CLE Luncheon, Sept. 26, 12 p.m. CDT
Belo Mansion, Dallas

Scott & Scott, LLP will present a complimentary CLE luncheon titled “Data Privacy and Security Issues in Cloud Contracts” at the Belo Mansion in Dallas on Monday, Sept. 26, from noon to 1 p.m. CDT. The event will be hosted by the Computer Law Section of the Dallas Bar Association.

Robert J. Scott, managing partner of Scott & Scott, will share suggestions on how each party can mitigate, balance or transfer the privacy and security risks in cloud computing.

On the surface, cloud agreements are similar to traditional technology licensing and services agreements; however, cloud computing engagements expose both the client and the service provider to risks not present in more traditional technology service or software transactions, Scott says. The transformation from on-premises software deployments to cloud based models has widespread implication for data privacy, security, and regulatory compliance.

Scott will address each element that contributes to privacy and security risk in cloud computing, including:
• GLBA Rules Affecting Cloud Contracts
• Using Cloud Services in Healthcare
• Due Diligence Obligations in Selecting Cloud Vendors
• Negotiating Key Provisions including insurance, indemnity, and limitations of liability
• How to Comply with Oversight Regulations involving Cloud Service Providers

Attendance for registrants is free, and lunch will be provided.

Register for the CLE luncheon.

By Jose Tabuena, JD, CFE, CHC

Douglas W. Hubbard, who developed Applied Information Economics as a practical application of scientific and mathematical methods to complex decision making, goes out further on a limb when it comes to measurement. According to Mr. Hubbard:

“Anything can be measured. If something can be observed in any way at all it lends itself to some type of measurement method. No matter how ‘fuzzy’ the measurement is, it’s still a measurement if it tells you more than you knew before.”

In the business world this has a ring of truth. Hubbard made a career out of measuring the sorts of things many thought were immeasurable. He writes of being surprised at how often clients dismissed a critical quantity—something that would affect a major new investment or policy decision—as completely beyond measurement.

For the auditor, compliance professional, and others charged with evaluating (i.e., measuring) the effectiveness and value of compliance program activities, Hubbard’s treatise, How to Measure Anything: Finding the Value of Intangibles in Business,3rd Edition, is a worthy read. His text includes an accompanying website that provides practical examples worked out in detailed spreadsheets. The book discusses how to measure those things in your business that until now you may have considered “immeasurable,” including technology ROI, organizational flexibility, customer satisfaction, technology risk, and even techniques that can be applied to compliance program effectiveness.

His observation that even intangible things can be measured (though he is not claiming they should) is a profound one. Hubbard lucidly explains why things that may seem immeasurable are actually not. He includes inspirational examples of where seemingly impossible measurements were resolved with surprisingly simple methods—for example, how in ancient Greece, a man was able to reasonably estimate the circumference of the Earth by looking at the lengths of shadows in different cities and then applying basic geometry.

There are also key points beyond just measuring things that should resonate with those tackling the compliance effectiveness quandary. A salient reason we should care about measurement is that it can inform important decisions. How much should we budget to enhance our compliance program? What features of our program should be modified? Moreover, he explains why you likely already have more information than you realize and that you don’t need as much data as you think.

Decision makers usually have imperfect information (i.e., uncertainty) about the best choice for a decision. Hubbard insists that decisions should be modeled quantitatively because such models have a favorable track record when compared to unaided (i.e., I know it when I see it) and/or purely qualitative “expert” judgment. Ultimately good measurement informs uncertain decision making. And Hubbard provides a comprehensive framework for measurement that can be applied universally to a host of business issues. The crux of the approach is that if you measure what matters, you make better decisions.

Undertaking this methodology forces clarity in considering the objectives you are trying to achieve. When computing the value of information, you may learn that you have been measuring all the wrong things. If your “program” is providing a service the value of which cannot easily be measured, maybe you need to reconsider what you are trying to achieve. Some kind of observable consequence must be present if it really matters (even if dictated by laws and regulations). Measuring things just because they are easy to measure is ultimately useless.

