Terra Extraneus

For many years, every kid I knew that did not go to college was somehow located and drafted by some pyramid or outside sales company. They were each eager to make their initial presentations to family, friends, and friends of their parents. Thus, I sat through many presentations on vitamins, cleansers, vacuums, and other life essentials. I would listen and decline, or if there seemed to be any hope, listen and then dissuade.

People that are drawn to a life of sales have unique gifts both of personality and articulation. Most people simply do not have these gifts. Training can enhance these gifts, and help them emerge, but it does not seem often that they can be instilled and created. Thus, dissuading someone from the waste of struggling in a career in which they have little hope seems humane. All of the kids eventually left sales, no matter what I said or did not, and obtained an education, or found an otherwise suitable career.

The same may be said for opening and running a business - some people have what it takes and others do not. Moreover, a business is subject to so many factors that stress is existence, even the right person running it might not be enough.

Unfortunately, many people are willing to buy, even if it takes all of their life savings and more, based on a good sales presentation. Most buyers of franchises do not have CPAs and do not hire CPAs to look over the disclosures, contracts and projections. Most buyers do not have lawyers and do not hire lawyers to look at the contracts. Most buyers do not consult their professional financial advisors. At most, buyers of franchises will normally interview prior buyers without realizing they may be part of the hustle or themselves victims that have not yet figured it out.

There are many legitimate franchising operations. But, any business, including a franchise sold by a reputable company, requires capital, expertise, and experience to evaluate, customize, and implement. Even a knowledgeable buyer should get a second opinion.

In the internet age, no business is likely to be truly unique, even if it is the only one in a town or on a corner, and therefore, there is likely to be information available. Thus, industry associations, newsletters, and business writers will generally explore the trends in an industry to determine pricing trends, revenue trends, expense trends and resale trends. A new business that is projected to be more successful than regional and national averages of existing businesses is likely infected with a terminal case of optimism.

While owning a business is the quintessential American Dream, business failure is a pervasive reality. While owning a lawsuit about a failed business is not the American Dream, it is often the only way a buyer can recoup some of what was lost.

No Comments

Arrogant, contentious, vain, verbose, bookish, boorish, strident, cantankerous. Sound like anyone you know?

Those are a few of the less complimentary descriptions that have been made about founding father and second president, John Adams. Biographer David McCullough described Adams as “high-spirited and affectionate, vain, cranky, impetuous, self-absorbed and fiercely stubborn.”

Eclipsed by the revered Gen. George Washington, Adams was the distant runner-up to be our nation’s first president. As President No. 2, Adams failed to win re-election, defeated by his own vice president, the much more charismatic Thomas Jefferson. Now modern Americans have an opportunity to get acquainted with our most cantankerous founding father in the HBO mini-series, “John Adams,” which was released on DVD on June 10 (see my first post on the mini-series here).

However, John Adams as portrayed by actor Paul Giamatti is never as volatile or inflammatory or irritating as the real Adams apparently was. There are a few glimpses — Adams snapping angrily at his children; Adams’ congressional comrades rolling their eyes when he makes a historical reference — but overall, Giamatti’s Adams is rather likeable.

Giamatti’s performance has received mixed reviews. David Hinckley of the N.Y. Daily News calls it “an extraordinary performance,” and Matt Rousch of TV Guide says Giamatti was “splendid.” Alessandra Stanley of the New York Times, on the other hand, didn’t like anything about Giamatti as Adams:

John Adams is the weakest part of “John Adams.” … Giamatti is the wrong choice for the hero. … Giamatti is a prisoner of a limited range and rubbery, cuddly looks — in 18th-century britches and wigs, he looks like Shrek.

I have been enjoying the mini-series and Giamatti’s portrayal. Stanley’s critique is way over the top. Absurdly, Stanley actually laments that the great Charles Laughton (who died, oh, about 46 years ago) was not available for the part. Still, I agree that Giamatti did not give us the Adams described in the history books. If Adams was a haughty and mouthy hothead, he just doesn’t come across that way in the HBO series. The result is a few scenes that are a bit puzzling and fall flat, in which the people in Adams’ life respond to him as if he were that firey man, even though in the film he has never been portrayed as such.

