With Its 2018 Tax Cut, Wells Fargo Could Pay Its $1 Billion Fine 3 Times and Still Have Cash to Spare

The $1 billion fine levied by federal regulators against Wells Fargo is unlikely to hobble or even slow down the bank, thanks to the massive corporate tax cut passed by Congress last year, reports The Washington Post.

Reporter Renae Merle explains: “Just in the first quarter, Wells Fargo’s effective tax rate fell from about 28 percent to 18 percent, saving it more than $600 million. For the entire year, the tax cut is expected to boost the company’s profits by $3.7 billion, according to the Goldman Sachs report.”

“Despite its regulatory headaches, Wells Fargo remains massively profitable. The bank reported Friday that although the fine drove down its first-quarter profits by $800 million, it still netted $4.7 billion,” Merle writes.

Read the Post article.




Term Royalty Interests Survive the Rule Against Perpetuities in Texas

The Supreme Court of Texas recently examined the intersection of the rule against perpetuities and the oil patch in ConocoPhillips Co. v. Koopmann, No. 16-0662, writes Thomas G. Ciarlone Jr. in Kane Russell Coleman Logan’s Energy Law Today blog.

The rule provides “that no interest within its scope is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.”

Ciarlone discusses the Koopman case and explains that it represents a positive result for the industry, one which will promote certainty in deed construction and therefore encourage robust exploration and development activities.

Read the article.



Is Your Agreement Non-Exclusive in Name Only?

Recent case law and enforcement actions have made clear, contractual language addressing the issue of exclusivity, while obviously relevant, is not always determinative, write E. John Steren and Patricia Wagner for Epstein Becker & Green’s Antitrust Byte blog.

The authors explain: “Instead, and regardless of the contractual language between the parties, the courts and enforcement agencies look at whether the parties operate, in practice, as if the relationship is exclusive or not. Regarding network participation, the enforcement agencies will look at whether competing networks exist and whether network members actually participate in those competing arrangements. For payor contracts, the enforcement agencies will look at whether payors actually contract with competing providers—and if not, why not.

Read the article.



Dual Language China Contracts: Don’t Get Fooled

Dan Harris of Harris Bricken’s China Law Blog writes that when foreign companies sign dual language contracts without knowing exactly what the Chinese language portion of their contract says, they are engaging in risky business.

He explains: “Many dual language Chinese-English contracts are silent on which language controls. For some unknown reason, foreign companies far too often just assume that the English language portion controls or they just assume that it does not matter because the meaning of both the English and the Chinese portions is exactly the same. Wrong, wrong, wrong.”

He writes that Chinese companies love using a contract with an English portion that is more favorable to the foreign company than the Chinese portion and then relying on the English speaking company to assume that the English language portion will control.

Read the article.



Ward, Smith & Hill Helps Secure $502.6M Patent Infringement Win Against Apple

A jury has awarded internet security software company VirnetX $502.6 million, finding Apple Inc. willfully infringed on four patents used for VPN on Demand and Facetime in Apple products.

The finding that Apple willfully infringed on four VirnetX communications patents could lead to higher damages. The liability and damages verdict was returned on April 10 at the end of a seven-day trial, and the willful infringement finding was returned the following day. It is the third jury verdict in the past two years that lawyers with East Texas-based firm Ward, Smith & Hill, PLLC, have secured for VirnetX in its long-running legal battle with Apple.

Judge Robert W. Schroeder III heard the case in the U.S. District Court for the Eastern District of Texas, Tyler Division. The dispute involved U.S. Patent Nos. 6,502,135; 7,490,151; 7,418,504; and 7,921,211.

VirnetX was represented at trial by Ward, Smith & Hill name partner Johnny Ward and Caldwell Cassady & Curry attorneys Brad Caldwell, Jason Cassady, Austin Curry and Chris Stewart.

In September 2016, Ward played a key role in securing a $302 million patent infringement verdict for VirnetX. Seven months prior to that verdict, Ward and attorney Claire Abernathy Henry assisted with a $625.6 million patent verdict win against Apple, the firm said in a release.