A thought experiment to try, which Hubbard calls a “clarification chain” is to imagine “if we didn’t do this, would there be an impact, and how would we notice the difference?” For example, a safe work environment has been shown to relate directly to safe employee behavior; similarly, a climate for customer service is known to predict customer satisfaction. For compliance programs, if we care about an “intangible” that we call culture or ethical climate, because it impacts certain things—such as perceptions that your supervisor and company sets a good example of ethical behavior, or that employees do not fear retaliation for reporting misconduct—we should be able to measure such outcomes.

Direct application of these ideas for measuring intangibles can prove relevant with what seems to be a new approach by regulators to oversee culture. The Financial Industry Regulatory Authority 2016 Regulatory and Examination Priorities Targeted Exam letter notably focused on culture. FINRA stated plans to assess five indicators of a firm’s culture: (i) whether control functions are valued within the firm; (ii) whether policy or control breaches are tolerated; (iii) whether the company proactively seeks to identify risk and compliance events; (iv) whether immediate managers are effective role models of firm culture; and (v) whether sub-cultures that may not conform to overall corporate culture are identified and addressed.

As described in its February 2016 Targeted Exam Letter, FINRA requested firms submit eight categories of information related to the organization’s cultural values, stating “We will formalize our assessment of firm culture to better understand how culture affects a firm’s compliance and risk management practices.” Significantly, FINRA is, “particularly interested in how your firm measures compliance with its cultural values, what metrics, if any, are used, and how you monitor for implementation and consistent application of those values throughout your organization.”

The industry is still waiting for the results of FINRA’s review and observations from this information. It will be most interesting to learn how FINRA makes use of the collected information, and how it assesses whether cultural values are actually guiding business conduct or acting more as a feelgood exercise. This now makes an opportune time for FINRA, industry auditors, and compliance professionals to lay the groundwork for objective, risk-based analysis that can provide a data-driven assessment of culture’s efficacy.

The compliance profession for some time has advocated for more stringent methodologies and measurements to address the major issue of compliance program effectiveness—a significant measure as it not only can determine whether a company faces indictment or the amount of a sentencing penalty, but more practically on the question of whether the program is having any impact at all.

A 2012 report by the Ethics Resource Center (now the Ethics & Compliance Initiative), observed that “the means by which organizations measure the effectiveness of their programs still vary, and in some cases organizations can be lulled into a false sense of security by evaluations or public rankings that may not be empirically based or reliable.” The report encouraged discussion and analysis, including consideration of possible outcome measures by which firms could demonstrate the impact of their programs (e.g., observed misconduct, frequency and nature of reporting, fear of retaliation, direct measurement in risk areas where this is possible).

It is certainly a positive sign that along with FINRA, the Justice Department has brought the measurement challenge to the forefront in hiring a compliance counsel and issuing possible “metrics.” The trend of the government to provide more guidance has continued with the DoJ stating its plans to release a set of sample questions to give companies an idea what investigators and prosecutors are concerned with.

The evaluation of culture and compliance effectiveness are in fact empirical issues. The elements of a compliance program and vague indicators should not be taken on faith. Whenever practical, tactics based on studies by social scientists should be field-tested using randomized controlled trials to estimate their economic benefits.

Perhaps it is now a brave new world with law enforcement and regulators, working closely with compliance professionals (including auditors and lawyers) to add meaningful rigor to measuring the intangibles of culture and program effectiveness? Eventually it may result in numbers and not just adjectives and color codes to reveal what is working.

Originally published in Compliance Week

An office lease is a pivotal tool for small law firms to attract better clients and expand their practices. But it is also frequently a small firm’s largest fixed capital expense and longest commitment. Negotiating favorable lease terms is critical to ensure that a lease contributes to, and does not hamper, a firm’s success, writes Laura Drossman of Drossman Law in San Francisco.

Small firms may not be able to compete financially with their market competitors, who will pay higher rents and prepaid rent upon demand, according to her article, originally published by the Bar Association of San Francisco. Failure to maintain adequate financials brings creditworthiness into question and kills tenant’s leverage in lease negotiations.

While base rent and escalations seem like an obvious starting point, due to sky-high demand and flush competition, prospective tenants better serve their interests by focusing on other points.

Those points can include space improvements, commencement date, pass-through costs and tempering spikes, security deposits and letters of credit, subleasing and assignment, maintenance costs and HVAC, and relocation rights.

Read the article.

