as the United States Foreign Corrupt Practices Act (the “FCPA”), the United Kingdom Bribery Act (the “UKBA”) and other foreign and international anti-corruption laws. However, while familiarity may breed contempt, presumed familiarity with anti-corruption laws is more likely to breed a regulatory investigation, subsequent regulatory proceeding, follow-on class action and derivative suits, and uninsured legal, accounting, consulting and settlement bills in the tens of millions to billions of dollars. The amount of attention paid to FCPA compliance and investigation defense issues is necessary because the incidence of anti-corruption issues and the costs of developing policies and procedures, conducting investigations and resolving regulatory inquiries and related court actions continues to escalate.

Key Steps to Establish an Effective Anti-Corruption Programme

Debra Kuper, Vice President, General Counsel and Corporate Secretary, AGCO

The 1960s and 1970s were transformative years for the US. The country was in the midst of a chaotic armed conflict overseas. Civil rights were causing turmoil on city streets. A political scandal resulted in the president’s impeachment. The environment was under assault. Terrorism was on the rise globally, including at the 1972 Summer Olympics in Munich. To top it off, the US Securities and Exchange Commission (SEC) charged more than 400 major US corporations with bribery. In the end, these companies admitted bribing foreign government officials, politicians and political parties to obtain or retain business. Shortly thereafter, the US Congress enacted the Foreign Corrupt Practices Act of 1977 (FCPA).

Managing the Decline - The Role of the General Counsel in a Faltering Company

Mitch Baruchowitz, General Counsel, Abadi & Co. Group

In the current complex business environment, the vast majority of companies who must sell themselves to preserve some remaining value, or those who fail to sell and experience either a Chapter 11 or Chapter 7 bankruptcy, arrive there through a series of events rather than sudden business failure. Whether it is the failure of management to contain costs over a long term, or the loss of a critical client that causes a business to fail, the General Counsel’s role in a faltering company is essential to successfully preserving value and preparing the company for a bankruptcy that can return value to creditors and if truly successful, even deliver value to shareholders. This must all be done at a time when resources for outside professionals are limited and even retaining company employees could prove difficult. Quite simply, the GC many times becomes the center of activity during a turbulent time and forethought and preparation can be the difference between being the eye of a storm or merely part of the hurricane.

Role of In-House Counsel in Transnational Operations

Philip Kessack, Senior Counsel, Americas Business Lines, AECOM Technology Corporation

A fundamental role of in-house legal counsel is to assist the operations teams in identifying, assessing and tailoring their procedures to ensure compliance with applicable requirements and to address the risks associated with the business and legal environment in which the company’s products are to be sold or services are to be performed. This role is especially critical for transnational companies who are looking to sell products or perform services in a foreign jurisdiction (Host Countries). Failure to invest the necessary time, money and effort to identify and understand the unique conditions and requirements impacting such work in a given Host Country not only jeopardizes the profitability of the company, but can expose the company to substantial civil and criminal penalties for failure to comply with the applicable requirements.

Why Fair and Predictable Patentable Utility is Critical to Investments and Innovation

Arvie Anderson, Assistant General Patent Counsel, Eli Lilly and Company

Investment in innovation and procurement of patent protection within any jurisdiction is justified by reliance upon fair and predictable patent protection. For new investment within any particular jurisdiction, innovators expect that historically well-settled legal doctrine pertaining to patents that conform to international norms and treaty obligations will remain consistent over time. Applicants also expect that countries will not “move the goalpost” of patentability requirements at some point after patent filing. Innovators have therefore been generally welcoming of patent harmonization which supports efficient and predictable patent protection in the multitude of jurisdictions in which they seek protection. Harmonization is predicated on the concept that an applicant can file a single application which will meet the patentability requirements of most major jurisdictions.

R&D Based Pharmaceutical Companies Vs. Generic Companies: A False Dichotomy?

Sharon Reiche, Corporate Counsel, Intellectual Property Policy, Pfizer Inc

As recently as a decade ago, there was a clear line separating R&D-based pharmaceutical companies and generic companies; on one side were innovator pharmaceutical companies focused on developing innovative new medicines, and on the other were generic companies focused on copying those medicines once they lost exclusivity. That clear division, however, has become blurred in recent years. Due to various factors, many innovative pharmaceutical companies are seeking new revenue opportunities by either cultivating an in-house generics business or partnering with generic companies to manufacture their branded products; generic companies, which primarily focused on generic medicine production, are increasingly beginning to recognize the benefits of innovation and the more lucrative market for these products. The question then becomes, are partnerships/collaborations among the two industries and these ‘hybrid’ pharmas now the way of the future?  And if so, can this new model, supported by a strong intellectual property framework, be used to spur local innovation in emerging markets to tackle the burden of diseases endemic to these countries?

A Discussion of Practical Steps to Harmonize Data Protection Rules Globally

Shahab Ahmed, Director, Legal and Corporate Affairs, Microsoft Corp

While cloud computing holds tremendous potential to drive efficiency, cost-savings, innovation and growth in both public and private sectors, there are certain obstacles to rapid adoption around the world in both of these sectors. This paper identifies one of the key obstacles to achieving the full business and economic benefits of the cloud concerns about data security and privacy and the lack of common, globally accepted mechanisms for dealing with these issues, while at the same time enabling the free flow of data across borders. Both of these data security and the free flow of data across borders are criteria of a healthy cloud computing environment. Many countries and regions are struggling to balance these requirements, and the result has been a diverse and complex set of rules and regulations with which it is extremely difficult and costly for multi-national companies to comply. Government efforts are underway in every region of the world to solve these challenges. The paper explores constructive ways for industry and government to collaborate on finding a solution. In particular we identify and discuss an international data security technical standard that is emerging as a potential reference template for harmonizing data protection laws globally.

e-Discovery – tips to a successful strategy:

Greg Mason, Co-founding  Partner, Forensic Risk Alliance

The wealth of electronic information generated today makes pre-litigation planning for corporate lawyers and their legal advisors more important than ever before. The huge volume of data to identify, collect, store, process, search and analyse triggers fear of high costs and logistical problems before the data is actually used to establish fact patterns or put together arguments.

