The Legal Intelligencer Blog

Mulgrew's Co-Defendant Sentenced for Fraud Charges

By Saranac Hale Spencer
Of the Legal Staff

Lorraine Dispaldo, co-defendant of suspended Philadelphia Traffic Court Judge Robert Mulgrew, was sentenced today in federal court to 18 months in prison.

Dispaldo had pleaded guilty in April to charges related to a scheme to defraud the state Department of Community and Economic Development out of state grant funds awarded to nonprofits.

A former administrative aide to state Representative Bill Keller, D-Philadelphia, Dispaldo had been charged along with Mulgrew in allegedly steering to improper purposes much of the $397,000 awarded to Community to Police Communications to purchase communications equipment for the police as well as to protect law enforcement officers by purchasing materials to secure vacant lots and buildings, as well as $460,000 awarded to the Friends of Dickinson Square to maintain the square and the surrounding area.

“Dispaldo helped orchestrate the scheme to fraudulently receive and misuse Pennsylvania state grant funds awarded to nonprofit groups,” according to a press release issued today by the U.S. Attorney’s Office. Paul L. Gray, of that office, prosecuted the case, according to the release.

Catherine M. Recker of Welsh & Recker represented Dispaldo.

In addition to the prison term, Dispaldo was ordered to pay a special assessment of $3,600 and restitution of $120,865 by U.S. District Judge C. Darnell Jones II of the Eastern District of Pennsylvania.

Mulgrew has yet to be sentenced.

Saranac Hale Spencer can be contacted at 215-557-2449 or [email protected]. Follow her on Twitter @SSpencerTLI.

The Trouble With Yes and No Answers

By Melissa M. Gomez
Special to the Legal

I have heard it said that there are only four good answers a witness can give in a deposition: “Yes,” “No,” “I don’t know,” and “I don’t remember.” I wholeheartedly disagree with this strategy.

Instructing a witness essentially not to provide any real answers to adverse questions can backfire in multiple ways, not the least of which is the fact that this advice essentially lets opposing counsel testify for our witnesses on the record. Think of it this way: When you read a deposition and the answers only confirm or deny the question, the content of that deposition is coming from the question. The question becomes the evidence. The wording of the question comes from the other side.

So the conundrum is clear: How do we get our witnesses to answer a question and nothing but the question, but still ensure that the language on the record comes from the right side of the case? The answer is one of balance.

I was recently working with some witnesses in a commercial case involving the privatization of a publicly traded company. The witnesses were very intelligent, high-powered people and they were fish out of water in the context of giving testimony. The group of them fell relatively evenly on the poles of the testimony spectrum. Specifically, some would flatly say yes to any question that had an element of truth in them, even if the context of the question was completely off base. Others went off on tangents, engaging in debates and working hard to convince opposing counsel he was wrong. I had my work cut out for me.

While the testifying tendencies of these witnesses were disparate, the foundation behind the preparation was the same. Specifically, there is a balance that every witness needs to understand how to strike. That balance is to find the sweet spot between one-word answers and dissertations of gratuitous information.

The key to this balance is threefold: First, understand the difference between answering and explaining. Second, know that rules are meant to be broken. Third, pick your battles. A witness who is grounded in these three things is on the road to being well prepared.

The first point: Understanding the difference between answering and explaining. There is a difference between adding context and providing an explanation. The first is helpful during cross-examination or deposition; the second is not. Take the following question, for example, in the investment case I referred to:

Question: “Would you agree with me that despite the fact that you were more profitable in 2008 than 2007, you represented to investors a poorer financial report in 2008?”

Explanation: “Well, in 2008, the United States was facing financial difficulties as a result of a crash in the real estate market. The result of that crash affected the entire economy of the country, including the businesses that resided within it…”

Answer: “While we did bring in more profits in 2008 than 2007, that increased profitability was not able to overcome the economic crash of that year; therefore, we did have a poorer financial report, which we communicated to the investors.”

Both answers tell the correct story. But only one begins and ends with an answer to the question as opposed to telling what sounds like an evasive side story.

The second point: Rules are meant to be broken. I have noticed that there are times when I give advice to witnesses and they, so eager for the help, take that advice to be absolute and applicable in every situation. For example, as I typically do, I instructed a witness in a different case to make sure to look at his jury in efforts to develop rapport. During practice cross, he didn’t even glance toward the attorney asking him questions. Instead, he kept staring at me, as I was filling in as his mock juror. I had to explain to him that addressing the jurors does not mean ignoring the questioner or staring the jury down. If it doesn’t feel natural, it doesn’t look natural.

