Jonathan B. Wilson

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Jonathan Wilson is an Atlanta attorney with more than 19 years of experience guiding growing private and public companies.  He currently serves as the outside general counsel of several companies and is the former general counsel of (NASDAQ: WWWW) and EasyLink Services (NASDAQ: ESIC).  He is also the founding chair of the Renewable Energy Committee of the American Bar Association's Public Utility Section.

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Wednesday, November 29, 2006

Pelosi Dumps Both Hastings and Harman
The Washington Post is reporting that incoming Speaker Nancy Pelosi has rejected both Jane Harman and Alcee Hastings as possible chairs of the House Intelligence Committee. 
2:32 pm est 

Tuesday, November 28, 2006

Arguments Against Loser-Pays
Left-wing blog aggregator, ePluribusMedia, is running a series of posts that take on the loser-pays rule -- a litigation reform proposal that is often backed by those who believe our litigation system permits too many weak or non-meritorious lawsuits.
Blogger Justinian Lane, describes himself as having worked in "various technical positions", hoping to complete his undergraduate degree and enroll in law school in 2007.  His webpage, TortDeform, is devoted to opposing the work of those he describes as tort reformers.  
Justinian's first post is noteworthy for making one of the least-informed arguments ever against tort reform.  Justinian writes:
Loser pays is a legal concept in which the loser of a lawsuit is forced to pay the legal costs of the winner.  Advocates of "loser pays" claim that enacting it would dramatically cut down on the mythical frivolous lawsuits that supposedly clog our court system.  I don't doubt that "loser pays" will cut down on frivolous lawsuits.  The problem is that "loser pays" will also dramatically decrease the number of serious and meritorious lawsuits, especially those filed by individuals against corporations.
I'm happy to see that Justinian at least concedes the key point that reformers make when they advocate the loser-pays rule: the rule will "cut down on frivolous lawsuits." 
If only his bretheren at the ATLA would be so gracious as to concede this point.
The problem is that Justinian devotes the remainder of his post to the argument that, for a loser-pays rule to work, it would have to be applied to criminal cases as well.
This argument is not only factually wrong, but misunderstands the distinction between civil and criminal law in our litigation system and adopts a "straw man" view of the loser-pays rule that has never been adopted by any responsible advocate on the tort reform side of the equation.
As I describe in Out of Balance, there are already a number of variants of the loser-pays rule at work in our litigation system:
  • Rule 68 of the Federal Rules of Civil Procedure contemplates the shifting of "costs" (defined to include filing fees, court reporter fees, copying charges and similar administrative expenses -- but not attorneys' fees) in situations where a litigant refuses an offered judgment and subsequently obtains less at trial.
  • Several states have "early offer" rules that allow a plaintiff to recover pre-judgment interest if a defendant declines an offer of judgment and if the plaintiff subsequently recovers more than the offer.  (While these kind of early offer rules shift costs unilaterally to plaintiffs and never to defendants, the adopt some of the theoretical rationales for the generic loser-pays rule).
  • Several states, including Alaska, Florida, Texas, Oklahoma and Georgia have some variety of a loser-pays in the form of an offer-of-judgment rule.  (Georgia's 2005 S.B. 3 is the best and most recent example). 
  • Alaska also has a pure loser-pays rule in civil cases built into its state constitution (although the Alaska loser-pays rule has been eroded by statute so that succesful defendants can recover at most only a small fraction of their defense costs).

Each of these U.S. examples, of course, derives from the traditional "English" rule, still in place in the U.K. and in many other European countries, that contemplates a losing party paying the attorneys' fees of the winner.

In none of these jurisidctions with variants of the loser-pays rule, however, is there a loser-pays rule in criminal cases (as contemplated by Justinian) in which the state would be obliged to pay the attorneys fees of a vindicated criminal defendant. 

Moreover, Justinians thesis, that "to be fair" a civil loser-pays rule would require a counterpart rule for criminal cases, is just plain wrong. 