In the context of cross-border serious economic crime – regulatory action, internal investigation or simply “follow- on” civil litigation – data volume is just the first of the the challenges that lie ahead. Still be to wrestled with are a number of European and US legal hurdles: European blocking statutes and data privacy/secrecy laws, privilege differences from country to country and the logistics of managing enormous amounts of data without inadvertently transferring it across jurisdictions or to the ‘wrong’ party.

Recent Trends in US Mergers and Acquisitions Litigation

Kenneth R. Thompson, II, Senior Vice President and Global Chief Legal Officer, LexisNexis, USA & Sam Snider, Vice President & Lead Acquisition Counsel, LexisNexis

In 2010 mergers and acquisitions (‘M&A’) activity rebounded from recent lows with U.S. activity up 16.3% in 2010 over 2009.  With this rebound came a number of new new structural developments, which generated a number of M&A-related caselaw developments. When combined with a wave of decisions arising from mid-crisis transactions, 2010 was an active year for M&A caselaw on a number of fronts.

This article updates our article ‘Recent Trends in US Mergers and Acquisitions:  Litigation and Regulatory Actions’ published in the Spring, 2010 edition of the International In-house Counsel Journal, for cases decided during 2010.

Utilizing a Legal Technology Platform for Strategic Legal Department Management

Mark Poag, General Counsel, DataCert, Inc.

The enduring economic strife of the past few years has caused an unprecedented shift in the global legal industry and the technology supporting the industry. Legal service delivery models have been revamped more in the past three years than in the past three decades. The need to consolidate and integrate the abundance of disparate systems has never been greater and cost is a significant driver of this change.

In today’s global economy in-house counsel are being challenged to demonstrate the business value of legal services, which involves reducing costs, improving efficiencies, and still remaining competitive. Future success for many lawyers, and the departments they represent, largely depends on their ability to confront today’s challenges and implement new processes that increase efficiency and reduce the impact to the bottom line. These industry changes aren’t temporary trends; rather, they represent a new reality for in-house counsel.

Footnote 61: Abrogating MyMail, Misjoinder in Patent Cases Revived

Tim Wilson, Senior IP Counsel, SAS Institute Inc

One provision of the Leahy-Smith America Invents Act of 2011 (the “America Invents Act”) that has been less noticed is a litigation procedure reform: Section 299 Joinder of Parties. This provision clarifies FRCP 20 for patent cases, making it substantially more difficult to join multiple defendants in a single patent infringement action. I think that this Congressional action may significantly impact the business model of non-practicing entities (NPEs) and potentially limit the Eastern District of Texas as a patent litigation forum of choice.

Attorney-Client Privilege:  Application of the Community of Interest Doctrine Exception to Third Party Communications for Licensor-Licensee and Similar Relationships

Rodney Sparks, Senior Biotechnology Patent Counsel, University of Virginia Patent Foundation & Daniel T. Sharpe, III, University of Virginia Patent Foundation

Attorney-client privilege is usually waived if privileged information is disclosed to a third party. Corporations and universities face complicated privilege issues because of a need to sometimes share privileged information with other entities. The community of interest doctrine is an exception to the general attorney-client privilege in that it allows for disclosure of confidential information to a third party without waiving privilege. However, the doctrine has limited applicability and generally only covers situations where the third party has sufficient community of legal interest with the disclosing party. This article provides a description for in-house counsel as to situations where the community of interest exception can be applied to a third party, particularly regarding patent preparation and prosecution, patent litigation, licensing discussions and negotiations, and intellectual property due diligence for licensing and mergers and acquisitions. The article further provides suggestions for protecting privileged information to reduce the risk that the community of interest doctrine will not be applied.

Lawyers as Negotiators: Hitting the Wrong Targets?

Tim Cummins, Executive Director and CEO, IACCM - International Association for Contract and Commercial Management

The annual IACCM study of the most frequently negotiated terms in business-to-business contracts once again reveals a strong focus on the provisions that deal with risk allocation and the consequences of failure.

Those who negotiate these deals confirm that their focus is often in the wrong place. Indeed, one General Counsel observed: “Having studied this issue, I realize that much of our negotiation is more driven by functional positions than it is by broader business interests”. In other words, business negotiations can result in the negotiation team fighting for things that undermine the interests of their own organization.

How to Keep Your Company from Falling Apart: It's Your Board of Directors. Really.

Mark J. Ohringer, Executive Vice President, Global General Counsel and Corporate Secretary, Jones Lang LaSalle Incorporated

1929 Crash. SEC. Bank Failures. FDIC. Savings and Loan Crisis. FIRREA. Enron/Andersen/WorldCom. SOX. Compensation Abuse. CD&A. Fannie Mae/Freddie Mac. FHFA. Lehman/AIG/Global Financial Crisis. TARP, TALF and Dodd-Frank.

See a pattern?  The history of corporate America is lately more one of failure than success. Some failures resulted from fraud, some from risk not adequately managed. After big failures, there has always been reactive legislation. Yet we all know there will be more excesses, more failures, and thousands more pages of legislation that will still not stop the wrenching downfalls from recurring.

Mitigating Risk in Co-Location Engagements

Yusuf Cassim, Vice President, Intellectual Property, Licensing and Contracts, The Charles Schwab Corporation

Given the state of the economy, b