Managing Legal

In Congress, July 4, 1776.

The unanimous Declaration of the thirteen united States of America, When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

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As we both awaited the start of a meeting, I struck up a conversation with the general counsel of a publicly traded company with $2BB in annual sales. We agreed that great law firms and attorneys are available beyond the most prominent brand name law firms.

But my friend was emphatic: Departure from those brand name law firms his client company was used to retaining would amount to a career risk. And — as the ads proclaimed a generation ago — “No one ever got fired for hiring IBM”.

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74% of respondents cited “regulations and enforcement” as their top concern in the most recent Morrison Foerster General Counsel Up-at-Night Report.

Coming at regulatory burdens from a different direction, legal scholars Michael Bommarito II and Daniel Martin Katz found that regulatory references in 10-K filings had increased 4X between 1994 and 2014 (after analyzing more than 160,000 10-K filings with the SEC).

To those (like me) who believe that regulators impose excessive burdens on American businesses large and small — U.S. Supreme Court Justice Anthony Kennedy may have offered a ray of hope yesterday.

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EPA, IRS, FCC, and other agencies — whom the High Court has called “the administrative state” — “wield vast power and touch almost every aspect of daily life”. And for the past three decades a judicial doctrine called “Chevron deference” has afforded these agencies considerable insulation from legal challenges.

In Chevron, U.S.A. v. Natural Resources Defense Counsel, Inc. the U.S. Supreme Court established the harmless-sounding principle that a federal court should defer to interpretations of statutes made by those government agencies charged with enforcing them, unless such interpretations are unreasonable.

However innocuous in theory — many view “Chevron deference” as more akin to a blank check for bureaucrats than a careful delineation of delegated congressional authority. As Chief Justice Roberts put it in a case where he dissented from Chevron‘s application:

“We do not leave it to the agency to decide when it is in charge.”

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Lola v. Skadden, Arps arose from a lawsuit in which a plaintiff demanded massive disclosures of documents of a specified description. This meant that the defendant had to review thousands of documents to respond.

David Lola was a licensed lawyer hired on contract by the law firm Skadden Arps to perform those document reviews.

Later, Mr. Lola sued Skadden Arps for overtime pay. Skadden Arps contended that the relevant statute — the Fair Labor Standards Act — precluded overtime pay because the work consisted of “the practice of law”.

The prestigious Federal Court of Appeals for the Second Circuit refused to throw out the suit:

“The gravamen of [the attorney’s] complaint is that he performed document review under such tight constraints that he exercised no legal judgment whatsoever — he alleges that he used criteria developed by others to simply sort documents into different categories ….

“A fair reading of the complaint in the light most favorable to [the attorney] is that he provided services that a machine could have provided ….”

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