The Legal Intelligencer Blog

High Court Dismisses Insurer’s Suit Against Margolis Edelstein

By Gina Passarella
Of the Legal Staff

Just weeks after hearing oral arguments in the case, the state Supreme Court has dismissed as being improvidently granted an appeal by an insurance company that wanted its lawyers to pay the $5 million the company paid to settle a case.

The court in Ingerman Affordable Housing v. Margolis Edelstein didn’t offer an explanation in its one-line order Friday for why it dismissed the case.

The state's six sitting Supreme Court justices were asked to decide whether an insurance company that settled for $5 million when it felt the insured's lawyer was badly losing a case could then sue the lawyer for malpractice even though he ultimately secured a defense verdict.

Attorney Clifford E. Haines told the justices at oral argument that the lower courts defied logic in finding his client, Ohio Casualty Insurance Co., had no damages against defense lawyer Walter J. Timby III and his firm, Margolis Edelstein, to present to a jury given the defense verdict against Ohio's insured. Haines pointed to the $5 million Ohio paid to settle personal injury claims against its insureds, Ingerman Construction and other related entities.

Haines argued the lower courts' rulings granting and upholding summary judgment in favor of Timby and Margolis Edelstein essentially give insurance defense lawyers a free pass on malpractice liability if their clients settle based on separate counsel's advice that the defense lawyer has put the insured at risk of liability.

Timby and Margolis Edelstein, through lawyer George M. Vinci Jr. of Spector Gadon & Rosen, argued on the other hand that legal malpractice claims require a plaintiff prove the "case within the case," and be able to show that the plaintiff would have won the underlying issue but for the lawyer's malpractice. In this case, Vinci noted, Ingerman Construction was found not liable when a jury returned a $7 million verdict against another defendant.

He argued it was Ohio's choice, based on advice from counsel at Post & Schell, to settle the case after several other defendants settled. That decision was made, Vinci said, after Shanin Specter of Kline & Specter told Ingerman Construction that he would target the company now that the other defendants had settled.

Even more importantly, Vinci argued, was that Ohio admittedly was acting in this lawsuit under the assigned rights of Ingerman Construction. When a party in Pennsylvania is an assignee of a claim, they are standing in the shoes of the party that assigned that claim — in this case, Ingerman Construction. The problem, Vinci said, is that Ingerman Construction suffered no damages, paid no money out of its own pocket and was found not liable by a jury. Therefore, Ingerman Construction had no claim to assign and Ohio has no damages to assert, he argued.

The "absurdity" of the entire case, Vinci said, is highlighted by the fact that Brad Ingerman, owner of the various Ingerman entities, testified at his deposition that his company did not sustain or pay any damages and that Margolis Edelstein gave competent representation.

But what Haines argued, and the dissenting judge at the Superior Court said in his opinion, was that Ohio never would have paid those damages had it not been fearful of significant liability beyond its $5 million excess insurance policy. Ohio settled, Haines said, because of the alleged missteps by Timby and the fact that the defendants in the underlying suit were up against one of the best personal injury lawyers in the county known for getting verdicts upward of $100 million.

Haines also noted that Ingerman Construction faced significant exposure after the other defendants settled.

Read The Legal’s full article on oral arguments in the case here.

Drinker Isn’t Only Firm to Start E-Discovery Shop

By Gina Passarella
Of the Legal Staff

In Thursday’s Legal, I wrote about Drinker Biddle’s new subsidiary, Drinker Discovery Solutions, in which the firm will offer its clients and other firms’ clients e-discovery services.

Drinker bought its own software and is looking to replicate what e-discovery vendors are offering their clients.

Drinker and consultants said they hadn’t heard of other firms taking a similar approach and creating a wholly owned subsidiary, though they expected it might catch on at other firms.

As it turns out, there are firms that have taken similar approaches.

Holland & Hart created a subsidiary several years ago that has since spun off into its own company, Catalyst Repository Systems. Other firms, including K&L Gates and Morgan Lewis (as mentioned in our article) have taken a number of e-discovery technology functions into the law firm practice.

Legal affiliate Law Technology News wrote an article earlier this year about how firms were handling e-discovery for their clients.

