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How to Read a Judicial Opinion
http://euro.ecom.cmu.edu/program/law/08-732/Courts/howtoreadv2.pdf
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How to Read a Judicial Opinion:
A Guide for New Law Students
Professor Orin S. Kerr
George Washington University Law School
Washington, DC
This essay is designed to help entering law students understand how to read cases for
class. It explains what judicial opinions are, how they are structured, and what you should look
for when you read them. Part I explains the various ingredients found in a typical judicial
opinion, and is the most essential section of the essay. Part II discusses what you should look
for when you read an opinion for class. Part III concludes with a brief discussion of why law
schools use the case method.
I. What’s in a Judicial Opinion?
Judicial opinions (also known as legal opinions, legal decisions, or cases) are written
decisions authored by judges explaining how they resolved a particular legal dispute and
explaining their reasoning. An opinion tells the story of the case: what the case is about, how
the court is resolving the case, and why. Most legal opinions follow a simple formula that will
seem odd to you at first, but will quickly become second nature. In this section, I’ll take you
through the basic formula.
Let’s start with the preliminary stuff before the body of the opinion. This part isn’t very
important in most cases, but it’s helpful to know anyway.
The Caption: The caption is the title of the case, such as Brown v. Board of Education,
or Miranda v. Arizona. In most cases, the caption reflects the last names of the two parties to
the dispute, and it tells you who was involved in the case. If Ms. Smith sues Mr. Jones, the case
caption may be Smith v. Jones (or, depending on the court, Jones v. Smith). In a criminal case,
the government brings the case, and the government itself is listed as a party. If the federal
government charges Sam Jones with a crime, for example, the case caption would be United
States v. Jones.
The Case Citation: Underneath the case name, you will find a legal citation that tells
you the name of the court that decided the case, the law book in which the opinion was published
(and therefore can be found), and also the year in which the court decided the case. For example,
“U.S. Supreme Court, 485 U.S. 759 (1988)” refers to a U.S. Supreme Court case decided in 1988
that appears in Volume 485 of the United States Reports, starting at page 759. 1
Plaintiff is a French word, and its use in American law is a holdover from the Norman conquest of the
Saxons in 1066 in what is today England. The Normans spoke French: the Saxons spoke Old English. For several
centuries after the French-speaking Normans took over England, lawyers and judges in English courts spoke mostly
in law French. When the American colonies inherited the English legal system, we also inherited this French
tradition. Many of the distinctive legal words you will learn in your first year of law school are French in origin.
Examples include: plaintiff, defendant, tort, contract, crime, suit, judge, attorney, court, verdict, allegation, party,
plead, damages, appeal, assault, felony, larceny, counsel, evidence, arrest, and jury. So, if you don’t like legalese,
blame it on William the Conqueror.
-2-
The Author of the Opinion: The next bit of information is the name of the judge who
authored the opinion. In most cases, the opinion will simply state a last name, followed by the
initial “J.” No, judges don’t all have the first initial “J”; the letter stands for “Judge” or
“Justice,” depending on the court. For example, “Hand, J.” refers to Judge Hand, and “Holmes,
J.” is Justice Holmes. In those jurisdictions where the judges are not called “judges,” you may
see a different initial. For example, some courts call their judges “Chancellors,” so the initial
will be a “C” instead of a “J.” You will also see variations like “C.J.” for Chief Judge, “V.C.”
for Vice Chancellor, etc. On occasion, the opinion will have the Latin phrase per curiam in place
of the judge’s name. This phrase means “by the court,” and generally means that the opinion
reflects a common view held by all of the court’s judges, rather than the writings of a single
judge.
Okay, enough of the preliminary stuff. Let’s get to the body of the opinion.
The Facts of the Case: The first part of the body of the opinion is usually devoted to
presenting the facts of the case. In other words, what happened? Surprisingly, there are no
particular rules for what a judge must include in this section. Sometimes the fact sections are
long, and other times they are short; sometimes they are clear and accurate, and other times they
are vague or incomplete. Typically, the facts tell you the judge’s understanding of the case and
what the judge thought was an important aspect of the case that helped the judge reach the
decision.