Our civil law exists to right wrongs between private parties, primarily through money damages.  Our criminal law exists to punish criminal offenses and to deter crime, largely through the imposition of incarceration.  The differences between the two legal systems (which Justinian will, we hope, explore during his first year of law school) are legion, beginning with the matter in which cases are commenced (civil complaint versus indictment) to the standard of proof applicable at trial (simple preponderance versus clear-and-convincing) to the standard of review on appeal.

The rules of procedure applicable in civil and criminal cases are more different than they are alike and there is simply no rationale to justify the blanket assertion that "to be fair" a civil loser-pays rule would require its counterpart in criminal cases.

Finally, while there are many views on the problems in our litigation system and many suggestions for reform, I am not familiar with any argument for a civil loser-pays rule that suggests one for criminal cases. 

8:08 am est 

Why Is Joe Kennedy Snuggling Up to Hugo Chavez?
Today's WSJ unpacks the deal between Joseph P. Kennedy II and Venezuelan demagogue Hugo Chavez:
Venezuelan strongman Hugo Chávez is an ally of the Iranian mullahs, a supporter of North Korea, a close friend of Fidel Castro and a good customer for Vladimir Putin's weapon factories. Now he's also a business partner of Joseph P. Kennedy II.
The former Democratic Congressman describes the deal he's cooked up with Mr. Chávez as charity for low-income consumers of heating oil. But it's worth asking what the price of this largesse is to Venezuelans and to U.S. security interests.
The arrangement is this: Mr. Chávez's Citgo--a Houston-based oil company owned by the Venezuelan government--is supplying home heating oil to Mr. Kennedy's Citizens Energy Corporation at a 40% discount. Citizens, a nonprofit outfit, says it passes the savings onto the poor, aiming to help 400,000 homes in 16 states that would otherwise have trouble heating their homes. In the process, Mr. Kennedy happens to get a high-profile publicity plug. If you think you qualify, says the television ad that drew our attention to this partnership, just dial 1-877-Joe-4-Oil.
7:36 am est 

Monday, November 27, 2006

Fixing Social Security
If President Bush wants to regain some momentum on domestic policy, in an era that requires bi-partisan cooperation, he should take a serious look at fixing social security
10:17 am est 

Fighting Government Spending
Today's WSJ tells the story of Tom Coburn and Jim DeMint in their fight against earmarks.  Remembering that Republicans are supposed to be the party of smaller government gives the GOP at least some hope for the future. 
7:47 am est 

Wednesday, November 22, 2006

General Counsel In-a-Box
Is it possible for outside counsel to serve effectively as the general counsel for a client?  J. Paul Caulfield thinks so, according to this piece in 
While this model won't work for every small business, there is a unique skill set that in-house lawyers bring to the table: a legal generalist's approaching to solving business problems with legal ramifications.
Large law firms train associates and create partners who are experts in a narrow field.  Litigators don't do corporate work and corporate lawyer's don't litigate.  Even within those broad fields there are specialities whose practitioners rarely see problems outside their narrow fields.
Most in-house lawyers, however, see a broad range of problems.  You draft a vendor contract in the morning, handle an employee discipline matter at mid-day and strategize over a litigation problem with your trial lawyer in the afternoon.  In-house lawyers can't afford to practice in a silo.
While law firms would benefit if they could provide real GC-type expertise to companies on an outsourced basis, that model flies in the face of law firm tradition and the very economies of scale that make large law firms profitable at what they do.
You can turn a top-tier law firm graduate into a specialist on class action litigation in four or five years.  After that time, your mid- or senior-associate can command high hourly rates because of his intense experience in such a narrow area.
If the same firm wanted to train the same law school grad into a top-flight corporate generalist it might take nearly twice as long.  That would not only extend the already-impossibly long partner track at the large firms, but would also make the young associate difficult to market or leverage for the partners. 
A young associate who does narrowly-focused work can get billed out at a relatively high rate: the client knows that the task is being handled by a bright young lawyer who is being supervised by more experienced partners and associates.
The same bright young lawyer, however, would be less well-equipped to take in a broad range of questions over the transom.  The issue-spotting and triage that in-house lawyers do takes experience.
1:37 pm est 