No strategy or rule is absolute. They are tools to be pulled out of the toolbox when they apply. Good preparation is helping witnesses use their good judgment to know when to use a strategy and when to let it go.

Which brings us to the third point: Know when to choose your battles. It can be unhelpful and awkward to restate every single question in a cross-examination or deposition. So, when do you break the rule of making sure the language on the record is your own? When the correct answer really is yes or no or when the subject matter of the question is simply not an important topic to the case.

I have found that with the proper contextual application, most witnesses can understand the middle ground and apply it. In our commercial case described above, this framework brought the witnesses on both ends of the spectrum into that helpful sweet spot. They did a great job. And their testimony stood on its own.

Melissa M. Gomez is a jury consultant and owner of MMG Jury Consulting LLC. She holds a Ph.D. in psychology from the University of Pennsylvania. Her experience includes work on hundreds of jury trials in Philadelphia and across the country, with a focus on the psychology of juror learning, behavior and decision-making. She has more than a decade of expertise in research design and methodology, as well as in behavioral and communication skills training.

This posting is for general informational purposes only and should not be construed or interpreted as advice specific to any matter. Each case is different and no strategy applies uniformly to all. If you have any questions regarding jury psychology that you would like to see addressed in this blog, contact Gomez at [email protected] or call 215-292-7956.

Fox Rothschild Re-Elects Leadership

By Zack Needles
Of the Legal Staff

Philadelphia-based Fox Rothschild has re-elected its two co-chairs, as well as its firmwide managing partner, to new three-year terms, effective April 1, 2014.

Phillip E. Griffin and Abraham C. Reich will continue as co-chairs of the firm and Mark L. Silow will continue as its managing partner.

Over the past three years, the firm has grown from 475 lawyers and 15 offices in 2010 to its current roster of nearly 600 attorneys in 19 offices.

In its most recent fiscal year, which ended in March, the firm grew its revenue by nearly 8 percent, from about $257 million to $277 million, and opened new offices in Denver, Coral Gables, Fla., and Morristown, N.J.

Silow told The Legal earlier this year that the firm felt it “had a really solid year in a market and economy that still continues to be challenging.”

Looking forward, Silow said the firm would focus its attention on growing its existing presence in the Denver, Miami and New York markets.

Silow said the firm's goal is to increase the bench depth of each one of its offices until they can all be characterized as "full-service."

But Silow said Fox Rothschild also has its eye on several regions of the country where it has yet to put down roots.

“We'd like to be in a major city in Texas, the Pacific Northwest, the upper Midwest and New England," Silow said.

Zack Needles can be contacted at 215-557-2493 or [email protected]. Follow him on Twitter @ZNeedlesTLI.

Proponents of Marrying Procurement and Legal Services

By Gina Passarella
Of the Legal Staff

In Tuesday’s Legal, I wrote about the interplay between procurement and legal departments and whether the two could work together in hiring outside counsel. The GCs I spoke to were skeptical at best about the idea, while a consultant to law departments praised the concept but said he found it lacking in the marketplace.

Since the article ran, we have received some feedback from those who are proponents of procurement taking a more active role in the purchase of outside legal services and say it’s already happening with increasing frequency. I thought I’d share some of their points.

Silvia Hodges Silverstein, a Columbia Law School lecturer who studies procurement’s influence on the purchase of legal services, said more and more GCs are not even asked "whether" they want to work with procurement—they just have to, as it is a top management mandate.

“GCs are often former law firm partners and are hardly the ones wanting to rock the boat,” Silverstein said. “Like anyone being forced to give up control over their budget and choice, they resist that development.”

Silverstein said the market isn’t the same as it was a decade ago, the time period during which those who spoke to The Legal first considered the legal and procurement departments working together. She said more data is available. It’s no longer unknown how much firms charge or how long they take for matters, for example.

“Law firms not being able to put a price tag on their services or legal departments not knowing how much they pay today shows negligence,” Silverstein said.

While it might not be the corporate procurement department selecting outside counsel, Silverstein said hardly any sizable legal department operates without a legal operations department staffed with quantitative business people helping the GCs make good business decisions.

Silverstein said paying less doesn’t equate to lower quality in a world when law firms are embracing project management and alternative fee arrangements.

Silverstein took issue with the argument that legal services are too unique to be included in a typical procurement process.

“My legal procurement research last year showed that about 20 percent of legal procurement professionals are, in fact, lawyers,” Silverstein said. “So the argument that the widget and pencil-ordering department ‘dares’ to buy legal services simply doesn't hold true.”

Silverstein pointed to GlaxoSmithKline’s use of online reverse auctions for any matter worth more than $250,000 as an example of how some legal departments have taken procurement beyond commodity work to other matters as well.