The “facts” of a case consist mostly of the events that occurredbefore the legal case was
filed in court, and that led to the filing of the case. For example, the facts might be that A pulled
out a gun and shot B, or that A agreed to give B $100 and then changed her mind. However,
most opinions also include a section on the procedural history of the case: that is, what happened
in the case after the case was filed in court. The procedural history usually consists of various
motions, hearings, trials, and proceedings that went on in the case before the court that is writing
the opinion was asked to resolve the dispute at issue. You should pay very close attention to the
procedural history when you read cases for your civil procedure class (note the word
“procedure”); generally speaking, it is less important when you read a case for your other classes.
Some opinions may make your life a bit difficult by calling the parties to a case by special
legal names, such as appellant, appellee, petitioner, respondent, plaintiff, defendant, and the
like. You will get used to this eventually. For now, however, it may help to keep in mind a few
simple guidelines. First of all, when parties first appear in court they are labeled using a pretty
simple convention: in civil cases, where someone is bringing a lawsuit, the person bringing the
lawsuit is known as the plaintiff,
1
and the person sued is the defendant. In criminal cases, where2
The phrase “common law” started being used about a thousand years ago to refer to laws that were
common to all English citizens. Thus, the word “common” in the phrase “common law” means common in the sense
of “shared by all,” not common in the sense of “not very special.” The “common law” was announced in judicial
opinions. As a result, you will sometimes hear the phrase “common law” used to refer to areas of judge-made law as
opposed to legislatively-made law.
-3-
a criminal charge is filed by the government, the person who has been charged is still known as
the defendant. There are no plaintiffs in criminal cases, however; the cases are brought by the
government, which is referred to as “the state,” “the prosecution,” or simply “the government.”
After the original court has resolved the case, the losing party may wish to seek review
of that decision by filing an appeal before a higher court. An appeal is a legal proceeding before
the higher court to review the decision of the original court. The original court is known as the
trial court (because that’s where the trial occurs, if there is one), and the higher court is known
as the appellate or appeals court. A single judge presides over the trial court proceedings;
however, appellate cases are decided by panels of several judges. For example, in the Federal
court system, a single trial judge known as a District Court judge oversees the trial stage, and
cases can then be appealed to the next higher court, the Court of Appeals, where cases are
decided by panels of three judges known as Circuit Court judges. Finally, cases can then be
appealed from the Court of Appeals to the U.S. Supreme Court, where cases are decided by nine
judges. At the Supreme Court, the judges are called Justices, not Judges.
During the proceedings before the higher court, the party that lost at the original court
ordinarily is called the appellant – that is, the one bringing the appeal – and the party that won
is known as the appellee (accent on the last syllable, by the way) – the party whose victory has
been appealed. Some older opinions may refer to the appellant as the “plaintiff in error” and the
appellee as the “defendant in error.” Finally, for historical reasons, some courts– including the
U.S. Supreme Court– label an appeal as a “petition,” and require the losing party to petition the
higher court for relief. In these cases, the party that lost before the lower court is called the
petitioner, and the party that won before the lower court is called the respondent (that is, the one
who appears before the higher court to respond to the losing party’s petition). It’s all somewhat
confusing, but you’ll get used to it in time.
The Law of the Case: After the opinion has presented the facts, it will then discuss the
law. This section of the opinion describes the legal principles that the judge will use to decide
the case and reach a particular outcome. In many cases, the law is presented in two stages: first
the opinion will discuss the general principles of law that are relevant to the case given its facts,
and next the court will apply the law to the facts and reach the court’s outcome.
As you read the law section of the opinion, you should think about what source of law
the court is using to resolve the dispute before it. Some cases interpret the Constitution, the
founding charter of the government. Other cases interpret statutes, which is a fancy name for
written laws passed by legislative bodies such as Congress. Still other cases interpret the
common law, which is a term that usually refers to the body of prior case decisions (known as
precedents) that derive ultimately from pre-1776 English law that the Colonists brought over
from England.2
The source of the law can be quite important because Constitutional rules trump
statutory (statute-based) rules, and statutory rules trump common law rules. As a result, the-4-
source of the court’s authority can help determine the significance of the court’s opinion. In
your first year, cases that you read in torts, contracts, and property law will mostly be interpreting
the common law. Cases that you read in criminal law mostly will be interpreting the common
law or statutes. Finally, cases that you read in civil procedure will mostly interpret statutory law
and the Constitution.
You should also look out for the method (or methods) of reasoning that the court offers
to justify its decision. For example, courts may justify their decision on grounds of public policy.