Monday, November 20, 2006

Business Shakedowns
MSNBC/ has an article on CALA's project to find vicitims of lawsuit abuse.  What's noteworthy is that this is a mainstream mediua outlet, describing the problem of excessive litigation through its effects on the business cycle and consumer prices without any gratuitous sound bites from the ATLA. 
12:19 pm est 

Thursday, November 16, 2006

Milton Friedman Dies
One of the most influential economists of the past century, Milton Friedman, reportedly died earlier today of natural causes. 
Friedman received the Nobel prize for economics in 1976 for his work on monetary theory.  His theory of monetarism was one of the driving intellectual ideas behind Ronald Reagan's tax cuts and monetary expansion in the early 1980s.
1:15 pm est 

Total Crap
"Even though I think the ethics bill is total crap, I'm going to work to pass it anyway because that is what Nancy wants"  Rep. John Murtha said yesterday when asked about the Democrat's plans to pass ethics legislation within the first one hundred hours of taking power.  
As NBC's Elizabeth Wilner wrote, "At this rate, maybe it won't take Republicans too long to win their way back to majority status." 
It's hard to imagine how likely Speaker Nancy Pelosi thought that Abscam unindicted co-conspirator Murtha was going to vault her administration into the "most ethical Congress in history."
It's even harder to imagine when her hand-picked candidate for Majority Leader describes her keystone ethics bill with barnyard language. 
10:36 am est 

Bipartisanship vs. Bipartisanship
Former Speaker (and potential '08 Presidential candidate) Newt Gingrich questions whether President Bush's approach to the next two years will be a bipartisanship that looks for alliances between the White House and the liberal leadership in Congress or one that looks to find common ground among the conservative majority in the House of Representatives. 
While his view that there exists a "conservative majority" in the House may overstate the facts somewhat, there is a valid distinction between the bipartisanship of the elites and the bipartisanship of the moderate/conservative center.
Most Americans - Republican and Democrat -- want to achieve a favorable outcome in Iraq (defined as a reasonably sane and effective government in that country within minimal levels of insurgency and minimal loss of U.S. life).  Only the far left of the Democratic party -- which, unfortunately, includes Nancy Pelosi and much of the Democratic House leadership -- wants to withdraw and leave Iraq in chaos.
Bush should reach out to the large consensus in the middle.
On other issues -- the minimum wage, immigration, tax reform, litigation reform and education -- there is also a large and sensible middle ground that is acceptable to many in both parties.
If Bush can speak for the middle ground, (which is, to give credit to Gingrich and the others who spent years educating the public on conservative principles, a mostly conservative middle ground), Bush can continue to lead. 
If Bush leads in this way, as Gingrich is encouraging him to do, he will lead much in the style of Ronald Reagan, who was at his best when he spoke for the majority of Americans in the conservative middle of our country. 
7:51 am est 

Wednesday, November 15, 2006

Pelosi Plays Hardball for Murtha
Likely House Speaker Nancy Pelosi is pulling out all the stops in her campaign to have John Murtha elected as Majority Leader according to The Hill
Pelosi's supports seems to be far beyond a mere endorsement with Pelosi and staff actively campaigning for Murtha inside the Democratic caucus:
Rep. Jim Moran (D-Va.) is quoted to say:
This is hardball politics … We are entering an era where when the Speaker instructs you what to do, you do it,” he said. “Yes, she’s making calls to people. She is contacting people and letting them know that it’s an unequivocal letter.”

Pelosi's "doubling-down" on Murtha is a bold and potentially damaging move.  If Murtha wins, she cements her power over her caucus, perhaps at the cost of alienating the moderates who support Steny Hoyer.  At the same time, if Murtha wins but eventually becomes ensnared in scandal, Pelosi will be remembered for having driven her colleagues over that cliff. 