More recently, Atlanta-based Troutman Sanders created a subsidiary in early June known as eMerge. It is run by Troutman Sanders partner Alison Grounds, who also heads up the law firm’s e-discovery and data management practice.

The goal of eMerge sounds a lot like Drinker Discovery Solutions’ mission.

From Troutman Sanders website: “eMerge provides consulting, project management and technology services related to the preservation, collection, processing, hosting, review, and production of ESI in litigation and internal/governmental investigations – all at competitive rates.

“Our mission is to leverage technology to reduce irrelevant data and get to the relevant documents efficiently,” Grounds said. “This reduces manual review costs and wasted fees in hosting junk.”

Here is a link to eMerge’s website.

Here is a link to Drinker Discovery Solutions’ website.

Fresh Ink: Inside Today's Legal

Welcome to your Friday morning round-up of stories in today’s edition of The Legal Intelligencer. All of the links below will take you directly to today’s stories, or you can head straight over to The Legal’s homepage. (Some stories may require registration or a paid subscription.)

The top story this morning is the voter ID decision being back in Commonwealth Court Judge Robert Simpson’s hands. As reporter Saranac Hale Spencer writes, Simpson gave strong indications that he is planning to enjoin part of Pennsylvania’s new law before November’s election. He said that some parts of the law may well have merit, and if he issues an injunction he’d like to find ground short of “all or nothing.”

Also above the fold on Page 1, reporter Gina Passarella writes that Comcast has beaten back an attempt by a class of plaintiffs to enforce a proposed settlement with the cable company in an antitrust case that subsequently was granted certiorari by the U.S. Supreme Court.

Below the fold on Page 1, reporter Amaris Elliott-Engel writes that Ken Shear, who was a cornerstone of the Philadelphia Bar Association for almost 36 years, plans to retire in 2013.

In more Regional News on Page 3, Jeff Mordock of the Delaware Business Court Insider writes that the Delaware Supreme Court has denied Grupo Mexico’s motion to reargue the court’s decision to affirm a Chancery Court decision ruling that resulted in awarding a record $2 billion in damages and $304 million in attorney fees in the Southern Peru shareholder litigation.

As always, our People in the News section is on Page 2, and the top stories from our sister publications across the country make up the Page 4 National News section.

In an Employment Law column on Page 5, Jeffrey Campolongo writes about employment law cases in the upcoming Supreme Court term.

In a Franchise Law column on Page 7, Craig R. Tractenberg and Gregg Rubenstein discuss necessary formality in franchise agreements.

If you have questions or comments about any of today's stories, or our coverage as a whole, we invite you to email any of the reporters directly. We hope you'll enjoy today's Legal.

Fresh Ink: Inside Today's Legal

Welcome to your Thursday morning round-up of stories in today’s edition of The Legal Intelligencer. All of the links below will take you directly to today’s stories, or you can head straight over to The Legal’s homepage. (Some stories may require registration or a paid subscription.)

The top story this morning is the state Supreme Court rejecting a request by the state Association of County Commissioners and 10 counties to order the General Assembly to take legislative action and provide state funding for a centralized, unified judicial system. As reporter Amaris Elliott-Engel writes, the court said it trusts the branches of government will cooperate to decide what local functions of the justice system need to be unified in a central system.

Also above the fold on Page 1, reporter Saranac Hale Spencer writes that a suit alleging a natural gas drilling operation violated the Clean Air Act has survived a motion to dismiss in federal court and raised novel questions about abstention.

Below the fold on Page 1, reporter Gina Passarella takes a look at recent indications that law firms could become e-discovery vendors. Drinker Biddle & Reath, for example, created a subsidiary to handle the technical aspect of mining electronic data in litigation.

In more Regional News on Page 3, reporter Zack Needles writes that Archer & Greiner plans to open an office in Monmouth County, N.J., after its recent expansion in Philadelphia and North Jersey.

As always, our People in the News section is on Page 2, and the top stories from our sister publications across the country make up the Page 4 National News section.

In a Securities Law column on Page 5, Katayun I. Jaffari and Jill M. Stadelman write that the SEC has adopted conflict mineral disclosure and due diligence rules.

In this week’s Young Lawyer column on Page 7, Michael J. Joyce writes about the daily struggles of handling the novelties of practice.