This is particularly likely in common law cases: the idea here is that the court believes that the
legal rule it adopts is a good rule because it will lead to better results than any other rule. Courts
may also justify their decisions based on the court’s understanding of the narrow function of the
judiciary. When a case is governed by a statute, for example. courts may conclude that a result
is required because that is what the legislature’s statute says, no matter what the court thinks
would be the best rule. Similarly, when past courts have already answered similar questions
before, a court may conclude that it is required to reach a particular result because it is bound by
the past precedents. This is an application of the judicial practice of stare decisis, an
abbreviation of a Latin phrase meaning “That which has been already decided should remain
settled.” Other courts will rely on morality, fairness, or notions of justice to justify their
decisions. Many courts will mix and match, relying on several or even all of these justifications.
Two important ingredients you should be looking for in the legal section of the opinion
are the holding of the case, if there is one, as well as any dicta the opinion may contain. The
holding is the core legal principle that the case represents. It is the conclusion that the case
stands for, the court’s resolution of the key legal dispute that it faced. (I’ll talk more about
holdings of cases later on in the essay.) At the opposite end of the spectrum from the holding of
the case is dictum, or, to use the more common plural form, dicta. Dictum is an abbreviation of
the Latin phrase “obiter dictum,” which means “a remark by the way.” Dicta are statements in
an opinion that are not actually required to resolve the case before it. The distinction between
the holding and dicta can be important because the holding of a case is more important than
dicta. In fact, you will often hear lawyers try to minimize the importance of language in past
decisions by characterizing that language as “merely dicta.”
The Disposition: The disposition usually appears at theend of the main opinion, and tells
you what action the court is taking with the case. For example, an appeals court may affirm the
lower court decision, upholding it; or it may reverse the decision, overturning it, and remand the
case, sending it back to the lower court for further proceedings. For now, you should keep in
mind that when a higher court affirms it means that the lower court had it right (in result, if not
in reasoning). Words like reverse, remand, and vacate means that the higher court though the
lower court had it wrong.
Concurring and/or Dissenting Opinions. Concurring and dissenting opinions (a.k.a.
“concurrences” and “dissents”) are opinions by judges who did not see entirely eye-to-eye with
the other judges of the court, and wish to express a slightly or even dramatically different view
of the case. In general, a concurring opinion is an opinion by a judge who would have reached
the same result as the majority, but for a different reason. Dissenting opinions are opinions by
judges who disagree with the majority’s result entirely. In most cases, dissenting opinions try
to persuade the reader that the majority’s decision was simply incorrect. -5-
You probably won’t believe me at first, but concurrences and dissents are very important.
You need to read them carefully. When they’re not important, concurrences and dissents usually
are edited out by casebook authors just to keep the case from being too long. When they are
included, it means that they offer some valuable insights and raised important arguments.
Sometimes your professor will believe that the concurrence or dissent is the opinion that had the
better argument. In fact, a strong dissent that points out a fatal flaw in the majority’s reasoning
sometimes will influence later courts and convince them to decide the same question differently.
Law school professors like to assign cases with concurrences and dissents because they often
frame the issues better than unanimous decisions.
II. What to Look For When You Read a Case
Okay, so you’ve just read a case for class. You think you understand it. At the same
time, you’re not quite sure whether what you learned is what your professor wanted you to learn.
If you’re like most law students, you will have the experience of walking in to class believing
that you understand an assigned opinion one hundred percent, only to walk out of class an hour
later shaking your head and wondering how you could have misunderstood the case so
completely. You’ll quickly learn that reading a case for law school is different from other
reading you have done for other classes. You have to read much more carefully. Here are the
primary goals you should have when you read a legal opinion for class:
1) A careful understanding of the facts. Most law students underestimate the
importance of the facts when they read a case. Many students think, “I’m in law school, not fact
school; I want to know what the law is, not just what happened in this one case.” There are two
problems with this line of thought. First, when you are called on in class to discuss a case, your
professor will ordinarily begin by asking you to state the facts of a particular case. If you don’t
know the facts, you will be unprepared. Second, the facts of the case are usually legally
important: many areas of law are highly fact-sensitive, which is a fancy way of saying that the
proper legal outcome depends on the very specific facts of what happened. If you don’t know
the facts, you can’t truly understand the case and can’t understand the law. (You will be happy
to know that these two problems are really one; law professors often ask about the facts precisely
because they are often important to the law.)
