October 2009 - Volume 7 - Number 11
Section-Sponsored Events
2009 Fall Meeting November 20-21, 2009 Washington, DC Upcoming Committee MeetingsBusiness Bankruptcy Committee 2009 Fall Meeting October 18-21, 2009 Las Vegas, NV Commercial Finance/Uniform Commercial Code Joint 2009 Fall Meeting November 4, 2009 Las Vegas, NV Banking Law Committee 2009 Fall Meeting November 12-14, 2009 Washington, DC LLCs, Partnerships and Unincorporated Entities 2009 Fall Meeting November 13-14, 2009 Washington, DC Mergers and Acquisitions 2009 Fall Meeting December 4-5, 2009 Washington, DC 
Recent Developments in Delaware Corporate Law and LLCs October 14, 2009 | 1:00 PM EST Webcast/Teleconference Multi-site 
Securities Enforcement in the New Environment October 1, 2009 | 11:00–1:00 PM EST Webcast/Teleconference Multi-site The Fourth Annual National Institute on the Securities Fraud October 15-16, 2009 National Institute Ritz-Carlton Washington, DC Anatomy of a Workout October 15, 2009 | 1:00–2:30 PM EST Webcast/Teleconference Multi-site ERISA Litigation Hot Topics October 16, 2009 Webcast/Teleconference Multi-site 20th Annual Health and Welfare Benefit Plans National Institute October 19-20, 2009 National Institute Ritz-Carlton Hotel, Pentagon City Arlington, VA The 12th Annual National Institute on the Banking Law Basics October 21-23, 2009 National Institute Boston University School of Management Boston, MA 24th Annual National Institute on Compenstion for Executives and Directors October 21-23, 2009 National Institute New York Helmsley Hotel New York, NY The Third Annual National Institute on the Investment Management Basics October 28-30, 2009 National Institute Boston University School of Management Boston, MA The 14th Annual National Institute on the Negotiating Business Acquisitions November 12-13, 2009 National Institute Windsor Court Hotel New Orleans, LA For information on future programs, check out the Section Meetings Calendar. 
For more information on upcoming Committee Meetings contact ruppr@staff.abanet.org. |
Message from the Chair, Nathaniel L. Doliner
Our Section's Fall Meeting continues to become increasingly important,
especially during these momentous and turbulent times. We will have more
government and other officials than ever at this year's Fall Meeting, on
November 20 and 21, from the SEC, the Public Company Accounting Oversight
Board (PCAOB), the Financial Industry Regulatory Authority (FINRA), the
Federal Reserve, Department of the Treasury, Department of Commerce and
others. Many of our Section's committees will hold meetings and
present programs at the Fall Meeting. They include:
- Audit Responses
- Business and Corporate Litigation
- Corporate Governance
- Employee Benefits and Executive Compensation
- Federal Regulation of Securities
- Government Affairs Practice
- Governmental Corporations
- Law and Accounting
- Legal Opinions
- Professional Responsibility
- Project Finance
- Securitization and Structured Finance
Finally, it is with great sadness I report that Elliott Goldstein of Atlanta, a very esteemed member and leader of our Section and the corporate bar, has passed away. I thank Tom McNeill, Mr. Goldstein's law partner, for the following very fitting tribute to Mr. Goldstein.
Nathaniel L. Doliner
Chair, Business Law Section
Practice Points
Note from the Editor
eSource is interested in practice pointers that you want to share with the members of the Business Law Section, and so we are expanding the scope of this section of eSource to include member submitted practice pointers. These member submitted practice pointers will be in addition to featuring interesting and timely programs and materials produced by the committees of the Business Law Section. Please send your submissions to the eSource editor via email. · · · · ·
All submissions must be through email and must include the author's full contact
information and affiliations. The eSource editor has sole discretion regarding the
decision to publish any member submitted practice pointer. Authors of selected
submissions must sign the ABA's standard copyright release prior to publication.
| 1. |
Navigating Private Placements Outside the Safe Harbors: Rethinking the Requirements.
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Since the Supreme Court's decision in the Ralston Purina case in
1953, practitioners have been forced to think about how to affect private
placements outside the successive safe harbors provided by case law and by
the SEC through rulemaking. The written materials that this panel prepared
are superb, including a paper on the integration of private and public
offerings. The panel of highly experienced practitioners and a
representative of the SEC Division of Corporation Finance explore the
subject in depth.
| 2. |
Jones v. Harris - The Supreme Court Considers Fund Fee Litigation for the First Time.