Did Giamatti or Director Tom Hooper fear that a more obnoxious Adams would be too much to endure for an 8-1/2 hour series? If so, I disagree. I’m thinking of George C. Scott in “Patton.” All of the same negative adjectives apply to Scott’s Patton, but Scott found a way to put all of those negative attributes on grand display, and yet still give us a Patton who comes across as a great and admirable man. I am guessing that Adams was something like that — a man with many obvious faults, and yet, a man of such intellect and personal power and devotion to the cause that his contemporaries found a way to admire him nonetheless.

Giamatti’s John Adams is more of an ordinary guy, neither provoking our anger or achieving our high regard. It is an interesting portrayal in a very interesting series, but it fails to do justice to the man Jefferson called: “The Colossus of that Congress — the great pillar of support to the Declaration of Independence, and its ablest advocate and champion…”

No Comments

The State Bar of Texas, I guess, will publish absolutely anything. In this instance, the State Bar of Texas published a pamphlet, called it a book, and stuck in a CD to try and justify the nice cover.

Arbitration Road Map, A Guide to Clauses Procedures, and Hearings, Austin 2007, is divided into two parts. Part 1, all 38 pages of it, supposedly deals with general arbitration considerations and Part 2, all 37 pages of it, deals primarily with international arbitration. The third part of the book, pages 78 – 110, contains the appendices, which include sample arbitration clauses. The CD contains the text of the book and is searchable, but the paucity of the book is not improved on the CD.

The book contains a few good points about arbitration law and procedure, but nothing a first year associate could not gather in a day from a standing start. There is little commentary from the practitioners that are named as the authors that would be considered substantive advice from experienced arbitration counsel. I would have expected experienced Texas arbitration counsel commentators to at least be able to tell some good anecdotes, even if they were unable or unwilling to give advice about how to handle the various steps in arbitration proceedings.

While a novice or student faced with an arbitration might find a useful item or two about the arbitration process, experienced arbitration counsel would find this volume a waste of time. Further, there are simply better “road maps” and “guides” and even casebooks already available that do not insult the intelligence of the reader. It is almost as if this book was really the outline for a future book, and was shipped to the printer by mistake.

No Comments

I have been enjoying the HBO mini-series “John Adams” since it was released on DVD June 10. Parts of the film are quite entertaining, even riveting; some segments are a bit more tedious. That being said, I enthusiastically recommend the entire 8-1/2-hour series to anyone who appreciates the importance of history, particularly our own revolutionary history.

You will also like “John Adams” if you enjoy a great character study. Interesting characters abound in John Adams’ world. Paul Giamatti as John Adams, Laura Linney as Abigail Adams, and Tom Wilkinson as Benjamin Franklin are all outstanding. David Morse is visually striking as George Washington, though his portrayal fails to do justice to the man who commanded the adulation of his countrymen. Stephen Dillane offers a puzzling portrayal of Thomas Jefferson.

The script is based on the Pulitzer Prize-winning 2001 book by master historian David McCullough. The score, especially its theme, is magnificent and infectious. The seven episodes (on three DVDs) range from 60 to 90 minutes each.

John Adams was a Massachusetts lawyer and farmer who became one of the most vocal proponents of the American Revolution. After independence was won, Adams was a chief architect of our new republic and the second president of our united states. At this writing, I have watched the first five of the seven episodes. I greatly enjoyed the first two. The third, fourth and fifth episodes are less noteworthy and sometimes dreary, though they have their moments. I am hopeful the final two episodes will equal the first two. I will comment on “John Adams” in a series of four posts, beginning with this, my reaction to Part 1, “Join or Die.”

“John Adams” begins with the Boston Massacre, Mar. 5, 1770. Five civilians including one teenager were killed by British soldiers who occupied the colonial seaport. Much of the first episode is devoted to the trial of the eight British soldiers charged with murder. Adams defied the public’s wrath by defending the soldiers, and proved his legal prowess by winning acquittal for six of the soldiers and reduced charges for the other two. Adams was 34 years old.