If you’re unconvinced of the importance of facts, take a look at a few law school exams.
It turns out that the most common form of law school examination question presents a long
description of a very particular set of facts, and then asks the student to “spot” and then analyze
the legal issues presented by those facts. Such questions are known as “issue spotters,” as the
key skill they evaluate is the student’s ability to understand the facts and spot the legal issues the
facts raise. Doing well on an issue-spotter (and thus doing well on law school exams) requires
developing a careful and nuanced understanding of the importance of the facts. The best way
to prepare for that is to start reading the fact sections of the cases you are assigned with great
care.
2) An understanding of the arguments that each party argued to the court. Lawsuits
are disputes, and judges only issue written opinions about the law when two parties to a dispute
disagree on a particular legal question. As a result, when judges do write about a legal question,
they generally focus on resolving the parties’ particular dispute, not on writing a treatise on
whatever issues they may see in the case. This means that the lawyers, not the judges, take the
lead role in framing the issues raised by a case. In an appeal, for example, the lawyer for the-6-
appellant must articulate specific ways in which the lower court was wrong: the appellate court
then looks at the lawyer’s arguments and either agrees or disagrees. Similarly, in a criminal trial,
it is largely up to the defendant’s lawyer to raise problems with the prosecution’s case, and to
articulate reasons why the prosecution’s case is flawed. (If you wondered why people pay big
bucks for top lawyers, that should give you a good idea.) Because the lawyers take a lead role
in framing the issues in a case, you need to understand when you read a case exactly what
arguments the two parties were making. You simply can’t understand the court’s opinion unless
you first understand the dispute that the parties wanted resolved.
3) An understanding of the result and reasoning of the majority opinion, as well as
the reasoning of any concurring and/or dissenting opinions. Your emphasis here should
be on understanding the reasoning offered by the judges for the conclusions they make. Why did
the court do what it did? How did the court frame the problem before it, and how did it try to
solve it? What sources of law did they rely on for their ruling? The most important point you
should remember about understanding a court’s legal reasoning is that you absolutely must think
critically about the court’s reasoning. Law is man-made, and Anglo-American law is often
judge-made. Learning to “think like a lawyer” often means learning to think like a judge, which
means learning how to evaluate what rules and explanations are strong, and what rules and
explanations are weak. Courtsoccasionallysaythings that are unconvincing, silly, wrongheaded,
or confused, and you need to think independently about what a judge says. Think to yourself,
what would you have done if you were the judge?
4) The possible effect and scope of the court’s decision. You should also spend a
moment thinking about what the effect of the court’s opinion is likely to be on future cases. In
the next case, the facts will be a bit different: should the outcome be the same? During class, law
professors like to change the facts around and ask you whether the change in facts would change
the outcome. You can think of this as taking the court’s rule “out for a spin,” and it’s important
for a few reasons. First, it’s hard to understand the impact of a legal rule unless you think about
how it might apply to specific situations. A rule might look good in one situation, but reveal a
big problem in another. Second, judges often reason by “analogy,” which means a new case may
be governed by an older case when the legally relevant facts of the new case are similar to those
of the old case. This raises the question, which are the legally relevant facts for this particular
rule? The best way to evaluate this is to consider new fact patterns.
Finally, you should accept that some opinions are ambiguous and vague. Sometimes a
court won’t explain its reasoning very well, and that forces us to try to figure out what the
opinion means. You’ll look for the “holding” of the case, but you’ll get frustrated because you
can’t find one. It’s not your fault; some opinions are just poorly reasoned or written, and others
are written in a narrow way so that there is no clear holding. Rather than trying to fill in the
ambiguity with false certainty, try embracing the ambiguity instead. One of the skills of topflight lawyers is that they know what they don’t know: they know when the law is unclear.
Indeed, this skill of identifying when a problem is easy and when it is hard (in the sense of being
unsettled or unresolved by the courts) is one of the keys to doing very well in law school. When
we professors write law school exams, we intentionally touch on unsettled or unresolved issues.
The best students are the ones who recognize and identify these unsettled issues without
pretending that they are easy. -7-
Part III. Why Do Law Schools Use the Case Method?