The case is VirnetX Inc. et al v. Apple Inc., case 6:12-cv-00855, in the U.S. District Court for the Eastern District of Texas.



Best Practices: Uncover the Full Potential of CLM Implementation

Conga and Forrester have published a new report titled “Best Practices: Uncover the Full Potential of Your CLM Implementation.” The report on contract lifecycle management can be downloaded from Conga’s website at no charge.

In promoting the report, Conga makes three points:

  1. Customers are leaving money on the table by not fully implementing CLM. Fewer than one in five of all CLM customers interviewed captures all the strategic values a CLM implementation can bring.
  2.  Engage early with stakeholders and manage their expectations. It’s critical to start working with general counsel and other key stakeholders early when developing a business case. Having a holistic plan that ties benefits to stage and to stakeholder will keep the implementation on track.
  3. Have a solid and funded business case that drives the later stages of implementation. More than 70 percent of CLM customers interviewed stopped at stage 2 of the implementation. Having funds, resources, and support enables the latter stages of CLM optimization.

Download the report.

‘Tax Case of the Millennium’ Hits High Court: A Primer

Oral arguments in the biggest U.S. Supreme Court tax case in years are just days away, reports Bloomberg Law.

Oral arguments in South Dakota v. Wayfair are scheduled for Tuesday, April 17.

Reporter Ryan Prete writes that the case directly challenges the 1992 decision in Quill Corp. v. North Dakota, prohibiting states from imposing sales tax collection obligations on vendors lacking an in-state physical presence.

“The case has set off perhaps the largest amount of state and local tax-related activity in the past decade as states have tried to ‘kill Quill’ as online commerce has replaced traditional brick-and-mortar markets,” according to Prete.

He quotes Max Behlke, director of budget and tax at the National Conference of State Legislatures, as saying the South Dakota case is the “tax case of the millennium.”

Read the Bloomberg article.



10 Common Contract Gotchas to Avoid

Business News Daily talked to business owners, attorneys and other experts to find out what common contract “gotchas” you should be on the lookout for.

The article, by Adam C. Uzialko, starts by warning about the use of terms like “notwithstanding,” which can contradict a party’s previously stated obligations.

Other topics include intellectual property clauses, last-minute revisions, specific accounting practices, automatic-renewal clauses, financial obligations, forum selection clauses, foreign laws, at-will clauses, and client acquisitions.

Read the article.




Wells Fargo Faces $1 Billion Fine to Settle Loan Abuses

Reuters reports that Wells Fargo & Co. has been offered a penalty of $1 billion by regulators to resolve outstanding investigations related to auto insurance and mortgage lending abuses, the third-largest U.S. bank by assets said on Friday.

The news agency previously had reported that the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency were preparing a fine of up to $1 billion for Wells Fargo’s auto insurance and mortgage lending abuses.

“The U.S. Federal Reserve has also imposed restrictions on the bank’s growth, forbidding it to expand its balance sheet beyond 2017 levels until it makes internal changes that addressed its board and risk management,” according to the latest Reuters report.

Read the Reuters article.



Median CEO Pay for the 100 Largest Companies Reaches Record $15.7 Million

The Washington Post is reporting that booming stock market and bulging equity awards propelled the median 2017 compensation for CEOs of the 100 largest companies to the highest figure in 11 years, according to a new analysis by executive compensation and governance research firm Equilar.

“While the median pay increase for CEOs was slightly lower than the year prior, at 5 percent instead of 6 percent, the median CEO pay package was valued at $15.7 million, the first time it notched above 2016’s previous high of $15 million,” writes Jena McGregor.

The highest-paid CEO in this year’s study is Broadcom’s Hock Tan, with a 2017 compensation package valued at $103.2 million. That figure includes a new stock grant valued at $98.3 million that will pay out over a period of several years only if Broadcom meets certain total shareholder return performance thresholds.

Read the Post article.