The preliminary injunction issued by U.S. District Judge Reed O’Connor of Fort Worth that temporarily blocks the Obama Administration’s instructions for public schools to accommodate transgender students has intensified the national debate over students’ use of bathrooms and other facilities, according to an article posted by Androvett Legal Media & Marketing.

“The nationwide aspects of the injunction will be interesting to watch because there are limited circumstances where that is appropriate, and this injunction only applies to those states that recognize the directive from the DOJ under their own state laws,” says Dallas attorney Shonn Brown of Lynn Pinker Cox & Hurst. “The big question is what does ‘sex’ mean. The differentiation between ‘biological’ and ‘identity’ will likely be interpreted differently by other courts, which will ultimately require an opinion of the Supreme Court to resolve. Also, this is a temporary order, which places a lower burden on the plaintiffs to show ‘likelihood’ of prevailing, whereas at the permanent injunction phase there is the higher standard of a trial on the merits.”

Federal officials interpreted the word “sex” in anti-discrimination statutes to also cover gender identity. They also argued that the lawsuit was filed too soon because the transgender policy isn’t binding and no enforcement action has been taken. Attorneys representing Texas, however, said the guidelines “obliterate” past rules, putting Texas and other states at risk of losing millions of dollars in education funding if the new guidelines were not followed.

Fugitive ex-CEO Jacob (Kobi) Alexander, who is scheduled to return to the U.S. from Namibia on Wednesday to plead guilty to securities fraud after leaving America more than 10 years ago, will try to convince a Brooklyn judge to release him on $25 million bail, reports the New York Daily News.

The 64-year-old ex-CEO of Comverse Technology Inc. moved to Namibia before he was formally charged in 2006 in a scheme involving the backdating of stock options at Comverse. He faces up to 10 years in prison, writes John Marzulli.

The Wall Street Journal explains how the alleged scheme worked:

Prosecutors allege Mr. Alexander, along with Comverse’s general counsel and its finance chief, for years would look for low-price trading days in the past on which to pretend they and other employees had been awarded stock options at that day’s price. Since an option grants its holder the right to buy shares at a fixed price, the alleged manipulation scored them instant gains. The backdating added millions to Mr. Alexander’s compensation.

Read the article.

A Texas-based legal recruiter is seeking up to $1 million in damages from a Holland & Knight partner, saying the lawyer broke his promise and used another headhunter to place him at the firm after the recruiter discussed the opportunity with him.

Legal recruiter Sean Cassidy’s suit against Dean Schaner alleges breach of contract, fraud and negligent misrepresentation.

“The [law firm] that we contacted you about… I would just ask that… since we contacted you about it, I always ask two things Dean,” said Cassidy, according to a recording played for Bloomberg Law. “One, I ask that if it’s something you ultimately decide to pursue, I just ask that you work through me on it.”

The Bloomberg article by Casey Sullivan reports:

“When contacted about Cassidy’s recording and overall litigation, Schaner wrote in an email Tuesday that the sound clip was a ‘misleading partial conversation,’ that he ‘never agreed to pursue the opportunity through Cassidy’ and furthermore, ‘never disclosed [Holland & Knight] to anyone.’ ”

Read the article.

Ernst & Young LLP cannot require its employees to give up their rights to pursue work-related claims together, a federal appeals court has ruled, giving a major boost to the U.S. National Labor Relations Board’s campaign against so-called class action waivers, reports Reuters.

“Companies have increasingly included provisions in employment contracts forcing workers to arbitrate claims individually as a way to avoid the cost of litigating class actions,” writes Robert Iafolla. “The NLRB has struck down such requirements imposed by dozens of companies, including American Express Co, Citigroup Inc and Domino’s Pizza Inc.”

The court found that the arbitration agreement violated the National Labor Relations Act by making workers arbitrate work-related claims as individuals in separate proceedings.

Read the article.

In response to continued M&A activity, the National Association of Corporate Directors has prepared a guide to board oversight of mergers and acquisitions. The handbook describes the current M&A climate and suggests questions to ask and resources to deploy at every step in the M&A transaction process, from strategy to post-merger integration, according to Steve Kalan, NACD director of business development.

The full publication is available exclusively to NACD members, but a complimentary executive summary is available to everyone for downloading.

