Business and Financial Training for Judges

Wow -- over a week since I posted. It has been a whirlwind week of depositions and court appearances. I attended an oral argument this morning (I was representing one of the parties but did not do the talking). I think I need to process this one some before I blog about it specifically.

But it reminded me of an argument I did in another court several months ago, that involved some issues of corporate law. Part way into the argument the judge said to me (in substance), "when I was in private practice, I was a [totally different kind of] lawyer, and I don't know anything about this stuff." I was arguing for summary judgment, which meant I thought the evidence was so clearly in my client's favor that we should not have to go to trial. I had the virtue of being right. Nevertheless, my motion was denied -- with no written opinion, just "denied" written in the margin. So I guess we're going to try the case. The judge offered to have a different judge hear the trial. Gee, thanks.

Addressing this problem is one of the virtues of the Massachusetts Business Litigation Session, where the judges are specifically chosen for their familiarity with business issues. But I think all judges should be getting training in matters like reading financial statements, fundamentals of accounting, the structure of limited liability entities, and the like. These issues pervade our society and a lack of knowledge about them is a big deal in many cases, even ones that might not be considered traditional "business" litigation.

What's the Scope of the Fiduciary's Duty?

Discussions of the scope of a fiduciary duty often consist of vague generalities -- duty of loyalty, duty of care . . . So what do they mean exactly? That's a hard question to answer, hence the generalities.

You can drill down into examples, which are highly context dependent. If you are the president of an online gaming company, the specifics of your duties are different than if you are a partner in a real estate venture. The president owes duties to the Company -- but what are his duties to an individual shareholder? The answer is much different if the Company is publicly traded and there are a tens of thousands of shareholders than if it is closely held and there are four.

Because the president of the gaming company is in the online gaming business, his duties will include a duty not to take advantage of opportunities to compete with his Company. The real estate partner could start up a gaming company without violating his duties to his real estate partners. The Company president could invest in real estate without violating any duties. Reverse those situations, however, and both might be in hot water.

To whom the fiduciary owes the duty will affect the scope of the duty. I actually deposed a trustee the other day who asserted under oath that he owed no duty to his trust beneficiary, but instead owed it to himself and his closely held company. I guess he feels he owes himself a duty of the highest loyalty and care, and so when there's a conflict between his interests and the trust beneficiary's, his duty to himself is the trump card. No, wait, that is 100% backwards and contrary to every decision on point ever that I'm aware of. Guess I'm in pretty good shape on that case.

Off Topic

I watched Blade Runner again last night for the bazillionth time. Absolutely my favorite movie of all time. (Other contenders, The Three Musketeers, the Four Musketeers, and Excalibur). Anyway, the "what is real here" thing that drives all of Philip K. Dick's stuff always blows me away. And I absolutely love Rutger Hauer's delivery of the Roy Battie death scene.

My favorite movie lines of all time, far and away: "I’ve seen things you people wouldn’t believe. Attacked ships on fire off the shoulder of Orion. I watched c-beams glitter in the dark on Tanhauser Gate. All these moments will be lost in time like tears in the rain." Wow. Great content. Awe-inspiring delivery. Rutger was the best in his day.

Nothing to do with the main topic of this blog, but Rutger deserves way more props than I think he gets. Other personal favorite, under-rated actor, Oliver Reed (who has nothing to do with Blade Runner, but everything to do with the Musketeer movies).

I love the Edward James Olmos finale too --"It's too bad she won't live, but then again who does." (Harrison Ford falls in love with a replicant -- talk about brilliant.)

Hardball tactics

Here's a recent decision dealing with some pretty hardball tactics: National Economic Research Assocs., Inc. v. Evans, 21 Mass. L. Rep. 337, 2006 Mass. Super. LEXIS 371 (Aug. 3, 2006) (Gants, J.).

After a consultant left his firm, his former employer engaged a forensic expert to search the hard drive of the consultant’s company computer. The expert retrieved a number of e-mails between the consultant and his attorney. The company's lawyer had the expert hold them pending a court order (which is the right thing to do), and then went to court to get an order that the attorney-client privilege had been waived and the company was entitled to review them.

The theory? They were still in the hard drive only because the computer automatically created a "screenshot" when the employee was reading them. They weren't on the company e-mail system, and the employee had methodically deleted all his personal stuff from the company computer when he left. The forensic expert had to be pretty darn forensic to get these things. The court didn't go for it, which strikes me as completely the right outcome. Just the fact that the company was willing to go to this length to try and get at these e-mails gives one pause.