I’ll conclude by taking a somewhat broader look at legal education, and the role of cases
in that education. College classes are pretty different from law school classes. In college you
had to read a bunch of books, and the professor stood at the podium and droned on for awhile
about broad themes and interpretations while you sat back in your chair, safe in your cocoon.
You’re now starting law school, and it’s very different. You’re reading about actual cases, reallife disputes, and you’re trying to learn about the law by picking up bits and pieces of it from
what the cases tell you. Even weirder, your professors are asking you questions about those
cases, getting everyone to join in a discussion about them. Why the difference, you may be
wondering? Why do law schools use the case method at all? I think there are two primary
reasons, one historical and the other practical.
The Historical Reason: The legal system that we have inherited from England is largely
judge-focused. The judges have made the law what it is through their written opinions. To
understand that law, we need to study the actual decisions that the judges have written. Further,
we need to learn to look at law the way that judges look at law. In our system of government,
judges can only announce the law when deciding real disputes: they can’t just have a press
conference and announce a set of legal rules (this is sometimes referred to as the “case and
controversy” requirement; the courts have no power to decide issues unless the issues are
presented by actual cases and controversies before the court). To look at the law the way that
judges do, we need to study actual cases and controversies, just like the judges. In short, we
study real cases and disputes because real cases and disputes historically have been the primary
source of law.
The Practical Reason: A second reason we use the case method is that it can be hard
to understand a particular legal rule, and its merits as a matter of policy, without applying the rule
in the real world. It can be hard to understand the rule because the English language is quite
ambiguous: even a legal rule that sounds definite and clear in the abstract may prove murky in
application. (For example, imagine you go to a public park and see a sign that says “No vehicles
in the park.” That plainly forbids an automobile, but what about bicycles, wheelchairs, toy
automobiles? What about airplanes? Ambulances? Are these “vehicles” for the purpose of the
rule or not?) You need to understand real-life applications of a rule before you can understand
what the rule really means. In a very practical sense, the applications are part of and help define
the rule.
It is also hard to assess the merits of a rule as a matter of policy without specific
examples. Often you will think of a legal rule that sounds good at first. If you try applying your
rule to different facts, however, you will find that specific facts can expose weaknesses in the
rule that you hadn’t thought of before. Law professors like to pose hypotheticals (imaginary fact
patterns) to get you to see that a given rule may not be as good as you first think. After a
semester of law school, you should be able to do this yourself; you’ll be able to think of a rule,
and then think of how different fact patterns that tests the rule. The goal is to get you to see the
strengths and weaknesses of different rules in a more sophisticated way. By studying cases, we
can help train our brains to think of specific factual situations that reveal the strengths and
weaknesses of a particular rule. We can then use that skill to devise better rules.
Good luck!-8-
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How to Read a Judicial Opinion:
A Guide for New Law Students
Professor Orin S. Kerr
George Washington University Law School
Washington, DC
This essay is designed to help entering law students understand how to read cases for
class. It explains what judicial opinions are, how they are structured, and what you should look
for when you read them. Part I explains the various ingredients found in a typical judicial
opinion, and is the most essential section of the essay. Part II discusses what you should look
for when you read an opinion for class. Part III concludes with a brief discussion of why law
schools use the case method.
I. What’s in a Judicial Opinion?
Judicial opinions (also known as legal opinions, legal decisions, or cases) are written
decisions authored by judges explaining how they resolved a particular legal dispute and
explaining their reasoning. An opinion tells the story of the case: what the case is about, how
the court is resolving the case, and why. Most legal opinions follow a simple formula that will
seem odd to you at first, but will quickly become second nature. In this section, I’ll take you
through the basic formula.
Let’s start with the preliminary stuff before the body of the opinion. This part isn’t very
important in most cases, but it’s helpful to know anyway.
The Caption: The caption is the title of the case, such as Brown v. Board of Education,
or Miranda v. Arizona. In most cases, the caption reflects the last names of the two parties to
the dispute, and it tells you who was involved in the case. If Ms. Smith sues Mr. Jones, the case
caption may be Smith v. Jones (or, depending on the court, Jones v. Smith). In a criminal case,
the government brings the case, and the government itself is listed as a party. If the federal
government charges Sam Jones with a crime, for example, the case caption would be United
States v. Jones.