“With merger and acquisition activity continuing to shift the business landscape, directors can benefit from learning the size and scope of this trend and how it relates to their board responsibilities,” NACD says on its website. “Director Essentials: Strengthening Oversight of M&A summarizes current M&A trends and guides directors in considering M&A as a strategic option. It will help directors fulfill their roles throughout the M&A process, from strategy to integration. Aimed primarily at public company directors, this report is also useful for fiduciaries of nonprofits and privately owned companies.”

Download the summary.

ContractWorks has published “The Buyer’s Guide to Contract Lifecycle Management,” a comprehensive, complimentary guide available for downloading.

The decision to purchase and implement contract lifecycle management software is not one most companies take lightly, the company says. There are currently over 100 solutions in the market- everything ranging from bare-bones, free solutions, to extremely complex and very expensive solutions- and everything in between. Knowing where to start can be tough, that’s why we’ve put together this guide.

This guide covers:

•The top three reasons companies choose to implement contract management software
•The key benefits companies realize from implementing software
•Budget and cost considerations
•Implementation times and how this can affect the ROI of your purchase
•Security considerations for CLM solutions
•Key factors to consider when vetting providers- including solution scalability and company/vendor reputation

Download the guide.

Quarles & Brady LLP announced that Peter F. Asaad has joined the firm’s Washington, D.C. office, concentrating on immigration in its Labor & Employment Practice Group.

Asaad focuses on representing corporate clients and individuals on all business-related and employment-based visa matters. He represents U.S. companies and multinational corporations in helping manage their employees’ employment eligibility needs and develop effective streamlined immigration and compliance programs. He also specializes in the needs of immigrant entrepreneurs, start-ups, and foreign investors in creating U.S. subsidiaries and affiliates as well as new U.S. businesses. He has additional expertise in advising individuals with employment and family-based immigration, asylum, deportation, and other immigration matters.

He received his law degree, cum laude, from the American University, Washington College of Law and his bachelor’s degree, cum laude, from the University of Rochester.

Barnes & Thornburg has added partner Fred Schwartz to its Chicago office as a member of the Labor & Employment Department. Schwartz joins from Littler Mendelson, where he was a founding member of the Chicago office and once served as managing shareholder.

Schwartz is the seventh partner and 12th attorney overall to join the firm’s Chicago office this year, the firm announced.

Schwartz concentrates his practice on labor and management relations and regularly handles proceedings before the National Labor Relations Board, including representation elections and unfair labor practice charges, as well as collective bargaining and arbitrations. On the other side of the coin, he regularly counsels employers that wish to maintain a union free workplace, and is engaged to perform workplace audits and training for members of management.

Schwartz counts among his clients many leading manufacturers, wholesalers, retailers, healthcare providers, and construction and transportation companies, for whom he conducts management and union avoidance training and provides compliance counsel.

“When it comes to the most complex matters facing employers, Fred is among the best and is a relentless advocate on behalf of his clients,” said Mark Rust, managing partner of Barnes & Thornburg’s Chicago office. “He joins the firm’s deep bench of labor and employment practitioners and is the latest example of our significant growth trajectory in Chicago.”

He received his J.D., cum laude, from the University of Minnesota Law School and his B.S. from Cornell University’s School of Industrial and Labor Relations. He is admitted to practice in the state of Illinois and before the U.S. Supreme Court, the U.S. Court of Appeals for the Fourth, Sixth and Seventh Circuits, and the U.S. District Courts for the Northern District of Illinois and the Eastern District of Wisconsin.

Joshua M. Herman has joined Farrell Fritz in its commercial litigation department as an associate. He is resident in the firm’s New York City office.

Prior to joining Farrell Fritz, Herman was a litigation associate and a summer associate at Brown Rudnick in New York, NY. He was a legal intern at the New York Legal Assistance Group: LegalHealth and a paralegal at Weitz & Luxenberg, P.C., a mass tort and personal injury litigation law firm.

Herman earned his Juris Doctor degree from New York University School of Law and his Bachelor of Arts degree, cum laude, from Tufts University. He is admitted to practice in New York and the U.S. District Court for the Southern District of New York.

Image by Gage Skidmore

Donald Trump’s power to nominate Supreme Court justices if elected to the White House is a threat to women workers, equal pay advocate Lilly Ledbetter and two union officials said, according to a report by Bloomberg Law.