Focusing on the Boston Massacre was an ingenious way to open the series. We viewers are immediately plunged into the bitter and volatile relationship between the colonies and Britain in the years shortly preceding the Revolutionary War. From the start, John Adams is at the center of things and torn by both sides, as he continued to be for the rest of his life.

Adams believed strongly in law and government. He would later be labeled a “federalist,” and by some, a “monarchist,” because he believed in the strong arm of government. At the end of the trial, when all chant, “God save the King,” Adams does so heartily. It is telling, in a later scene, when the phrase is chanted again, but Adams can no longer utter the phrase. What an agonizing decision those colonists faced, many of whom considered themselves loyal British subjects, their anger provoked because they were being denied their rights as free Englishmen. The decision to declare independence from the crown was not made easily, and it was not made by anarchists, but by citizens of law who felt the king and his tyrannical dealings left them no other choice.

The most startling scene in “Join or Die” is the tarring and feathering of a British customs agent. Stripped naked, his head and body covered with hot tar, paraded around town on a rail — the scene shows that normally civil people can be driven to acts of terror and revolution when they are denied the basic rights due them as citizens and human beings.

This first episode will have a special interest for attorneys, since so much of it takes place in the courtroom. (“Join or Die” becomes an interesting partner piece to “Amistad,” the 1997 Steven Spielberg film in which Anthony Hopkins plays John Quincy Adams, who served as defense attorney in the trial of slaves who mutineered on a slave ship). I would be interested to know how accurate is “Join or Die’s” depiction of a colonial-era trial. In the gallery and balcony, observers stand rather than sit, and frequently sound their opinion about the proceedings.

I think Giamatti is excellent in this series. However, his over-the-top depiction of Adams the trial lawyer struck me more as an actor playing an attorney than an actual trial lawyer. As Adams famously said in his closing argument, “Facts are stubborn things.” Adams had the facts on his side, and facts are made no more factual by being shouted so loudly and dramatically, as Giamatti’s Adams does throughout the trial. A good orator knows that a little dramatics goes a long way, and that too much histrionics is counterproductive.

* * * * *
See second post: “John Adams: Great and Grating, or Ordinary and Likeable?”

No Comments

Unlike other professions, lawyers are often known more by their passions and hobbies than by their law practice. For example, most lawyers that claim to be undefeated in litigation maintain that claim by dumping losers on associates and partners or trying very few cases. As a result, the public and the media often do not know a strong lawyer from a weak lawyer, because they do not know how to evaluate a “win” or a “loss.” This is more pronounced for lawyers that paper transactions and provide consulting services. For that reason, often lawyers are known for things other than their practice.

One of my hobbies started when I learned to read in the 1960s, comic books. Comic books appeal to many different aspects of personality. In my case, the comic books I read appealed to my idealism that there were heroes (my father was a policeman, the archetype of the ultimate hero, as every television season attests), that right and wrong could be determined, and that right would win if it was very, very careful. Marvel Comics introduced the idea that imperfect people controlling imaginable but non-existent power could overcome their imperfections and still be heroic. DC introduced this idea to a much more limited degree and in ways that were only imaginary (kryptonite, for example), which made Marvel’s approach unique and unforgettable.

The Invincible Iron Man was such a character, largely because the armor was invincible but the man inside was very vulnerable. Unlike the Kryptonian, he was that way because he was imperfect, and not because the writers struggled to make him that way. Contemporaneous with the movie, Marvel released a hardback book entitled The Invincible Iron Man. This is a collection of the earliest Iron Man comic books from the 1960s. This wonderful book is over 700 pages long, full color, and priced at full retail at $100. But, the Barnes and Noble website and the Amazon.com website offer it for just over $50 and qualifies for free shipping. It contains about three years of comic magazine issues that came out monthly and annually. If you enjoyed the movie, especially if you missed the Iron Man comics as a kid, and especially if you read a few and missed the rest or have not seen them in thirty or forty years, the volume will carry you back to your youth. (Yes, it duplicates other books issued by Marvel, but this book deserves to be allowed to supplant its weaker and smaller forerunners.)