12:35 pm est 

Borat Sued by Fraternity Brothers
"Borat," the fictitious news reporter from Kazakhstan whose advertures exploring the "cultural learnings of America for make benefit glorious nation of Kazakhstan" are the subject of a comedic movie that raked in over $60 million last week has been sued by at least one of the unwitting co-stars of his file.
Justin Seay, who was a member of the Chi Psi fraternity at the University of South Carolina at the time, claims that he was duped by the movie's star into getting drunk and making politically incorrect statements in the film.  
Borat's inventor, British comedian Sasha Cohen, has made a mint out of confronting ordinary people, in character, and exploring their reactions to his goofy foreign role.
Borat's introduction to the U.S. litigation system is only the character's latest introduction to American culture.  Several months ago he was the subject of an official Kazakh protest to the White House who claimed that the actor's portrayal of their country was insensitive.
We hope that Borat's introduction to torts in America "is to be resulting in judgment that is summary."
8:19 am est 

Murtha and the Culture of Corruption
John Fund has an insightful background in today's WSJ on Congressman John Murtha and his past problems with law and ethics.

Few will recall that Murtha was very nearly indicted as part of the Abscam scandal in the early 1980s.  Murtha was one of the Congressmen approached by undercover FBI agents posing as Arab Sheiks with offers of bribes.  In one meeting, Murtha is taped describing how he would cooperate with the phony sheiks:

"And what I'm sayin' is, a few investments in my district, a few you know, is big to me, to this guy apparently is not too big, to a couple of banks which would get their attention. And investment in a business where you could legitimately say to me--when I say legitimately, I'm talking about so these bastards up here can't say to me, well, why, in eight years from now, that's possible, we'd never hear a thing for eight years, but all at once, ah, some dumb bastard would go start talking eight years from now, ah, about the whole thing and say, '[expletive], ah, this happened,' then he, then he, in order to get immunity so he doesn't go to jail, he starts talking and fingering people and then the [expletive] all falls apart."
And this is going to be the #2 leader of the Democratic Party in the House of Representatives? 
8:06 am est 

Monday, November 13, 2006

Class Actions in France
The French government last week approved a law that would, for the first time, permit consumer class action litigation in France.
As Ted Frank notes, however, the French law would seem to circumvent many of the problems prevailing in U.S. consumer class actions:
  • damages are capped at 2,000 euros;
  • contingent attorneys fees are not permitted;
  • individuals may not sue on behalf of a class -- only accredited governmental and consumer protection agencies may initiate suit; and
  • class actions are limited to consumer goods sold on standard terms.

A strange thing it is when a majority of French legislators adopt legal reforms more favorable to business interests than those capable of being passed in the U.S. Congress. 

9:48 am est 

Friday, November 10, 2006

Republicans at Their Best
Peggy Noonan says that politicians are at their best when they acknowledge defeat.  Does this signal the high water mark of the Republican Party?
I hope not. 
The reasons for the GOP's loss are as obvious as they are legion. 
The war in Iraq is not going well.  Too many Republicans are caught up in too many unseemly scandals (Abramoff & Co., Foley et al., and more). 
Republicans have lost sight of their original vision.   Instead of smaller government we get the "bridge to nowhere" and a new record in Congressional earmark appropriations. 
The Republican Congress passed the Class Action Fairness Act, but otherwise made zero progress on reforming our out-of-control litigation system. 
Our immigration system is broken and we have lost control of our borders.  The Republican House passed a border fence measure that was unfunded and the Republican-controlled Senate could not come to an agreement. 
Republican ideals didn't fail.  Republicans failed their ideals. 
But, to be optimistic, it is better to have lost in 2006 than to lose by even more in 2008.
To recover, Republicans need to reclaim their intellectual heritage and consistently enunciate why it is that their vision is superior.
Lower taxes, with smaller, more efficient government and a less burdensome bureaucracy, combined with a fairer and more efficient litigation system, will improve economic growth.
The Iraq war has not gone well and we need to do better.  But retreat is not a viable option and the Republicans' opponents have not yet described how they would do better.
We live in a dangerous world that is full of enemies who would harm us.  We can persuade them with diplomacy and economic development but we must first defend ourselves, efficiently and vigilantly. 
Republicans also cannot tolerate those who bear their label who fail to live up to Republican standards.  A reliable Republican vote who keeps wads of cash in his refrigerator should not be allowed to remain in the party.  Anyone who knew about the depredations of Congressman Foley and failed to act appropriately has no business in the GOP. 
Republican principles are inconsistent with the morality of K Street and the GOP should drum out of the party those who would blur the line between acceptable and unacceptable behavior.  It is better to be consistent with conservative principles than to be inconsistent and undermine those principles. 
Do this and do it consistently and the Republican party will regain its majority.  Do it not and prepare to remain out of party until you do, or at least until the Democrats' own shortcomings outpace your own. 
11:49 am est 