In the end, Silverstein echoed a sentiment the GCs had—that procurement can’t take over the entire process of selecting outside counsel.

“It is not procurement's job to pick the suppliers,” Silverstein said. “It is procurement's job to improve the process of sourcing and make better/more objective choices for the company on a total cost basis, not on the lowest price.”

Dave Sampsell’s company, BanyanRFP, looked to address some of the same concerns GCs expressed regarding their argument that legal services aren’t widgets that can be run through a sourcing department.

The Minneapolis-based company provides a cloud-based RFP application for legal departments. Sampsell said he often hears from GCs that they are hesitant to work with procurement departments or don’t like the applications procurement departments use to purchase legal services. Sampsell said that, in constructing his RFP process, he took into account that there needs to be a qualitative as well as quantitative aspect to purchasing legal services.

Gina Passarella can be reached at [email protected] or 215-557-2494. Follow her on Twitter @gpassarellaTLI.

Sticky Fingers: Minimizing Expense Report Fraud

By B.J. Hoffman
Special to the Legal

As outlined in a recent study by the Association of Certified Fraud Examiners, businesses typically lose 5 percent of annual revenues to fraud, waste and abuse. Fraud comes in many shapes and sizes, ranging from fictitious vendor schemes to “ghost” employees and inventory that perpetually falls off the back of company trucks.

Perhaps the most common schemes, though, are the smallish, “drip…drip...drip” losses from inflated employee expense reimbursements. Though the individual dollar amounts of these abuses tend to be low, often the losses are widespread within a company and occur over extended time periods. Accordingly, company losses grow to material levels.

Expense reimbursement schemes can be grouped into several categories:

• Personal expenses mischaracterized as business-related: Examples include personal lunches that are mischaracterized as business-related, or auto reimbursements for personal trips.
• Fictitious expenses: Reimbursement for expenditures that are never made by the employee. For instance, an employee who has access to a stack of blank toll receipts, or who writes a personal check for a business expense, later voids the check, and submits a photocopy of the original check to the employer for reimbursement.
• Overstated expenses: Legitimate business expenses incurred by an employee are overstated by altering supporting documentation. Also possible is inflation of expenses, where an employee is able to submit receipts for one level of travel, but where actual travel is at a less expensive rate (the classic example is reimbursement for business class airfare, while actually flying coach).
• Multiple reimbursements for the same expense: The employee is reimbursed more than once for a single business expense. An employee who is reimbursed for airfare based on a booked itinerary report, and then requests reimbursement based upon a credit card charge statement. Employee expense reports receive less scrutiny from employers, as amounts are often low. Also, employers want to trust employees, and don’t ordinarily want to disrupt workplace culture by imposing police-state-like rules. However, this trust is what allows for losses to accumulate.

Employers and auditors should be on the lookout for several indicators of potential expense reimbursement schemes, including:

• Expense reports that lack supporting documentation or which ordinarily are not subject to any review.
• Employee reimbursements that exceed annually budgeted amounts.
• Supporting expense documentation that is composed of photocopies, rather than original invoices.
• Submission for reimbursement of dated/old expenses.
• Reimbursement requests for “cash” expenses.
• Multiple expenses in the same or similar dollar denominations, or for rounded dollar amounts, or for total amounts that fall just shy of a predetermined threshold for further employer review.

Of course, it is preferable to devote resources to discouraging employees from attempting to falsify expense reports, rather than trying to ferret out individual fictitious expenses. Accordingly, policies should be developed and communicated to employees that outline acceptable expense reimbursement procedures, such as:

• Requiring detailed descriptions on expense reports, including the expense’s time, date, individuals involved and purpose.
• Mandating that original supporting invoices (not copies) be attached to the report.
• Outlining limitations on elapsed time under which an expense will be reimbursed (i.e. monthly).
• Listing specific types of reimbursements that are (or are not) reimbursable, and at what rates.

All expense reports should be first reviewed by the employee’s direct supervisor, as he or she has a deep understanding of the employee’s daily activities and would be the most knowledgeable party in determining whether an expense is reasonable.

Development and adoption of clear policies and procedures regarding employee expense reports will serve to limit losses to fraud, waste and abuse, and such savings can be highly material over time.

B.J. Hoffman is a certified public accountant and certified fraud examiner for Citrin Cooperman, an accounting, tax and business consulting firm. A partner in the Philadelphia office, he provides clients with a mix of audit, tax and litigation support services. He often works with closely held entities in a variety of industries, including professional service firms and real estate enterprises. He can be reached at [email protected] or 215-545-4800.

