Blog
CFPB to study arbitration
A Wall Street Journal editorial details a provision of the Dodd-Frank financial reform bill that allows the CFPB to study the use of arbitration in consumer contracts. Arbitration gives consumers and business a faster and less expensive means of resolving disputes, but the trial bar would love to see every dispute settled by class actions writes the Journal.
Clearer standards would improve FCPA compliance
Responding to an USA Today editorial opposing Foreign Corrupt Practices Act reform efforts, former Attorney General Michael Mukasey has an op-ed that offers some ideas to clarify the law. Mukasey proposes adding a compliance defense and defining who is considered a foreign official under the statute. “Unambiguous guidelines from the government, including information about cases it declines to prosecute, can help,” argues Mukasey. “Standards are then clearer, and companies can operate in compliance knowing they will not be charged unfairly if they disclose, and correct, unlawful conduct.”
Correct the Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act bars U.S.-based and U.S.-traded companies from giving things of value to foreign government officials or their surrogates in order to gain a competitive advantage — a worthy law whose goals have wide support from American businesses.
But more than 30 years of experience with the law and an increasingly global economy have shown some weaknesses which, if corrected, could improve compliance and raise business standards.
For example, companies should be rewarded for strengthened compliance. If a U.S. company buys a foreign company, discovers that company violated the FCPA and then corrects the wrongful business practice, the parent company should not then be smacked with an enforcement proceeding for conduct occurring before the merger.
If a U.S. company with a strict compliance program learns low-level employees of a foreign subsidiary broke company policies, investigates, stops and reports that conduct, there is no assurance today that the company will not still be indicted.
In countries like China where the government is a partner in every business, how does a U.S. firm determine who is and is not considered a government employee? Does the U.S. firm violate the FCPA by bringing a Chinese factory manager to the United States for training?
Merely being charged with an FCPA violation can destroy a company's market value and prevent it from doing business with the government and other customers. Most cases are decided not in court but in prosecutors' offices, where costly settlements substitute for risky legal fights. Thus, some companies have not pursued foreign business development or exited foreign countries altogether, leaving the field to less scrupulous foreign competitors.
Unambiguous guidelines from the government, including information about cases it declines to prosecute, can help. Standards are then clearer, and companies can operate in compliance knowing they will not be charged unfairly if they disclose, and correct, unlawful conduct.
Some suggest that increased FCPA enforcement has proved the law's utility without the need for changes. But the opposite is true: Aggressive enforcement has alerted business and the courts alike to its flaws. That is why clarifying the FCPA has drawn bipartisan support. Without clear standards, American businesses will begin to cede global markets to less ethical foreign competitors, making America less competitive and costing jobs.
Former U.S. attorney general and federal judge Michael B. Mukasey is a partner with Debevoise & Plimpton LLP. He represents the U.S. Chamber Institute for Legal Reform with regard to the Foreign Corrupt Practices Act.
This column first appeared in USA Today.
Trial Lawyers Backing Louisiana Governor
A blog post at The Political Desk looks at the close ties between Louisiana Governor Bobby Jindal and the state’s trial lawyers. Jindal has been accused of creating a “trial lawyer bonanza” by siding with the tort bar in their efforts to sue the oil and gas industry over “legacy” well sites in Louisiana.
Disabilities Act Prompts Flood of Suits Some Cite as Unfair
The New York Times spotlights a growing trend in New York City – lawyers who recruit plaintiffs to sue local businesses for violations of the Americans with Disabilities Act. Such “drive-by” ADA suits are relatively new to New York, but have long been a problem in California and Florida. In fact, Sen. Dianne Feinstein recently called for changes to California’s ADA statute, saying the law is used by attorneys to extort money from businesses.
Asbestos Trust Transparency Legislation Introduced
Representative Ben Quayle today introduced the Furthering Asbestos Claims Transparency (FACT) Act of 2012, a bill that would require asbestos settlement trusts to disclose information about their claims and respond to information requests from parties to asbestos litigation. “We applaud Representative Quayle’s effort to shed light on the growing number of asbestos bankruptcy trusts that play a significant role in today’s asbestos compensation system,” said ILR President Lisa Rickard. “The FACT Act is common sense bipartisan legislation that would bring much needed transparency to the trust system.”
Senator calls for changes to ADA
Senator Diane Feinstein is encouraging California legislators to address the problem of “drive-by” lawsuits filed under the Americans with Disabilities Act. She warns that lawyers are using the law, which allows plaintiffs to sue for $4,000 per day, to extort payments from business owners. Feinstein is pushing for a 90-day grace period for owners to bring their business into compliance with the ADA before any lawsuit can be filed, reports CBS San Francisco. ILR has featured multiple abusive California ADA lawsuits on the Faces of Lawsuit Abuse website.
Updates to the FCPA on the way?
A special report from the National Law Journal takes a look at the government's recent enforcement of Foreign Corrupt Practices Act cases. ILR has proposed changes to the laws that would “include giving credit to companies for timely disclosure and cooperation, clarifying the definition of “foreign official” and requiring an intent standard for corporate criminal liability.”
Usury laws don’t apply to lawsuit lenders says NY judge
A New York judge has decided that a company that advanced more than $1 million to plaintiffs at an alleged 40 percent interest rate is not subject to state usury laws. The ruling comes in the wake of the New York City Bar Association’s warning to lawyers to avoid “unlawful” funding arrangements, Reuters reports.
Does Arbitration Offer Better Access to Justice for Consumers?
Arbitration is a fair way of resolving claims, according to the testimony of Victor Schwartz (which he discusses in the nearby video) on behalf of the U.S. Chamber Institute for Legal Reform. Studies have shown that consumers fare just as well, if not better, when they take their claims to arbitration rather than litigation, and arbitration proceedings are resolved more quickly and with lower transaction costs. The procedure gives consumers a fair, cost-effective forum to resolve smaller disputes that are not financially viable for litigation.
According to Schwartz, arbitration is a threat to the trial lawyers’ business plan. These lawyers don’t want to litigate small claims – they want to bundle as many claims as possible together into a class action to drive up the settlement value and their fees with it. However, a vast majority of claims are individualized and would not qualify for class consideration. And even if they are one of the rare cases that can be grouped into a class, few consumers bother to submit the complex forms necessary to obtain recovery.
Hiring a lawyer on a contingency fee basis to go to court instead of arbitration can cost a consumer up to 50 percent of any eventual reward – and that’s only if they can find an attorney. Studies have shown what most of us already know – plaintiffs’ lawyers will only take a case if they believe there is both a substantial chance of success and a potential recovery that will justify their expenses. Some studies show that lawyers will not take a case if the claim is worth less than $60,000. Since the vast majority of arbitration claims involve small sums, the elimination of pre-dispute arbitration could force consumers to spend more on a lawyer than their claim is worth. In addition, arbitration can be a much more expeditious procedure than litigation, which could take years to resolve in our increasingly overcrowded court system.
Ultimately, arbitration lets consumers and employees resolve their claims in an affordable, timely, and accessible forum. Eliminating pre-dispute arbitration would be good for trial lawyers but bad for everyone else.