Thursday, November 9, 2006

Nancy Pelosi's First Crisis
Mickey Krauss and J. Peter Pham speculate that the likely new Speaker's first crisis will come out of her decision to put impeached former federal judge (now Congressman) Alcee Hastings on the House Permanent Select Committee on Intelligence.
Their article recounts Hastings' infamous history as a judge (resulting in his impeachment and removal from the bench by a Democrat-controlled Congress -- Pelosi voted to impeach) to some questionable activities arising during the former judge's tenure as a Congressman from Florida.
That Pelosi would even consider putting Hastings -- who was impeached and removed from office for taking bribes -- on a committee as sensitive as the one that oversees U.S. intelligence efforts, does not bode well. 
1:42 pm est 

Quaker Litigation Reform
Not really, but I posted this on on the theological background behind another article on the history of Quakers having eschewed secular courts in their disputes with other Quakers. 
I'm not a Quaker, but take heart in any group that encourages its members to avoid litigation! 
12:43 pm est 

Wednesday, November 8, 2006

South Dakota Judicial Accountability Referendum Defeated
The South Dakota Judicial Accountability Referendum -- also known as Amendment E or the "Jail for Judges" movement -- was defeated by a margin of 90% to 10% yesterday. 
Hopefully this ignominious ending brings a final end to this fringe effort, which proposed stripping judges of their immunity and allowing disgruntled litigants to sue judges.  Depending on your point of view, it was either "one of the worst reform ideas ever" or "positively insane cuckoo bonkers." 
8:35 am est 

Thursday, November 2, 2006

Making Choices on Climate Change
Today's Wall Street Journal Online features two pieces (Op/Ed; Bjorn Lomborg) on the recently-issued U.K. Stern Report, which argues that global warming is increasing the incidence of hurricanes and flooding and that spending "merely" 1% of global GDP (approximately $450 Billion) would avert future catastrophe.
I won't repeat their arguments, but there are a few higher-level points worth remembering from this debate:
First, many anti-global warming arguments, like the Stern Report, calculate the financial impact of global warming by assuming that society takes no steps to mitigate the effects of global warming.  (When the Stern Report claims that flooding in the U.K. will increase from a cost of 0.1% of GDP to 0.4% of GDP, that conclusion makes just such an assumption).
In reality, the impact of future change can only be estimated based upon the dynamic effects of multiple changes.  If flooding, in fact, was increasing in the U.K., even without adopting any global-warming-type remedies (like reduced CO2 emissions and the like), society would tend to locate fewer buildings in flood-prone areas, builders would modify structures to be more flood-resistant, urban planners would change they way urban areas manage flood waters, etc.  All of these non-global-warming remedies would mitigate the effects of global warming, perhaps at a cost below that required by cutting CO2 emissions.
Second, the debate over emissions cuts, which is the essence of the environmentalist's proposal to "do something" about global warming, should properly focus on the choices involved in adopting one remedy to the exclusion of another.  Cutting emissions entails real costs.  They include direct costs: the money spent modifying carbon-producing factories, automobiles and other machines so that they produce less CO2.
They also include indirect costs: the possible reduction in GDP resulting from restrictions on CO2 production and the lifestyle impact people will feel when they have to change the way they live when certain goods and services become unavailable or more expensive as a result of CO2 restrictions.
If the cost of CO2 cuts, as estimated by the Stern Report, is $450 Billion, what alternative remedies could be purchased for the same or a lesser amount?  Would those remedies achieve the same effect as cuts in CO2, or a better or worse outcome? 
The policy exercise is not a choice between "doing something" and doing nothing.  On the contrary it is a choice from a menu of options where cutting CO2 emissions is only one item on the menu.
Finally, the policy exercise in making choices over potential remedies is not made in a vacuum, but rather takes place in a dynamic system where market forces are already creating changes in the system.
As Lomborg points out, approximately 95% of the financial impact of hurricanes results from the fact that more people, with more valuable goods and more financially productive activities, are choosing to live in "riskier habitats" (i.e., Southern Louisiana and along the Gulf Coast). 
If individuals chose not to live or work in those risky habitats, nearly all of the financial impacts of hurricanes would disappear.
But, the environmentalist might argue, "you can't simply tell people where to live."
That's true, by the market can certain be persuasive. 
If the price of homeowners insurance, business interruption insurance and other risk-mitigating products are allowed to fluctuate to reflect real-world risk, the cost of locating a home or business in a risky habitat will increase accordingly.  When that cost becomes higher than the perceived value of living in the risky area, individuals will choose not to do so.
Consequently, in the long run, market forces will tend to allocate costs with risks and individuals will choose, based upon their own cost/benefit perception, to take actions that mitigate and reduce the risk of financial loss.
While a market-oriented view of the cost of global warming is often hard to enunciate -- and even harder for the mainstream media to communicate to the public -- it does provide an adequate method for describing policy choices. 
9:00 am est 