If you have questions or comments about any of today's stories, or our coverage as a whole, we invite you to email any of the reporters directly. We hope you'll enjoy today's Legal.

Red Flags in the Analysis of Income Statements

By Colleen S. Vallen
Special to the Legal

Financial analysis is a complex and broad topic, so much so that books have been written solely on the subject. In this post, I highlight sample red flags that can be identified on an income statement. Attorneys often don’t need to understand all of the issues or answers when it comes to financial analysis of income statements; rather, they need to know how to identify red flags and what questions can be used to obtain additional information.

Red flags highlight potential areas of concern. Asking the right questions will provide valuable information about a business. Some red flags will be readily explained, while others may be indicative of business problems including the potential for errors, omissions and fraud. Developing the ability to know when to ask questions is an important skill when working with financial data.

The financial data of a business includes the financial statements (i.e., balance sheet, income statement, statement of cash flows and statement of owner’s equity). In addition, transaction-level data will be maintained in subsidiary ledgers and journals. The income statement shows the operational results of a business (i.e., the revenues, expenses and profits of a business).

One of the primary categories of the income statement is revenue. Comparing the revenue for multiple periods and analyzing the changes in those revenue figures provides information about a business’ growth. A red flag identified through this analysis is a declining revenue trend. If a business has a declining revenue trend, questions you may want to investigate include:

• What caused the declining revenue?

• Is there a valid reason for the decline (i.e., loss of a product line) or could it be an indicator of other problems?

• Does the business have a plan to address the revenue decline?

• Will the business be able to pay its bills?

• Is the business viable?

Another red flag related to the income statement is unexplained business performance, which can exist with revenues, expenses or profits that are outside the norm. When looking for unexpected performance, consider changes from prior periods, deviations from budget and performance out of sync with the business’ market and/or industry. For example, if the business’ revenues for the last several years were relatively flat (i.e., minimal or no growth) and in the current year there is significant growth, questions you may want to ask include:

• What caused the increased revenue growth?

• Is the growth sustainable or is this a one-time event?

• Why did the business have relatively flat growth historically?

Finally, large, unusual or nonrecurring items on the income statement are a red flag. Comparing the income statements of a business for multiple periods will assist in identifying these types of items. Crucial questions to ask include:

• What occurred?

• How did and will the event impact the overall performance of the business?

For example, a company may sell off a division that can have a positive impact on the profits in the current year, but in the long term it may or may not be beneficial.

When analyzing financial data, identify trends and changes in performance and ask questions about your findings to further understand what these trends and changes mean to a business. The goal is to learn about the business and how these trends and changes will impact it now and in the future.

Colleen S. Vallen is a partner in Citrin Cooperman Philadelphia’s valuation and forensic services group. An expert in the field of forensic and investigative accounting, she focuses her attention on forensic and fraud investigations, the preparation of financial damage analysis and litigation support. She is also highly experienced in the analysis, investigation and review of financial documents as well as case planning and management, financial and economic analysis, expert report preparation, oral presentation of findings and assistance with discovery, interrogatories and depositions. She can be reached at cvallen@citrincooperman.com or 215-545-4800.

Fresh Ink: Inside Today's Legal

Welcome to your Wednesday morning round-up of stories in today’s edition of The Legal Intelligencer. All of the links below will take you directly to today’s stories, or you can head straight over to The Legal’s homepage. (Some stories may require registration or a paid subscription.)

The top story this morning is the voter ID case again going before Commonwealth Court Judge Robert Simpson. As reporter Saranac Hale Spencer writes, the case is back in Simpson’s hands after being remanded by the state Supreme Court, and presents a fast-developing set of facts as state officials continued to attempt to craft the voter ID program on the eve of Tuesday’s hearing.

Below the fold on Page 1, reporter Amaris Elliott-Engel writes that senior judges have been restored to the Philadelphia court system after the Court of Common Pleas was required to reduce its complement of senior judges by the same number of judges confirmed to fill vacancies on the bench.

In more Regional News on Page 3, reporter Ben Present writes that a York County jury has awarded $6 million to the estate of a woman who died from internal bleeding after a resident from an area hospital allegedly failed to properly diagnose and communicate her condition to a cardiologist.

As always, our People in the News section is on Page 2, and the top stories from our sister publications across the country make up the Page 4 National News section.