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The first case regarding the "excessive fee" provision added in
1970 by Congress to the Investment Company Act of 1940 was decided by the
U.S. Court of Appeals for the Second Circuit in the Gartenberg case
in the early 1980s. Since then, mutual fund boards of directors have
followed the procedural path set forth by the Second Circuit in
Gartenberg and have not lost a single litigated case in the past
three decades. The surprising decision of the U.S. Court of Appeals for
the Seventh Circuit in Jones v. Harris, which repudiates
Gartenberg, will be heard by the Supreme Court this Fall. The
materials include outlines by practitioners as well as the decisions and
briefs below in Jones v. Harris. The panel consists of highly
experienced practitioners, counsel to one of the litigants, and current and
past representatives of the SEC Division of Investment Management.
| 3. |
LLCs - Important Case Law Developments 2009.
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The written materials provide a comprehensive review, broken down in very
discrete categories, of the important case law developments in the past
twelve months regarding LLCs. For those who are deeply interested in the
nuances of LLC organization and operation, this is a "must read and
listen to" program. The experienced panelists discuss a number of the
several more important cases in some depth.
Web Store Featured Product:-
Annual Review of Business and Corporate Litigation 2009
The 2009 edition of the Annual Review of Developments in Business and Corporate Litigation is a two-volume set of
27 chapters spanning a broad range of substantive areas within business law. It provides an overview of business and
corporate litigation topics that have emerged during the past year. As in previous editions, leading authorities in more
than two dozen specialized areas review and comment on key issues.
| 4. |
Private Equity Fund Issues in the Current Market: Defaulting LPs, Carried Interest Renegotiation, and Taxation of Carried Interest.
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This unusual program touches on everything a practitioner might want to
know: how is Congress attempting to tax carried interest as ordinary
income and not capital gains, how is the new offering regime in Canada
going to work, how and why is Congress considering removing the private
adviser exception from registration under the Investment Advisers Act of
1940, and what are the considerations in structuring private equity deals.
The experienced panel utilizes the roundtable format to invoke a more
informal atmosphere during the discussion.
Web Store Featured Product:-
Carried Away: A Discussion of the Current Tax Treatment of "Carried" Interests and the Prospects for Change
In this program, panelists discuss a wide array of issues regarding "carried" and other compensatory interests, including their tax treatment under current law and administrative guidance, proposed regulations, and proposed legislation.
| 5. |
Seeking Perfection - The Proposed Revisions to UCC Article 9.
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The materials trace the experiences that have been encountered since the
2001 revisions to UCC Article 9 up through the amendments that were
formally presented in July 2009 in Santa Fe to the National Conference of
Commissioners on Uniform Laws. The three highly experienced practitioners
on the panel use an informal speaking style to keep the discussion lively,
relevant, and entertaining.
Web Store Featured Products:-
Forms under Article 9 of the UCC, Second Edition
This updated edition of Forms under Article 9 of the UCC, 2nd edition discusses how to simplify
documentation of secured transactions. Combining the most useful features of traditional forms
collections and analytical references.
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The 8th Annual Commercial Law Developments Update
This 8th Annual Commercial Law Developments Update is a comprehensive review of recent critical developments in commercial law. These developments include recent decisions under UCC Article 9 as well as those involving guaranties, letters of credit, intellectual property, and consumer law. -
Practice Under Article 9 of the UCC
Practice Under Article 9 of the UCC is a comprehensive guide for lawyers facilitating secured transactions.
| 6. |
Regulation of Lobbying and Other Political Activities.
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This program examined the emerging trend of increased restrictions on lobbying activity
and campaign finance. Panelists discussed how to navigate state and federal laws and
explained how and why restrictions are emerging on the state and federal level. Also,
the program focused on restrictions in the new administration, pay for play crackdowns
in the states, and tips from a state lobbyist on the ground.
The Business Lawyer
Published quarterly, The Business Lawyer is the premier business law journal in the country, circulating to approximately 60,000 readers.
It contains articles of significant interest to the business lawyer, including case law analysis, and developing trends.
(Note: access to articles requires membership in the ABA Business Law Section -- to join, click here.)
- Disclosure Obligations Under the Federal Securities Laws in Government Investigations
This Article focuses on the potential right of a business successor to assert various elements of a predecessor's attorney-client relationship and the implications to practitioners of a successor's ability to do so. An attorney-client relationship that the courts permit to be asserted by a business successor is referred to in the Article as a "transpositional" relationship. The Article examines in what context a successor may (1) enforce the duty of confidentiality of the predecessor's counsel; (2) assert the predecessor's attorney-client privilege; (3) disqualify the predecessor's counsel under the principles of Model Rule 1.9, or its equivalent, on the ground that such counsel should be viewed as the successor's former counsel for purposes of the Rule; and (4) assert a malpractice claim against the predecessor's counsel based exclusively on services provided to the predecessor. The Article concludes with some general observations about the decisions examined, the need of transactional lawyers to be familiar with the principles that courts have relied on, and transaction provisions that might be used to blunt the surprising, and arguably unfair, results that this line of decisions can sometimes produce. Print Article
- Contracting to Avoid Extra-Contractual Liability—Can Your Contractual Deal Ever Really Be the "Entire" Deal?