Wednesday, November 1, 2006

Kerry: Stuck in Iraq
John Kerry's now-infamous comment that students can study hard and do well in school but that those who don't will get "stuck in Iraq" may turn out to be a pivotal event in the 2006 mid-term elections.
Republicans have been struggling this season, acknowledging that they will lose seats in both houses of Congress and defining "success" in the coming election as maintaining control of Congresss at a net loss of seats.
In one poorly-constructed moment, a non-player in the 2006 election has managed to stick his foot in the mouths of his fellow Democrats. 
Compounding that colossal error in judgment, when White House spokesman Tony Snow brought Kerry's comments to the attention of the White House press corps, rather than apologize, back-track, and turn the episode into a 24-hour story, Kerry tried to take the offensive, refusing the apologize and blaming Bush for taking him out of context.
By ham-handedly trying to make lemonade out of his lemon of a remark, Kerry put the issue on a tee and paved the way for Karl Rove & Co. to knock the ball well down the fairway. 
What's most interesting from the episode is what it says about Kerry's internal dialogue.  After losing the 2004 election in a close call, Kerry remains bitter.  He still believes that he was the better candidate and cannot resist the urge to take potshots at the President and his notoriously lackluster education.
Who cares that George W. Bush got "Cs" at Yale?  When you're the leader of the free world, your resume ceases to be a matter of much concern.  It only matters to the guy who didn't get the job, and who cannot help but remind himself (and the rest of us) that his grades were better 30+ years ago. 
Not only is he fixated on his loss and his inner resentment about being bested by a (supposedly) lesser scholar, but Kerry cannot restrain his urge to trumpet his own superiority just six days before the election. 
Even if you stay awake at night replaying the "horror" of November 2004 over and over in your head, when you awaken you have to realize that voicing your internal dialogue will only make you look petty and resentful.  When you fail to understand that, and also fail to understand how your personal melodrama will draw the spotlight away from your compatriots how are trying to win an election, you fail to understand what is truly in your own self-interest.  
We won't know until next week how much damage Kerry has done to his own party's prospects.  This scandal may amount to nothing.  But if it does draw even a few percentage points from some of the key races in this cycle (or add a few percentage points to the Republican tally from a newly-energized base) Kerry will have to answer to his Democratic colleagues.  
If the Democrats don't take control of Congress, they may resent John Kerry more than they ever hated George W. Bush. 
11:36 am est 

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Jonathan B. Wilson is an Atlanta attorney at the law firm of Taylor English Duma LLP.  Jonathan B. Wilson provides legal advice to investors, companies and business executives involving corporate law, securities law, SEC matters, intellectual property, website and Internet legal issues, start-ups, limited liability companies, partnerships, 1934 Act matters, outsourcing, strategic alliance agreements, contracts, and other matters of importance to growing private and publicly-traded companies.