Civ Pro Matters - the bell tolls for thee

Today, after more than two years of litigation and a ton of money on the line ($20 million), twelve jurors returned a unanimous defense verdict for Morgan, Lewis & Bockius, LLP against a former client for one simple reason: the statute of limitations.

Purolite alleged that in the 1990's, despite the U.S. trade embargo against Cuba, Morgan counseled it to continue selling to Cuba from its foreign offices. In 1999, as one might have guessed, Don and Stefan Brodie, the Pennsylvania-based brothers who own Purolite, were indicted for violating the Trading With the Enemy Act (not to be confused with Sleeping With the Enemy). They later pled guilty to a lesser charge.

Morgan claimed that the brothers Brodie ignored the firm's advice to stop selling to Cuba because, "They didn't like to be told what to do." Ouch! I'm sure it's not the first or last time the firm counseled a slightly belligerent client, but it's surprising to hear Morgan speak that way about a former client. I wonder if its current clients are a little uncomfortable right now . . .

In the end though, Purolite appears to have slumbered too long on their rights and slept right through the tolling of the proverbial bell: the statute of limitations. Regardless of whether Morgan counseled for or against sale to Cuba (and that does matter from an integrity perspective) the partners over at Morgan must be glad they attended Civ Pro the day the statute of limitations was covered. They must also be glad that Purolite's current counsel apparently didn't attend class that day.

Thanks to Law.com for the tip!

I May Already Be a Winner

I got an amazing e-mail this morning from the Reverend Father Peter Clark, a Director of Special Duties at a little known but highly influential NGO: The United Nations Organisation in Conjunction With the International Monetary Fund World Bank Fact-Finding & Special Duties Office London UK (UNOCIMFWB-FFSD London). Reverend Clark, who I daresay is not a native English speaker, writes to seek my help in resolving a complicated payment problem of international proportions.

Rev. Clark and another officer of UNOCIMFWB-FFSD London has arranged to make a payment to me (with reference number LM-05-371) of $10 million (US). Why? According to the World Bank's security computer, I have been waiting a long time to receive this payment, sadly without success. The good news is that at long last, I have met "all the statutory requirements in respect of [my payment]."

Anticipating some suspicion on my part (how could I have not noticed that the UNOCIMFWB-FFSD London owed me $10 million?), Rev. Clark explained that my problem is that of "interest groups." "A lot of people are interested in [my] payment and those people are merely doing paper works with [me]." Interest groups messing with paper works explains why I "receive difffent kinds of untrue fax and phone messages from different people every day." Rev. Clark seems to anticipate my paranoia. He explains that he has uncovered that "officials and parastatals" have been extorting a lot of money from me with the pretext of helping me receive my money. Rev. Clark urges me to "do away" with these parasites. And the best way to do it is to remain silent about his news that my $10 million payment is on the way.

My payment, it appears, will be shipped to me in a "security proof box weighing 75Kg." I'm naturally curious about this, because a $10 million check weighs only a couple of mgs. Rev. Clark has already tried all the commercial courrier companies to arrange for shipment. But they all turned him down. It seems that commercial courriers require the right to open all packages for customs inspection. The box containing my payment can't go commercial because it's been "padded with synthetic nylon and to open it [I] will have to cut the pad before [I] will meet the button that [I] will press to open the dial code-lock." The sad fact is that there is no way customs or anyone else can open the box and re-close it.

I'm in luck though because Rev. Clark discovered that there is a "security courrier services specializing in diplomatic materials that can carry my box without passing through customs anywhere." (Rev. Clark assures me that the courrier in question is an "expact" and I have "Notting" to worry about). All I have to do to set the security courrier in motion with my box is to donate $500,000 to any charity I designate as soon as I receive the box. To facilitate my "donation," I am to execute a promissory note for $500,000 to Rev. Clark which he will hold until further instruction from me.

Why me? Why have I been singled out for this top secret diplomatic international payments transaction? It's not what you might think. Rev. Clark assures me that the UNOCIMFWB-FFSD London has chosen to help me get $9.5 million richer "because [I] am an honest person."

Rebate for (Almost) Everyone?

The Joint Committee on Taxation has posted a description of the "Economic Stimulus Act of 2008" which is scheduled for markup tomorrow by the Senate Committee on Finance.