In this week’s GC Mid-Atlantic column on Page 5, Hayes Hunt and Jillian R. Thornton write about the effects of social media on the workplace.

In a U.S. Supreme Court column on Page 7, Stephen A. Miller writes the second part in a preview of the upcoming term.

If you have questions or comments about any of today's stories, or our coverage as a whole, we invite you to e-mail any of the reporters directly. We hope you'll enjoy today's .

Cozen O’Connor Leadership Succession Nears Completion

By Gina Passarella
Of the Legal Staff

Cozen O’Connor is in the process of implementing the final stages of moving the law firm from first- to second-generation leadership.

Come January 2013, current president and executive partner Michael Heller will become president and chief executive officer of Cozen O’Connor. Thomas A. “Tad” Decker, the current CEO, ceded the title of president to Heller last year and will now relinquish his role as CEO. Decker will take on a vice chairman position and remain actively involved in the firm’s strategic growth initiatives. He will also become actively involved in Cozen O’Connor Public Strategies, an ancillary business of the firm. The role of executive partner held by Heller will no longer exist.

Decker had been hired back to Cozen O’Connor from the Pennsylvania Gaming Control Board in 2007 to take over certain leadership roles from founders Stephen A. Cozen and Patrick J. O’Connor. Both name partners still sit on an advisory board at the firm to help come up with solutions to problems the firm is facing. Also on that board are vice chairmen John J. Cunningham III and F. Warren Jacoby, former Wolf Block leader Mark Alderman and former Blank Rome leader David Girard-diCarlo, who is retiring from the practice of law this year.

Heller said that rather than sharing the firm’s leadership responsibilities, he will have full responsibility for the firm’s strategic growth. Heller said he would work with managing partner Vincent R. McGuinness Jr. and chief operating officer Dave Ellman to carry out the firm’s latest strategic plan, which is in its final stages of drafting.

“History has shown that it is a very difficult transition from a first-generation firm to a second-generation firm,” Heller said. “We got lucky because Tad really was the perfect person to lead that transition for a lot of reasons.”

Heller said Decker has been generous in partnering with Heller over the past several years in managing the firm and allowing Heller to take a leadership role in Cozen O’Connor’s lateral acquisition program.

Heller himself was the first lateral corporate partner Cozen O’Connor ever hired when he joined the firm in 1995 from Wolf Block. He subsequently helped Cozen O’Connor hire more than 65 Wolf Block attorneys upon that firm’s dissolution in March 2009. There have been a number of other lateral acquisitions in the last few years, including in New York and Texas and in the intellectual property and labor and employment practice areas.

Heller said the plan moving forward is to continue that growth both geographically and in terms of the practice diversity he said the firm has achieved over the last three years.

While Cozen O’Connor has done well at growing its litigation and reinsurance practices across the country, Heller said the firm needs to keep expanding its business practices west of the mid-Atlantic region. He said the firm would continue to look at Chicago, Los Angeles, Dallas, Houston and Miami for that growth.

Heller said Cozen O’Connor’s unique practice mix, which has a strong history in subrogation and insurance work, is not something he wants to move away from. He said that unique mix has a lot to do with why the firm continued to grow profitably in the toughest economic climate of his generation.

Moving forward, Heller said his focus in terms of practice area growth will be on labor and employment, IP, real estate, commercial litigation, energy and utilities and the diversification of its insurance practice to continue the firm’s recent emphasis on reinsurance and bad-faith work. Cozen O’Connor is also looking to expand its subrogation practice in Canada. The firm already has a Toronto office.

Heller will officially take over as CEO on January 1. Cozen is still chairman of the firm. O’Connor is a vice chairman.

Gina Passarella is the senior reporter for The Legal. She can be contacted by e-mail at gpassarella@alm.com or phone at 215-557-2494. Follow her on Twitter at @GPassarellaTLI.

Fresh Ink: Inside Today's Legal and Pa. Law Weekly

Welcome to your Tuesday morning round-up of stories in today’s edition of The Legal Intelligencer, which also includes this week’s edition of Pennsylvania Law Weekly. All of the links below will take you directly to today’s stories, or you can head straight over to The Legal’s homepage. (Some stories may require registration or a paid subscription.)

This year’s Lawyers on the Fast Track supplement is also inside today’s paper, so be sure to give it a read.