The Case Citation: Underneath the case name, you will find a legal citation that tells
you the name of the court that decided the case, the law book in which the opinion was published
(and therefore can be found), and also the year in which the court decided the case. For example,
“U.S. Supreme Court, 485 U.S. 759 (1988)” refers to a U.S. Supreme Court case decided in 1988
that appears in Volume 485 of the United States Reports, starting at page 759. 1
Plaintiff is a French word, and its use in American law is a holdover from the Norman conquest of the
Saxons in 1066 in what is today England. The Normans spoke French: the Saxons spoke Old English. For several
centuries after the French-speaking Normans took over England, lawyers and judges in English courts spoke mostly
in law French. When the American colonies inherited the English legal system, we also inherited this French
tradition. Many of the distinctive legal words you will learn in your first year of law school are French in origin.
Examples include: plaintiff, defendant, tort, contract, crime, suit, judge, attorney, court, verdict, allegation, party,
plead, damages, appeal, assault, felony, larceny, counsel, evidence, arrest, and jury. So, if you don’t like legalese,
blame it on William the Conqueror.
-2-
The Author of the Opinion: The next bit of information is the name of the judge who
authored the opinion. In most cases, the opinion will simply state a last name, followed by the
initial “J.” No, judges don’t all have the first initial “J”; the letter stands for “Judge” or
“Justice,” depending on the court. For example, “Hand, J.” refers to Judge Hand, and “Holmes,
J.” is Justice Holmes. In those jurisdictions where the judges are not called “judges,” you may
see a different initial. For example, some courts call their judges “Chancellors,” so the initial
will be a “C” instead of a “J.” You will also see variations like “C.J.” for Chief Judge, “V.C.”
for Vice Chancellor, etc. On occasion, the opinion will have the Latin phrase per curiam in place
of the judge’s name. This phrase means “by the court,” and generally means that the opinion
reflects a common view held by all of the court’s judges, rather than the writings of a single
judge.
Okay, enough of the preliminary stuff. Let’s get to the body of the opinion.
The Facts of the Case: The first part of the body of the opinion is usually devoted to
presenting the facts of the case. In other words, what happened? Surprisingly, there are no
particular rules for what a judge must include in this section. Sometimes the fact sections are
long, and other times they are short; sometimes they are clear and accurate, and other times they
are vague or incomplete. Typically, the facts tell you the judge’s understanding of the case and
what the judge thought was an important aspect of the case that helped the judge reach the
decision.
The “facts” of a case consist mostly of the events that occurredbefore the legal case was
filed in court, and that led to the filing of the case. For example, the facts might be that A pulled
out a gun and shot B, or that A agreed to give B $100 and then changed her mind. However,
most opinions also include a section on the procedural history of the case: that is, what happened
in the case after the case was filed in court. The procedural history usually consists of various
motions, hearings, trials, and proceedings that went on in the case before the court that is writing
the opinion was asked to resolve the dispute at issue. You should pay very close attention to the
procedural history when you read cases for your civil procedure class (note the word
“procedure”); generally speaking, it is less important when you read a case for your other classes.
Some opinions may make your life a bit difficult by calling the parties to a case by special
legal names, such as appellant, appellee, petitioner, respondent, plaintiff, defendant, and the
like. You will get used to this eventually. For now, however, it may help to keep in mind a few
simple guidelines. First of all, when parties first appear in court they are labeled using a pretty
simple convention: in civil cases, where someone is bringing a lawsuit, the person bringing the
lawsuit is known as the plaintiff,
1
and the person sued is the defendant. In criminal cases, where2
The phrase “common law” started being used about a thousand years ago to refer to laws that were
common to all English citizens. Thus, the word “common” in the phrase “common law” means common in the sense
of “shared by all,” not common in the sense of “not very special.” The “common law” was announced in judicial
opinions. As a result, you will sometimes hear the phrase “common law” used to refer to areas of judge-made law as
opposed to legislatively-made law.
-3-
a criminal charge is filed by the government, the person who has been charged is still known as
the defendant. There are no plaintiffs in criminal cases, however; the cases are brought by the
government, which is referred to as “the state,” “the prosecution,” or simply “the government.”