By the way, stay through the credits at the end of the movie. The film makers threw in a teaser staring Samuel Jackson as Nick Fury (Yes, people ask, “who is Nick Fury?” The same people are likely to ask, “who is Jethro Tull?”) and there is a mention of the Avengers (Yes, people also ask “who are the “Avengers?”).

As the new movies of our era demonstrate, the comic book creators were little known and not fully understood people of genius. My only concern about the movies is that they tend to collapse literally years of plot development and character development into a few seconds. That is the reason some of the movies simply do not work. Contrast the X-Men, Iron Man and Spiderman to the first Hulk movie and the latest Superman movie, for example. Even in an action movie, plot, character development and dialogue still matter, which is why Bill Bixby as David Banner worked week after week for several television seasons, even in the absence of modern special effects.

No Comments

One of my earlier experiences with advertising material regulation was the time the NASD refused to approve an advertisement by a registered representative that contained a cartoon with a caption that read “We put the boots on the bull.” The cartoon displayed a Texas longhorn wearing boots. The NASD’s refusal was that they could not determine from the cartoon and caption what expertise the registered representative was claiming. In other words, in past eras, NASD advertising materials regulation has largely been arbitrary and without substantive principles to guide it. The NASD seemed to have no trouble in that same era with Merrill Lynch’s logo which incorporated a bull (but not a Texas longhorn).

FINRA Regulatory Notice 08-27 seems to focus on the advertising materials created by ghost writers and professional advertisers designed to give the appearance of credentials based on book writing, article writing, and newsletters. Of course, while this might be a serious subject, it still does not address the real issue: what constitutes a “credential” for a registered representative?

The main worry of the FINRA Regulatory Notice seems to be that the ghost written materials imply the registered representative is the author “and therefore an expert.” I hate to break this too harshly to FINRA, but every registered representative claims to be an “expert.” What customer wants a registered representative that is not an “expert?” Of course, making the claim by creating false credentials or false marketing materials is fraudulent. Nevertheless, because the industry refused to definitively define what constituted a “credential,” and continues that proud tradition, claiming to be an expert will continue.

By the way, if one is searching for a ghost writer to create marketing materials for financial services to individuals, I have had the privilege to know a couple of the best. The disclaimer included in their materials that the financial executive is not the sole author of the materials is often overlooked by the prospective customer that wants to hear what they want to hear.

No Comments

Stephen Bloom’s new book, The Believers Guide to Legal Issues (2008, Living Ink Books), is mis-titled. While the book is very generally about legal issues, it is more of a consumer protection guide for Christians. Possibly it should have been entitled, The Legal Services Christian Consumer Guide.

The book is written in the current form of the Christian book: it is infantile and tawdry. It uses novelized short stories at the outset of every chapter to make a point, most of which are dripping with emotional resonance but distant from reality. Mr. Bloom assumed or was told that no Christian would sit and read a real book. Compare the book to Sekulow’s real book, Witnessing Their Faith. Nevertheless, Bloom’s book gives some excellent consumer protection tips to the Christian trying to navigate the legal system or deal with problems that seem legal.

Thus, and the book is RECOMMENDED for this purpose, if someone wanted to teach a Sunday School class to a group of adults of mixed ages and educational levels about legal problems Christians might face and how to deal with them, this book could be helpful to the class (although it would not do much for a teacher not already an expert in such things). The only thing missing from the book are the sentences with the blanks to fill in that seem to be the standard in most Sunday School teaching materials.

Thus, for the Christian with limited interest in reading, the Christian without formal education beyond high school, and the Christian with little experience in the business world, Bloom’s book could be very helpful.

But, Bloom’s book is NOT a Believer’s Guide to Legal Issues, except in the sense of consumer protection. Mostly, he tries to warn Christians to avoid being mesmerized by the secular legal system’s approach to problems and remember that there are alternatives, some of which are biblically recommended. While he quotes Scripture at length and does try to make certain applications, the book is simply too short and too much of an over simplification to be meaningful as any sort of actual guide. Bloom seems to assume, too, that Christians end up in legal problems because they did not pray hard enough or did not talk it all out. Bloom does not seem to recognize that in a Jeffersonian Democracy, some disputes cannot be resolved except by the legal machinery, especially those disputes with large commercial entities and institutions.