The top story in today’s Legal is a preview of the return of the voter ID case to Commonwealth Court. As reporter Saranac Hale Spencer writes, the case is back in the hands of Judge Robert Simpson after the state Supreme Court remanded it to assess the actual availability of photo ID cards to Pennsylvania voters.

Also above the fold on Page 1, reporter Gina Passarella writes that a products liability trial alleging Johnson & Johnson illegally marketed the antipsychotic drug Risperdal for use by kid has opened in Philadelphia.

Below the fold on Page 1, reporter Zack Needles writes that Reed Smith has formed a strategic alliance with an Athens, Greece-based business law firm, Papapolitis & Papapolitis.

Also below the fold on Page 1, Saranac Hale Spencer writes that attorney Charles Naselsky was convicted Monday on charges related to a tax evasion scheme carried on while he worked as a real estate lawyer at Cozen O’Connor.

In a From the Chief column on Page 3, Hank Grezlak writes that the voter ID decision was one of the state Supreme Court’s finer moments.

As always, our People in the News section is on Page 2, and the top stories from our sibling publications across the country make up the Page 4 National News section.

In a U.S. Supreme Court column on Page 5, Stephen A. Miller writes the first in a two-part preview of the upcoming term.

In a Guest Commentary on Page 7, Robert L. Byer writes in a response to an editorial board column that possible split decisions are not related to party affiliation in the Supreme Court.

Today’s lead story in PLW is the Supreme Court vacating the reinstatement of a worker who was fired for sexually harassing his colleague. As reporter Ben Present writes, one lawyer involved in the case said it may mark the first time the high court has applied a public policy exception in vacating an arbitration award.

Below the fold on Page 1, Zack Needles writes that the Pennsylvania legal community might be becoming less forgiving of the disbarred.

On Page 3, Ben Present writes that a Superior Court panel declined to force a father to release his mental health records in a custody trial.

There’s much more inside this week’s PLW, including Samuel C. Stretton’s Ethics Forum, in which he writes that criticizing opposing counsel is a big mistake; Sean P. McCusker’s Family Law column on child support when a parent’s role is greatly diminished; and Cliff Rieders’ Politics column on the Supreme Court after Sebelius.

If you have questions or comments about any of today's stories, or our coverage as a whole, we invite you to e-mail any of the reporters directly. We hope you'll enjoy today's Legal.

Social Media and Electronic Communication Statistics Lawyers Should Not Ignore

By Gina F. Rubel
Special to the Legal

Like it or not, social media and electronic communications are here to stay and they are tools that cannot be overlooked in the legal marketing strategy by law firms and lawyers. Here are 10 statistics that should not be ignored.

Social media matters. Business-to-business marketers believe social media is critical to organic search success. Marketers rate social media as the second-most important factor (64 percent) in search, behind only strong content (82 percent). While many law firms have focused on content for their websites, they are still slow to the mound when it comes to social media engagement. It’s time to shoot for a base hit at the very least. (B2B Magazine.)

It starts at the top. Company executives, including law firm partners, management and CMOs, need to be involved in social media. Seventy-seven percent of buyers say they are more likely to buy from a company whose CEO uses social media. Ninety-four percent said C-suite social media participation enhances a brand image. And 82 percent of employees say they trust a company more when the CEO and leadership team communicate via social media. However, as is the case with law firms, partners, associates, staff and legal marketers still have to be aware of the ethical and practical implications of social media engagement. Therefore, engage with a policy and strategy in place. (Emarketer.)

Less is more. Audiences engage less on social media the more you post per day. When a brand posts twice a day, those posts only receive 57 percent of the likes and 78 percent of the comments per post. Law firms and lawyers need to be that much more strategic. (Track Social.)

Purpose trumps ego. A recent email trends and benchmarks report shows a steady increase in open rates over both Q4 2011 and Q1 2012. Open rates for triggered messages (a.k.a., those emails that were “triggered” in response to an event or to share information about something of value to the target audience) were 75 percent higher than "business as usual" (BAU) emails in Q1 2012, dropping from 101 percent in Q1 2011. In fact, triggered messages continued to perform well with significantly stronger click rates (119 percent higher) than BAU. This means that law firm electronic alerts about important information for their target audiences are going to be opened more than the "look at us" emails. (Epsilon & DMA.)