Although business lawyers frequently incorporate well-defined liability limitations in the written agreements that they negotiate and draft on behalf of their corporate clients, contracting parties that are dissatisfied with the deal embodied in that written agreement often attempt to circumvent those limitations by premising tort-based fraud and negligent misrepresentation claims on the alleged inaccuracy of both purported pre-contractual representations and express, contractual warranties. The mere threat of a fraud or negligent misrepresentation claim can be used as a bargaining chip by a counterparty attempting to avoid the contractual deal that it made. Indeed, fraud and negligent misrepresentation claims have proven to be tough to define, easy to allege, hard to dismiss on a pre-discovery motion, difficult to disprove without expensive and lengthy litigation, and highly susceptible to the erroneous conclusions of judges and juries. This Article traces the historical relationship between contract law and tort law in the context of commercial transactions, outlines the sources, risks, and consequences of extra-contractual liability for transacting parties today, and surveys the approaches that various jurisdictions have adopted regarding the ability of contracting parties to limit their exposure to liability for common law fraud and misrepresentation. In light of the foregoing, the authors propose a series of defensive strategies that business lawyers can employ to try to limit their clients' exposure to tort liabilityarising from contractual obligations. Print Article
- Business Successors and the Transpositional Attorney-Client Relationship
This Article focuses on the potential right of a business successor to assert various elements of a predecessor's attorney-client relationship and the implications to practitioners of a successor's ability to do so. An attorney-client relationship that the courts permit to be asserted by a business successor is referred to in the Article as a "transpositional" relationship. The Article examines in what context a successor may (1) enforce the duty of confidentiality of the predecessor's counsel; (2) assert the predecessor's attorney-client privilege; (3) disqualify the predecessor's counsel under the principles of Model Rule 1.9, or its equivalent, on the ground that such counsel should be viewed as the successor's former counsel for purposes of the Rule; and (4) assert a malpractice claim against the predecessor's counsel based exclusively on services provided to the predecessor. The Article concludes with some general observations about the decisions examined, the need of transactional lawyers to be familiar with the principles that courts have relied on, and transaction provisions that might be used to blunt the surprising, and arguably unfair, results that this line of decisions can sometimes produce. Print Article
- Gheewalla and the Director's Dilemma
Did North American Catholic Education Programming Foundation, Inc. v. Gheewalla change anything? The Delaware Supreme Court ruled in 2007 that corporate directors owe no direct fiduciary duty to creditors in insolvency, but the bar seems to have met the case with a collective shrug, concluding that the preservation of a creditor's right to pursue derivatively on behalf of a distressed corporation a claim for breach of fiduciary duty leaves intact the "fiduciary duty to the corporate enterprise" theory that informed pre-Gheewalla advice.
This Article posits that this general view is wrong. In the vicinity of insolvency, two oft-cited principles—that a board should strive to maximize enterprise value, and that it should protect the shareholders—sometimes are in conflict. In a period where insolvency deepens, a discounted sale may maximize enterprise value, even as it cuts off a less likely, but real prospect of an equity-preserving restructure.
This Article argues that "duty to the enterprise" theory is incoherent and ignores the reality of business valuation, which is that all prospects are uncertain. The necessary consequence of Gheewalla,construed in light of other relevant authorities, is that where any business strategy may generate a return for equity holders, the board must favor that strategy and reject alternatives, even if in the board's business judgment the strategy is unlikely to succeed, and alternatives, on a risk-adjusted basis, would maximize the enterprise value. Print Article - Are Corporate Officers Advised About Fiduciary Duties?
This Article reports the results of an empirical study of whether and how in-house corporate counsel advise corporate officers about fiduciary duties. The fiduciary duties of officers long have been neglected by courts, scholars, and lawyers, even though executives play a central role in corporate success and failure. The study's findings, organized by type of company (public or private), size, and attorney position, show several interesting patterns in advice-giving practices. For example, fewer than half of all respondents provided advice to officers below the senior-most rank. The results raise the possibility that, unlike directors who may overestimate their liability exposure, certain shortcomings in giving advice to officers may cause them to underestimate personal liability exposure and engage in more risky behavior than is desirable for the company itself. The Article also offers recommendations for improved practices in advising officers about their duties. Print Article
- The Uniform Commercial Code Survey
The most significant legislative development in commercial law during 2008 was the establishment by the Uniform Law Commission of the Joint Review Committee on U.C.C. Article 9 with a charge to propose "specific amendments or corrections" to Article 9. The committee has a narrow focus, looking particularly at areas where non-uniformity has arisen, and expects to complete its task in 2009. Print Articles
Committee Spotlight
To learn more about or join the committees that contributed to this month's practice points, just click on the committee name below.