Pinterest’s Deal With Getty to Address Infringement Concerns

By Ashley Kenney Shea
Special to the Legal

When social networking site Pinterest first gained popularity, IP lawyers everywhere raised their eyebrows at the copyright infringement issues attendant with the site. In a nutshell, when users pin content that they do not own on Pinterest, Pinterest makes a copy of the full-size image to its servers. This action entails reproducing the image, often without the permission of the content owner, and with possible copyright infringement. Pinterest is distinct in this way from other social media websites like Facebook and Tumblr, where users generally post content that they own or link directly to third-party sources.

Pinterest has largely avoided copyright problems to date because many content owners find that its value as a promotional tool outweighs the negative effects of the reproductions. For most content owners, Pinterest pins do not result in a reduction of the market for the content; rather, the pins drive traffic to the content owner’s website, resulting in more hits, sales, followers, etc. According to social media analytics company Shareaholic, Pinterest is the second-largest referrer of traffic on the Internet after Facebook, with referrals to online publishers increasing by 66.52 percent from September 2012 to September 2013.

However, potential for liability has lingered both for Pinterest as a facilitator for mass infringement and also for users, since Pinterest’s terms purport to shift all responsibility for infringement to its users. (The terms state that users “assume all of the risk” of “pinning” content, and must “indemnify Pinterest in the event of a lawsuit,” even though many users are likely unaware of this fact.)

Now we may be seeing Pinterest begin to address some of its copyright issues. The company recently struck a licensing deal with Getty Images, the stock photo agency that owns the rights to approximately 80 million images, for an untold amount, in exchange for an agreement by Getty not to sue for infringement for use of its images on Pinterest. Under the deal, Getty receives photo credits on all images pinned on Pinterest boards as well as a link back to its site. Getty will use image recognition technology to identify Getty images on Pinterest, and update those photos with metadata that includes the time and location of the photo, the photographer, a caption, an image ID and licensing information. The licensing fee from Pinterest will be distributed between Getty and Getty’s photographers and illustrators. This benefits Getty, which unlike consumer-oriented websites, gains little value from Pinterest traffic.

Pinterest will benefit to some extent from the deal as well. The Getty metadata can be used to suggest more pins to Pinterest users for similar images. In turn, users will likely spend more time “pinning” on Pinterest, resulting in a network of linked data that can be more easily monetized by the site for advertisers. What about the users? They will enjoy a reduced risk of liability and more information about the images they pin—a win-win.

Griesing Law advises businesses and nonprofit organizations on intellectual property and new media matters. For more information, please contact Dina Leytes ([email protected] or 215-732-3924), Kathryn Goldstein Legge ([email protected] or 215-618-3722) or Ashley Kenney Shea ([email protected] or 215-501-7843).

Martin LLC Raises Money for ACS

By Alexa Woronowicz
Of the Legal Staff

More than 60 employees and family members from Martin LLC came together for the American Cancer Society’s “Making Strides Against Breast Cancer” walk Oct. 19 in Fairmount Park in Philadelphia, raising more than $1,000 for the cause.

To date, 2,535 participants raised $155,137 at the event.

Donations are still being accepted at makingstrides.acsevents.org.

 

Stradley Ronon Sponsors Champions for Children Luncheon

By Alexa Woronowicz
Of the Legal Staff

Stradley Ronon Stevens & Young served as a sponsor of the first Champions for Children Luncheon hosted by the Moyer Foundation in Philadelphia.

Representatives from Stradley Ronon attended the luncheon as the Jamie Moyer Legends Award was presented to Philadelphia Phillies pitcher Cole Hamels for his humanitarian work with the Hamels Foundation.

The mission of the Moyer Foundation is to provide comfort, hope and healing to children affected by loss and family addiction, according to a release.

Pictured, from left, are Hamels; Stradley Ronon associates Stephen Feinour Jr., Jamie Gershkow and David Somers; and former Phillies pitcher and Moyer Foundation President Jamie Moyer.

The Legal’s Managing Partners Breakfast

The Legal Intelligencer will be hosting its annual Managing Partners Breakfast, a gathering of the region’s law firm leaders for a networking and information session. The Legal cordially invites managing partners and a member of their management teams to the complimentary breakfast. The event will be held Thursday, Dec. 5, from 8 to 9:30 a.m. at Top of the Tower, Three Logan Square, 1717 Arch St. in Philadelphia.

Nationally recognized law firm consultant Ward Bower, a principal at Altman Weil, will analyze the findings from The Legal’s 18th annual managing partners survey, compare them to national trends and give his insights on what lies ahead for the Pennsylvania legal market in 2014.

If your firm’s managing partner cannot personally attend, please feel free to invite another member of your firm’s management committee.

RSVP to Molly Rose at 215-557-2390 or [email protected].