4 Comments

As an Oklahoma based trial lawyer, I do not have the luxury of a continuous stream of cases all in the same genre or even area of law. Largely originating on one of the three coasts (including the Gulf Coast), cases usually come in waves. I just completed a three year group of 41 cases, ten of which were tried, against Goldman Sachs & Company. This particular wave of cases was actually the second tidal surge because during the three years prior to the just concluded three years, I was counsel against Goldman Sachs in a predecessor wave of cases.

Goldman Sachs manages its exposure somewhat idiosyncratically and not quite like the other wire houses or other member firms in the securities industry. For instance, Goldman Sachs is far more concerned about its image than it is winning or losing, or even the economics of any particular case. Because the securities industry effectively gags its associated persons thus creating a conspiracy of silence, Goldman Sachs can litigate endlessly with associated persons and face little risk that the image it jealously guards will be tarnished by inconvenient media exposure.

The news media has no effective means of penetrating this conspiracy of silence, because no member firm is going to allow its associated persons to speak freely to the media, even about other member firms (or previous employers). Also, one has to wonder if the media will even try to break the code of silence, because of the possible back lash by one or more member firms.

Abusive personnel practices have been a hall mark of about half the securities industry, and avoided by the other half. Goldman Sachs’ abuse of registered representatives was largely the result of institutional errors made when investment bankers attempted to “fix” the firm’s “brokerage” and “advisory” personal wealth management business. It reminded me of watching a newly minted teenage driver. You constantly have to remind them at first to look back over their shoulder while backing out of the driveway. Goldman Sachs was so intent upon socially engineering the lives of its registered representatives that it back over half of them.

No Comments

Errors and omissions insurance policies for registered representatives and broker-dealers have been offered at different times by different companies and usually, quickly withdrawn from the market. One of the companies that has stayed in the market longer than most has been AIG / National Union.

But, as demonstrated in a consolidated case, Ryan v National Union, United States District Court, District of Connecticut, AIG / National Union has a strange way of handling these cases.

First, the policy excluded coverage for discretionary accounts or the exercise of discretion. Second, the policy excluded outside activities that included “any entity other than the broker-dealer.” Third, the policy had a relatively short “tail,” in that it excluded coverage for acts pre-dating the policy effective dates and additional time coverage in the “tail” provision.

In other words, about the only thing covered, if the insurance company had its way, would be claims arising during the policy period resulting from acts during the policy period in brokerage accounts (not fee based advisory accounts in which discretion was exercised rightly or wrongly), which typically would include only the old fashioned stock broker, commission and sales of securities. In the Ryan case, the federal court held that the exclusions did not exclude all possible claims that might be implicated by the pleadings in the arbitration proceedings, and therefore there was a duty to defend all the claims in the arbitration proceedings.

It is sad that the AIG / National Union product has become so prevalent among the few who can afford or do buy insurance. A better product issued by a company that was more concerned about its insureds would probably lead to a broader market. A broader coverage market would lead to lower premiums because there would be more buyers among which to spread the risks.

No Comments

While the annals of Oklahoma insurance law may not be whipped into a froth, the Supreme Court ruled that “actual cash value” in the insurance code means the same as other insurance code terms such as “fair value” and “actual value.” Tyler v. Shelter Mutual Insurance Company, 2008 OK 9. The opinion was issued in response to a certified question from a federal court. It took ten judges to decide the issue.

In another case, a jury was asked to decide whether an insured of Oklahoma Farmers Union Mutual Insurance Company was entitled to indemnity payments for a substandard wood roof. Because both parties admitted the policy was unambiguous, there was no fact question to submit to the jury, so the jury verdict was superfluous as a matter of law. Based on the unambiguous policy, the Court reversed and rendered, finding coverage and ordering a hearing to set damages. The question under the policy was whether the replacement of the hail damaged wood roof shingles with plywood decking and composition shingles would be covered. Farmers attempted to cover only the repair of the composition shingles because the policy limited coverage to materials of like kind and quality, and the wood shingles were not the same as the composition shingles and plywood decking. Gutowski v Oklahoma Farmers Union Mutual Insurance Company, 2008 OK CIV APP 8.

No Comments