Facebook Could Face Record Fine, Say Former FTC Officials

The Washington Post reports that Facebook’s disclosure that its search tools were used to collect data on most of its 2.2 billion users could potentially trigger record fines and create new legal vulnerability for not having prevented risks to user data, three former federal officials said.

“The three former officials, all of whom were at the Federal Trade Commission during the privacy investigation that led to a 2011 consent decree with Facebook, said the company’s latest mishap may violate the decree’s provisions requiring the implementation of a privacy program,” according to reporters Craig Timberg and Tony Romm.

They quote David Vladeck, who was head of the FTC’s bureau of consumer protection when the decree was drafted and signed by Facebook, as saying that Facebook could face fines of $1 billion or more for this and the mishap in which Cambridge Analytica improperly gained access to information on as many as 87 million Facebook users.

Read the Post report.



The Storm After the Storm: Restoration Contracts

An article in Gray Reed & McGraw’s Texas Construction Law Blog offers some steps cleaning and restoration professionals can take in an effort to minimize the damage from a payment dispute with a client after a natural disaster.

Authors Russell Jumper and Tim Fandrey point out the importance of having a form agreement specific to natural disaster mitigation and remediation ahead of time.

Other points discussed in the article are the agreed scope of the project, making sure insurance proceeds go to the contractor, keeping the client or insurer from taking an estimate to a competitor, and being prepared for litigation.

Read the article.




PwC Faces Largest-Ever Auditor Malpractice Damages Verdict

MarketWatch is reporting that the Federal Deposit Insurance Corp. could collect the largest damage award ever against a global public accounting firm when a federal judge decides what to award the agency after a verdict against PricewaterhouseCoopers.

The judge in the case has already ruled that PwC had been professionally negligent in not detecting the criminal fraud that led to the failure of Colonial Bank Group in 2009, according to reporter Francine McKenna.

The FDIC has asked Judge Barbara Rothstein to award it $625 million in compensation for the bank’s alleged net losses from a fraud with mortgage originator Taylor Bean and Whitaker, which also failed in 2009.

Even PwC’s estimate of damages based on the judge’s decision, per court filings, of $306 million would result in the largest-ever final judgment or jury verdict for accounting malpractice, MarketWatch reports.

Read the MarketWatch article.



Target Pays $3.7M to Settle Lawsuit Over Racial Disparity in Use of Criminal Background Checks

Image by Mike Mozart

The Minneapolis  Star Tribune is reporting that Target Corp. has agreed to pay $3.7 million to settle a lawsuit over concerns that the way it uses criminal background checks as part of the hiring process has disproportionately hurt black and Latino applicants.

Reporter Kavita Kumar quotes Sherrilyn Ifill, president of the NAACP Legal Defense and Educational Fund: “Target’s background check policy was out of step with best practices and harmful to many qualified applicants who deserved a fair shot at a good job. Criminal background information can be a legitimate tool for screening job applicants, but only when appropriately linked to relevant questions such as how long ago the offense occurred and whether it was a nonviolent or misdemeanor offense.”

As part of the settlement of the class-action complaint, independent consultants will recommend changes to Target’s current screening guidelines.

Read the Star Tribune article.



M&A 101: Key Concepts in Non-Disclosure Agreements

Although non-disclosure agreement negotiations may seem like a perfunctory step in the M&A process, NDAs present many issues that buyers and sellers should carefully consider before escalating discussions and venturing further toward a deal, according to a post by Faegre Baker Daniels.

Lance Bonner and Kate Sherburne explain: “Unlike confidentiality agreements in other commercial transactions, NDAs negotiated at the onset of the M&A process are often non-mutual and only bind the buyer with respect to the seller’s confidential information. As a result, negotiating an NDA typically begins with a form prepared by the seller or its investment bank or their respective legal counsel. Key negotiation points will vary depending on the characteristics of the proposed transaction and relationship of the parties.”

The authors discuss the areas that are commonly important, including confidential information, exclusions, representatives of the buyer, access to employees, suppliers and other business relations, non-solicitation, and more.