After the original court has resolved the case, the losing party may wish to seek review
of that decision by filing an appeal before a higher court. An appeal is a legal proceeding before
the higher court to review the decision of the original court. The original court is known as the
trial court (because that’s where the trial occurs, if there is one), and the higher court is known
as the appellate or appeals court. A single judge presides over the trial court proceedings;
however, appellate cases are decided by panels of several judges. For example, in the Federal
court system, a single trial judge known as a District Court judge oversees the trial stage, and
cases can then be appealed to the next higher court, the Court of Appeals, where cases are
decided by panels of three judges known as Circuit Court judges. Finally, cases can then be
appealed from the Court of Appeals to the U.S. Supreme Court, where cases are decided by nine
judges. At the Supreme Court, the judges are called Justices, not Judges.
During the proceedings before the higher court, the party that lost at the original court
ordinarily is called the appellant – that is, the one bringing the appeal – and the party that won
is known as the appellee (accent on the last syllable, by the way) – the party whose victory has
been appealed. Some older opinions may refer to the appellant as the “plaintiff in error” and the
appellee as the “defendant in error.” Finally, for historical reasons, some courts– including the
U.S. Supreme Court– label an appeal as a “petition,” and require the losing party to petition the
higher court for relief. In these cases, the party that lost before the lower court is called the
petitioner, and the party that won before the lower court is called the respondent (that is, the one
who appears before the higher court to respond to the losing party’s petition). It’s all somewhat
confusing, but you’ll get used to it in time.
The Law of the Case: After the opinion has presented the facts, it will then discuss the
law. This section of the opinion describes the legal principles that the judge will use to decide
the case and reach a particular outcome. In many cases, the law is presented in two stages: first
the opinion will discuss the general principles of law that are relevant to the case given its facts,
and next the court will apply the law to the facts and reach the court’s outcome.
As you read the law section of the opinion, you should think about what source of law
the court is using to resolve the dispute before it. Some cases interpret the Constitution, the
founding charter of the government. Other cases interpret statutes, which is a fancy name for
written laws passed by legislative bodies such as Congress. Still other cases interpret the
common law, which is a term that usually refers to the body of prior case decisions (known as
precedents) that derive ultimately from pre-1776 English law that the Colonists brought over
from England.2
The source of the law can be quite important because Constitutional rules trump
statutory (statute-based) rules, and statutory rules trump common law rules. As a result, the-4-
source of the court’s authority can help determine the significance of the court’s opinion. In
your first year, cases that you read in torts, contracts, and property law will mostly be interpreting
the common law. Cases that you read in criminal law mostly will be interpreting the common
law or statutes. Finally, cases that you read in civil procedure will mostly interpret statutory law
and the Constitution.
You should also look out for the method (or methods) of reasoning that the court offers
to justify its decision. For example, courts may justify their decision on grounds of public policy.
This is particularly likely in common law cases: the idea here is that the court believes that the
legal rule it adopts is a good rule because it will lead to better results than any other rule. Courts
may also justify their decisions based on the court’s understanding of the narrow function of the
judiciary. When a case is governed by a statute, for example. courts may conclude that a result
is required because that is what the legislature’s statute says, no matter what the court thinks
would be the best rule. Similarly, when past courts have already answered similar questions
before, a court may conclude that it is required to reach a particular result because it is bound by
the past precedents. This is an application of the judicial practice of stare decisis, an
abbreviation of a Latin phrase meaning “That which has been already decided should remain
settled.” Other courts will rely on morality, fairness, or notions of justice to justify their
decisions. Many courts will mix and match, relying on several or even all of these justifications.
Two important ingredients you should be looking for in the legal section of the opinion
are the holding of the case, if there is one, as well as any dicta the opinion may contain. The
holding is the core legal principle that the case represents. It is the conclusion that the case
stands for, the court’s resolution of the key legal dispute that it faced. (I’ll talk more about
holdings of cases later on in the essay.) At the opposite end of the spectrum from the holding of
the case is dictum, or, to use the more common plural form, dicta. Dictum is an abbreviation of
the Latin phrase “obiter dictum,” which means “a remark by the way.” Dicta are statements in
an opinion that are not actually required to resolve the case before it. The distinction between
the holding and dicta can be important because the holding of a case is more important than
dicta. In fact, you will often hear lawyers try to minimize the importance of language in past
decisions by characterizing that language as “merely dicta.”