Ledbetter was a former Goodyear tire plant supervisor who sued her employer after she discovered she was making less than her male colleagues after 20 years on the job. She lost that pay discrimination case at the Supreme Court in 2007. Congress responded by passing the Lilly Ledbetter Fair Pay Act to allow more time for claimants in federal pay bias claims.

“Ivanka Trump said during the Republican Convention that her father would likely look at the the pay bias issue,” reports Bloomberg’s Chris Opfer. “The AFL-CIO’s Shuler blasted the GOP nominee, however, for later saying on the campaign trial that he would expect his daughter to leave her job if she was being discriminated against.”

Read the article.

Dozens of law professors banded together to assail a federal court’s recent decision striking down the Obama administration’s hydraulic fracturing rule, according to a report in E&E Publishing’s EnergyWire.

The report says 36 energy, public lands and environmental law experts filed a friend-of-the-court brief with the 10th Circuit, arguing that the U.S. District Court for the District of Wyoming got it wrong when it found fracking to be beyond the authority of the Interior Department and its Bureau of Land Management.

“The lower court’s decision has no basis in legal precedent or relevant statutes and violates basic canons of statutory interpretation,” the professors told the 10th U.S. Circuit Court of Appeals, which is reviewing the decision. “It reads a sweeping government-wide exclusion into a surgical amendment explicitly tied to one statute. As a result of this decision, the BLM cannot fulfill its statutory mandate to serve as the chief steward of our public lands.”

“In particular, the professors take issue with the lower court’s interpretation of the Safe Drinking Water Act, as amended by the Energy Policy Act of 2005,” writes E&E Publishing reporter Ellen M. Gilmer.

Read the article.

Pillsbury Winthrop Shaw Pittman has posted a client advisory reporting on some of the significant U.S. Supreme Court actions from January through June 2016 related to environmental and administrative law.

The Supreme Court decisions discussed in the advisory involve energy regulation, public lands/statutory interpretation, land regulation/tribal, rico/offenses committed abroad, clean water act/administrative procedure act finality, standing, agency interpretation/chevron deference, clean air act/epa clean power plan, mercury air toxics standard.

The court declined to hear two cases involving CWA/American Farm Bureau Federation, and Groundwater Contamination/Exxon Mobil.

The advisory also covers two cases of interest in the upcoming term, involving regulatory takings and  presidential appointments.

Read the article.

Buchalter Nemer‘s Gary Wolensky, shareholder in the Orange County office, has been selected for inclusion in the 23rd edition of The Best Lawyers in America in the practice areas of Personal Injury Litigation – Defendants and Product Liability Litigation – Defendants. He was also named the Best Lawyers’ 2017 Los Angeles Product Liability Litigation – Defendants “Lawyer of the Year.”.This is the eighth year in a row Wolensky has been recognized by the organization.

Wolensky focuses his practice on the defense of manufacturers and retailers in consumer class actions, product liability and commercial litigation, and regulatory matters particularly in the automobile, motorcycle, consumer goods, football sporting goods and fitness equipment, pharmaceutical, medical device, food and amusement park industries. Wolensky has also worked with many of the top researchers and consultants on head and spinal issues, and has extensive experience with concussion related litigation and regulatory issues representing helmet manufacturers. His medical background stems from attending first year medical resident courses mandated by a former client.

Selections for The Best Lawyers in America are based entirely on peer-review. Their survey process is designed to capture an accurate opinion of leading lawyers about the professional abilities of their colleagues within the same region and practice area.

Nine attorneys from the family law firm Orsinger, Nelson, Downing & Anderson, LLP, have been selected to the 2017 edition of The Best Lawyers in America, which recognizes the nation’s top attorneys.

Partners Richard R. Orsinger and Brad M. LaMorgese were each recognized on the 2017 listing for their work in both Family and Appellate Law. Orsinger, name partner and head of the firm’s San Antonio office, has been honored in Family Law every year since 1987 and in Appellate Law since 2007. This is the second selection in both areas for LaMorgese.

Six additional firm partners, including name partners Keith M. Nelson, R. Scott Downing and Jeffrey O. Anderson, earned recognition based upon their representation of clients in Family Law matters. Nelson has been selected each year since 2006 and Downing for 11 consecutive years. Anderson has been honored each year since 2009.

This is the second Family Law selection for William M. Reppeto III and third for Lon M. Loveless. This is the first selection for Paula A. Bennett.

