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American Bar Association

ABA Section of Business Law


Business Law Today

Snap Judgments
By Francesca Jarosz
It ain't easy being global
If you're a law firm, that is. According to the Chicago Tribune, there are differences between the U.S. system and that of London, where firms have heavy central management and lawyers advance through a regimented, 10-year process. Another trick is making the firm's image universally appealing and managing the multinational enterprises.

But these challenges haven't stopped some of the top U.S. firms from trying to take their vast practices overseas. In Chicago, for example, the firm Kirkland & Ellis has established outposts in London and Munich and is looking to venture into Hong Kong. Others have acquired foreign firms as a way of expansion, and many are making it a top priority.
Investigating the investigators
It's a bit ironic that the federal body responsible for keeping an eye on potential foul play in the investment market is getting the once-over itself. The Securities and Exchange Commission, which has taken some heat for its handling of a recent insider-trading case, will be reviewed by Congress' investigative branch, the Governmental Accountability Office, the New York Times reports.

In late October, the GAO accepted the request of Senate Finance Committee Chair Charles Grassley, a Republican from Iowa, to look into the SEC's enforcement unit, which investigates violations of securities laws, and its office of compliance, inspection and examination, which handles a slew of regulated companies.

It will do that by analyzing things such as seeing how many referrals the SEC gets that actually trigger regulatory action. The accountability office will also look at the types of cases the SEC brings and how it tracks them, with a focus on policing insider trading.

As of August this year, the SEC had opened 838 investigations.

Reviews of the SEC aren't rare. The GAO has examined the commission in 2004 and 2005. John Heine, an SEC spokesman, said the group welcomes the review and looks forward to receiving recommendations.

Critics, rev up your engines.
And speaking of the SEC ...
One of the bigger challenges of complying with the agency's recently expanded guidelines for executive pay disclosure will be the requirement that proxy statements have a discussion and analysis section on compensation that is written in everyday language. In the analysis, companies have to answer questions about the objectives of the compensation program and what it's designed to reward. In other words, get away from vague euphemisms, such as "pay is based on performance," and cut to the chase.

HR Magazine offers some tips on how to do just that: Start work early to make sure you understand the objectives and get professional help if you don't. Setting up a mock analysis is helpful to prepare for the real thing, and get the compensation committee involved.

After all, it's important that everyone speaks the same language, especially when that language can be difficult to understand.
Business travel hotels: No room for kids
Travelers thinking of bringing the kids along might receive a less-than-cheerful greeting at the Holiday Inn or Omni. Hotels like these, which once aimed at attracting families, have traded that approach for loyalty to their standard customer: the business traveler.

Sure, crayons and activity books are nice, but they don't necessarily fit in with the hotels' classy surroundings. "It's inauthentic for a hotel to try to be something that it's not," Mark Snyder, a brand-management executive, told the New York Times.

It's also difficult to cater to both the business guests, who want peace and quiet, and youngsters, who just want to splash in the pool. And for hotels, the former seems to be more promising.

What's in it for the little ones? Well, there's always the complimentary soap.
Smooth operators
Callers, beware: Your records aren't as confidential as you might think. There's a controversial and, by some definitions, illegal practice called "pretexting" out there, and detectives, information brokers and even some companies use it to track down phone records. According to Newsweek, pretexters call phone companies pretending to be someone else to get their hands on the records, which can be used for everything from tracking information on job candidates to finding car owners who are late on making payments.

Some companies, such as Verizon, have used security codes and other measures to protect callers from getting their records swiped. Others, such as AT&T, don't think the problem is big enough for such a fuss. In fact, the extent of pretexting is a tough call to make. One complaint to the Federal Trade Commission on the issue listed 40 Web sites promoting the service.

Federal and state bills to illegalize the practice are pending. In the meantime, you might want to call with care.
The law of the bottom line
Talk about growing pains. At firms trying to climb for the ranks among the top 100, lawyers who aren't making the dollar are likely to be replaced, the Chicago Tribune reports. With today's pressure on not only growing, but growing profitably, a concept known as revenue per lawyer (RPL) is becoming the law firm equivalent of the corporate earnings per share. And increasing RPL is a big priority, especially at mid-level firms itching to become one of the big dogs.

"You subtract lawyers who don't meet the market criteria you're trying to achieve," said Chicago legal consultant Joel Henning.

So much for a pep talk.
Who's the boss?
It's hard to tell at some companies these days. In the first eight months of 2006, 960 corporate head honchos were replaced at various companies, according to U.S. News & World Report. It's happening at firms from Ford Motor to Viacom, and in some cases, the turnover time is less than nine months.

At companies like the pharmaceutical giant Bristol-Myers Squibb, the move is an attempt at redemption from financial woes and a shot at a PR boost. And Bristol-Myers has scored success in both. Since the New York-based company replaced its CEO in September, its stock has jumped 6 percent.

That's good news for everyone. Except, of course, the CEO.

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