Mobile is on the move. In June 2012, Litmus released email marketing statistics outlining subscriber behaviors. Among their findings was an 80 percent increase in smartphone and tablet use to open emails since December 2011. Law firms must provide email messages that fit the platforms used to open them. (Litmus.)

Facebook fans are quiet. In a given week, less than 0.5 percent of Facebook fans engage with the brand they are fans of. So while it is important for a law firm to own its profile on Facebook and to share relevant, worthwhile content, it is certainly not where the firm should spend the majority of its social media engagement time. (Admap.)

Adults use social media. Ninety-one percent of today’s online adults use social media regularly. That means decision-makers for the hiring of lawyers are online. It doesn’t matter if you are providing business litigation, personal injury, domestic law, estate and tax, labor and employment, intellectual property or any other type of legal service – your clients and prospective clients use social media. (Experian.)

Fortune 100s embrace Twitter. With more than 340 million tweets per day, Twitter is driving the online conversation as it relates to Fortune 100 companies. Twitter is also the platform of choice among global companies. Corporate lawyers need to know what is being said about their clients by monitoring the online chatter. (Burson-Marsteller.)

Organic trumps pay-to-play. Google gets 3 billion-plus searches per day and 75 percent of all clicks go to SEO (organic) links as opposed to paid Google ads. That means a law firm’s website content, blog content, online press releases, directory listings, media quotes, articles, calendar listings and other content all matter as to how a law firm and its lawyers are found online. In fact, the most valuable forms of marketing content are blog posts, social media, articles and guides and press releases. (SEOMOZ and Hubspot.)

Social media affects litigation. By now, we have all heard stories about how tweets, texts, Facebook postings, Flickr posts, blogs and all other forms of social media updates have been the focus of discovery requests and court rulings – yet, some courts and counsel have not embraced the need to instruct and monitor jurors on the use of social media. A number of states and the Federal Court are adopting new model jury instructions for just that reason. It’s important that litigators and judges are educated on the need for same to be effective at trial. (U.S. Courts.)

Gina F. Rubel is the owner of Furia Rubel Communications, a strategic marketing and public relations agency with a niche in legal marketing. A former trial attorney, she is the author of Everyday Public Relations for Lawyers. Rubel and her agency have won many awards for legal communications, PR, media relations, website and graphic design, strategic planning, corporate philanthropy and leadership. She maintains a blog, is a contributor to National Law Review, The Legal Intelligencer Blog, AVVO Lawyernomics and The Huffington Post. You can find her on LinkedIn or follow her on Twitter. For more information, go to www.FuriaRubel.com.

 

Fresh Ink: Inside Today's Legal

Welcome to your Monday morning round-up of stories in today’s edition of The Legal Intelligencer. All of the links below will take you directly to today’s stories, or you can head straight over to The Legal’s homepage. (Some stories may require registration or a paid subscription.)

The top story this morning is a look at the job ahead of Ken Feinberg in his effort to quickly settle Penn State claims related to the Jerry Sandusky sex-abuse scandal. As reporter Ben Present writes, plaintiffs attorneys said there is no precedential guidance for a case like this, making Feinberg’s job a difficult one.

Below the fold on Page 1, reporter Saranac Hale Spencer writes that the 12 members of the jury who are scheduled to hear the capital case of the alleged North Philadelphia gang leader Kaboni Savage will serve anonymously. The jury members, however, will not be fully sequestered.

In more Regional News on Page 3, reporter Amaris Elliott-Engel writes that a judge has rejected The Beasley Firm’s abuse of process suit in the fight over the estate of famed trial lawyer James E. Beasley Sr.

As always, our People in the News section is on Page 2, and the top stories from our sister publications across the country make up the Page 4 National News section.

In this month’s Public Interest page, Lynn A. Marks and Shira J. Goodman right that merit selection is the right path for Pennsylvania, while Michele Levy writes about HAP’s SOAR project responding to cuts for the disabled poor.

In the Law Technology News page, Monica Bay writes about persuading juries with effective graphics.

If you have questions or comments about any of today's stories, or our coverage as a whole, we invite you to e-mail any of the reporters directly. We hope you'll enjoy today's Legal.