Read the article.




Facebook Privacy Scandal Unleashes Nationwide ‘Litigation Swarm’

Facebook Inc. finds itself in the eye of a rapidly building legal storm over the disclosure of user data to political research firm Cambridge Analytica as lawsuits stack up from users and investors, and regulatory agencies pile on, Bloomberg Technology reports.

Reporter Christie Smythe quotes Marc Melzer, a New York-based attorney: “Facebook’s having to fight on multiple fronts, with potentially conflicting strategies and obligations, is what will make this ‘litigation swarm’ problematic.” The company will likely “want to move slowly and withhold as much as they can without antagonizing regulators or the courts that are presiding over the suits.”

“Damages could be substantial for shareholders, with one group of investors estimating that at least $50 billion in the company’s market capitalization has been wiped out as a result of the disclosure, which affected 50 million users,” Smythe reports.

Read the Bloomberg Technology article.



Webinar Recording Available on SEC Cybersecurity Guidance

Hunton & Williams LLP has posted an on-demand webinar discussing the Securities and Exchange Commission’s recently released cybersecurity guidance.

For the first time since its last major staff pronouncement on cybersecurity in 2011, the SEC has released new interpretive guidance for public companies that will change the way issuers approach cybersecurity risk, the firm says on its website.

Presenters are partners Lisa Sotto, Aaron Simpson and Scott Kimpel, and senior associate Brittany Bacon. They discuss the new guidance, along with changes in regulatory obligations under EU law with respect to the upcoming GDPR and historical SEC enforcement actions related to cybersecurity.

Watch the on-demand webinar.



Energy Company’s Bankruptcy Generating Enron-Sized Legal Fees

Banking - investing - money - advisorsHundreds of lawyers and financial consultants involved in the $42 billion corporate restructuring of Energy Future Holdings, once the largest power supplier in Texas, have been paid a gusher of cash, and more huge paydays may be in the works, reports The Houston Chronicle.

Mark Curriden of The Texas Lawbook writes that the law firms, banks and consultants working on the EFH case have received more than $600 million, making it one of the most complex and expensive corporate bankruptcies in U.S. history. For comparison, similar fees in the Enron bankruptcy topped $700 million.

“The total fees for all the professionals – for the lawyers, bankers, accountants, restructuring experts for all the companies involved – will probably hit $1 billion,” EFH General Counsel Andy Wright told The Texas Lawbook in an exclusive interview.

Read the article.



Blockchain Smart Contracts Need a New Kind of Due Diligence

Computer screen- numbers - blockchainAn article by two Hogan Lovells lawyers and published by Lexology outlines some of the due diligence steps to take in the age of blockchain age of smart contracts.

Authors of the article are Theodore J. Mlynar and Ira J. Schaefer.

They discuss the need for a traditional analysis of the proposed transaction and negotiated terms, a source code analysis, and the advice that the proposed smart contract be run on a simulator to see how it operates in response to expected and unexpected messages from users and other contracts..

Read the article.




Amazon Fires Its Lobbying Law Firms in Washington

Amazon.com Inc. cut ties with two of Washington’s biggest lobbying law firms and brought on new advisers following passage of the tax overhaul bill last year and in the face of new challenges in the age of President Donald Trump, reports Bloomberg Politics.

The shakeup occurred shortly before Trump briefly sent Amazon’s stock tumbling when he tweeted that Amazon doesn’t pay enough in state and local sales taxes, hurts retailers and gets an unfair edge on the back of the U.S. Postal Service.

“Amazon ended its relationship with Akin Gump Strauss Hauer & Feld LLP, the law firm that attracts more lobbying revenue than any other K Street operation, and Squire Patton Boggs, last Friday, according to a person familiar with the decisions,” write Ben Brody, Spencer Soper and Jennifer Jacobs.

The reporters add that their source told them Amazon hired Paul Brathwaite of Federal Street Strategies LLC and Josh Holly of Holly Strategies Inc.

Read the Bloomberg Politics article.