After reading through it, the one interesting thing I noticed was that the description does not contain any discussion about a phaseout for the rebate check. Every news report I read stated that the rebate would phase out if the taxpayer earned too much money in 2007. However, there is nothing about that in the description and, in fact, in one of the examples, a couple with 230,000 in income is described as receiving a rebate.

That will likely get changed in the markup, but I was rather surprised by it.

UPDATE: It didn't even take the Senate to change it. The proposed bill in the house (HR 5140) has this language:

The amount of the credit allowed by subsection (a) (determined without regard to this subsection and subsection (f)) shall be reduced (but not below zero) by 5 percent of so much of the taxpayer's adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).

Shoot Money Out a Big Cannon

Hey Jeff and all, Calculated Risk has laid down a challenge. Come up with the worst idea for a government sponsored economic stimulus package. I'm sure RLR readers have some great ideas for terrible programs-- the possibilities for stupid plans that yield absolutely no economic growth are infinite. To help you get started, consider what makes a good stimulus package? It should lower costs of capital to people that are going to spend it on new goods and services, and not save it, or pay down existing debts.

You are going to have to be really creative to outdo the 229 ideas (and counting) posted at Calculated Risk. Here's one that shows real promise. Money cannons. Place a money cannon at the tallest point of each municipality in the US. Load in $100s and $20s. Fire and watch what happens.

Hat tip and thanks to my friend at Underbelly. We agree that the money cannon idea is the one to beat. Sadly, this idea may not be as bad as the one our government just delivered.

Capitalism Humor

Tom Smith (San Diego), who Brian Leiter calls "the funniest blogger in legal academia," has a very funny post about comments by Bill Gates at the Davos conference. My favorite line:

Gates is not even the future of operating systems, let alone the world economy. If he has time on his hands, let him invent a word processing program that doesn't suck.

Viva WordPerfect!

Hottie or Nottie?

Apropos of the photo of Karl Marx in the post below, here's Karl sans facial hair. What was he thinking?

Who Decides?

Prof. Fershee,

In response to your comment on my previous post, I absolutely hear your concern, and I share it. That is the critical balance that we must decide going forward, is an interest in mortality something that should be salable in the market, or is a "death bond" more like human organs, where for the sake of policy, we simply do not want to allow them to be sold. (For a fun read see Elisabeth Landes & Richard Posner, The Economics of the Baby Shortage, 7 J. LEGAL STUD. 323 (1978).)

Anonymous makes a great point, just pick up Dukeminier, et al. on Wills, Trusts and Estates, your family members are much more likely to "do you in" than an investment banker on Wall Street. But setting the statistics aside, the real issue is whether or not it should be the government's role to tell you who to trust.

Here's another piece to consider, there is a split among the states on the issue of whether you can sell the contract rights to the death benefit on the life policy that you own on the life of someone else. For example, I can take out a life insurance policy on my husband, because I have an insurable interest in his life. However, not all states think I should be able to sell my interest in *his life* to a third party without his consent, though, amazingly, some do.

Perhaps you would prefer the approach that requires the insured (not necessarily the policy owner) to consent to have the interest in his life sold to a third party, and then again if that interest was securitized. However, now we seem to be putting restraints on alienation that are not only potentially costly to enforce, but which may be difficult to factor into pricing. If consent is required, then the investor is actually purchasing an option rather than a pure asset.

My feeling is that life settlements and securitized pools of them, should be allowed. As long as the parties involved understand what they are doing, the practice will bring an increase in competition to a market that has unduly favored insurers. With a life settlement, consumers have another option with which to derive value from their assets. On the other hand, the corollary to an increase in life settlements is a decrease in policy lapse. Since lapse is figured into premium structures for insurance rates, insurers may have to increase premiums in order to account for this change in their expected cash flows (several already have). With an increase in premiums, it becomes more costly to procure insurance, which may dissuade a would-be insured from taking out insurance in the first place. As we still favor insurance from a policy perspective, this may be another reason to restrict life settlements.

How best to restrict the market place is not a question I am qualified to answer. So if anyone has ideas, please share. It is a fascinating web of issues, though, and something worth having on our radar.