Of Counsel Marilea Lewis earned her fifth consecutive selection as a mediator. The 2017 selection marks her first in Family Law.

To compile its annual listing of the leading attorneys in various areas of practice, Best Lawyers studies millions of peer evaluations submitted by lawyers nationwide. The complete 2017 edition is available online at http://bestlawyers.com.

The firm has 15 lawyers and offices in Dallas, San Antonio and Frisco, Texas.

Health officials reported the first spread of the Zika virus from state to state when a Texas man got the disease after visiting a section of Miami where mosquitoes have been spreading Zika.

The Zika virus can cause brain damage and other birth defects in infants if the mother is infected during pregnancy. While its dangers first appeared in Brazil, its spread to the U.S. has magnified questions about risk, including to workers whose employers want them to travel.

For example, what steps are employers legally required to take if they need an employee to travel to a hot zone? What is the liability if an employee contracts the disease, which also can be sexually transmitted and spread when a mosquito bites an infected person and carries it to someone else?

Androvett Legal Media & Marketing has posted an article on its website quoting Justin Markel, a labor and employment lawyer in the Houston office of Roberts Markel Weinberg Butler Hailey PC:

“Under the Occupational Safety and Health Act, employees may refuse to work in certain circumstances when working conditions are dangerous. Among other things, the employee must genuinely believe that an imminent danger exists, and there must be a real danger of death or serious injury. Because of the way Zika is transmitted and the availability of preventive measures, it is unlikely that an employee could refuse to travel on this ground – unless the employee is pregnant.

“However, employers should be cautious when an employee refuses such a work assignment. An employee could argue that she is protected by OSHA and is shielded from adverse employment actions.”

Markel says that employer liability depends in part on participation in the worker’s compensation system. In Texas, employers have the option of whether to participate, he notes. “If the employee is covered by workers’ comp insurance, and if it could be proven that the employee contracted Zika while working, then the employee may have a workers’ comp claim. That would also mean that workers’ comp benefits are the employee’s exclusive remedy.

“If the employer does not subscribe to workers’ comp, then the employer may be liable for failing to provide a safe work environment if the employer does not take reasonable precautions to protect against Zika exposure,” he says.

Markel says employers with workers in affected areas should focus on educating their workforce about precautionary measures. OSHA has published helpful guidance here. Employers should try to limit standing water near worksites, and employees working outside should use mosquito repellant and wear long sleeves and pants.

eSignLive by Vasco has compiled a collection of its five most popular white papers on the subject of using e-signatures in business and law.

The papers include:

Beginner’s Guide to Electronic Signatures: A comprehensive 38-page beginner’s guide to electronic signatures introduces key concepts and considerations when creating digital business processes with this technology.

Why ESIGN is Not Enough to Keep You Out of Court: To help secure the enforceability of your electronically signed contracts and agreements, this article presents recommendations from three legal experts.

Electronic Signature Security: This whitepaper presents a holistic view of security to help identify the requirements against which you should evaluate e-signature solutions.

Key Evaluation Criteria for E-Signature Software: In this report, analyst firm Technology Evaluation Centers (TEC) outlines six key e-signature selection criteria and their importance to the success of a digitization strategy.

G2 Crowd’s Electronic Signature Software Rankings: In their winter 2016 e-Signature Grid, business software review site G2 Crowd analyzed over 1,900 e-signature reviews written by business professionals.

Download the white papers.

Image by Widjaya Ivan

Some Republicans in Congress argue the Obama administration’s final plan to effectively privatize Internet governance constitutes a federal government internet giveaway and effectively monopolizes web domain pricing, reports Fortune.

The National Telecommunications & Information Administration announced it will transfer internet domain name authority from the federal government to the Internet Corporation for Assigned Names and Numbers (ICANN) on Oct. 1.

The NTIA says the move won’t affect internet users in any meaningful way, according to a Wall Street Journal report, but it’s necessary to prevent governance fragmentation between nations as the Internet continues to grow and expand.

“The senators’ primary beef was with the Internet domain name registration company Verisign, which ICANN exclusively works with to register web domains,” reports Chauncey L. Alcorn. “The lawmakers complain fully transferring the federal government’s domain naming process over to ICANN gives Verisign exclusive authority to name its own price for the domain name registration process.”

Read the article.