The Disposition: The disposition usually appears at theend of the main opinion, and tells
you what action the court is taking with the case. For example, an appeals court may affirm the
lower court decision, upholding it; or it may reverse the decision, overturning it, and remand the
case, sending it back to the lower court for further proceedings. For now, you should keep in
mind that when a higher court affirms it means that the lower court had it right (in result, if not
in reasoning). Words like reverse, remand, and vacate means that the higher court though the
lower court had it wrong.
Concurring and/or Dissenting Opinions. Concurring and dissenting opinions (a.k.a.
“concurrences” and “dissents”) are opinions by judges who did not see entirely eye-to-eye with
the other judges of the court, and wish to express a slightly or even dramatically different view
of the case. In general, a concurring opinion is an opinion by a judge who would have reached
the same result as the majority, but for a different reason. Dissenting opinions are opinions by
judges who disagree with the majority’s result entirely. In most cases, dissenting opinions try
to persuade the reader that the majority’s decision was simply incorrect. -5-
You probably won’t believe me at first, but concurrences and dissents are very important.
You need to read them carefully. When they’re not important, concurrences and dissents usually
are edited out by casebook authors just to keep the case from being too long. When they are
included, it means that they offer some valuable insights and raised important arguments.
Sometimes your professor will believe that the concurrence or dissent is the opinion that had the
better argument. In fact, a strong dissent that points out a fatal flaw in the majority’s reasoning
sometimes will influence later courts and convince them to decide the same question differently.
Law school professors like to assign cases with concurrences and dissents because they often
frame the issues better than unanimous decisions.
II. What to Look For When You Read a Case
Okay, so you’ve just read a case for class. You think you understand it. At the same
time, you’re not quite sure whether what you learned is what your professor wanted you to learn.
If you’re like most law students, you will have the experience of walking in to class believing
that you understand an assigned opinion one hundred percent, only to walk out of class an hour
later shaking your head and wondering how you could have misunderstood the case so
completely. You’ll quickly learn that reading a case for law school is different from other
reading you have done for other classes. You have to read much more carefully. Here are the
primary goals you should have when you read a legal opinion for class:
1) A careful understanding of the facts. Most law students underestimate the
importance of the facts when they read a case. Many students think, “I’m in law school, not fact
school; I want to know what the law is, not just what happened in this one case.” There are two
problems with this line of thought. First, when you are called on in class to discuss a case, your
professor will ordinarily begin by asking you to state the facts of a particular case. If you don’t
know the facts, you will be unprepared. Second, the facts of the case are usually legally
important: many areas of law are highly fact-sensitive, which is a fancy way of saying that the
proper legal outcome depends on the very specific facts of what happened. If you don’t know
the facts, you can’t truly understand the case and can’t understand the law. (You will be happy
to know that these two problems are really one; law professors often ask about the facts precisely
because they are often important to the law.)
If you’re unconvinced of the importance of facts, take a look at a few law school exams.
It turns out that the most common form of law school examination question presents a long
description of a very particular set of facts, and then asks the student to “spot” and then analyze
the legal issues presented by those facts. Such questions are known as “issue spotters,” as the
key skill they evaluate is the student’s ability to understand the facts and spot the legal issues the
facts raise. Doing well on an issue-spotter (and thus doing well on law school exams) requires
developing a careful and nuanced understanding of the importance of the facts. The best way
to prepare for that is to start reading the fact sections of the cases you are assigned with great
care.
2) An understanding of the arguments that each party argued to the court. Lawsuits
are disputes, and judges only issue written opinions about the law when two parties to a dispute
disagree on a particular legal question. As a result, when judges do write about a legal question,
they generally focus on resolving the parties’ particular dispute, not on writing a treatise on
whatever issues they may see in the case. This means that the lawyers, not the judges, take the
lead role in framing the issues raised by a case. In an appeal, for example, the lawyer for the-6-
appellant must articulate specific ways in which the lower court was wrong: the appellate court
then looks at the lawyer’s arguments and either agrees or disagrees. Similarly, in a criminal trial,
it is largely up to the defendant’s lawyer to raise problems with the prosecution’s case, and to
articulate reasons why the prosecution’s case is flawed. (If you wondered why people pay big
bucks for top lawyers, that should give you a good idea.) Because the lawyers take a lead role
in framing the issues in a case, you need to understand when you read a case exactly what
arguments the two parties were making. You simply can’t understand the court’s opinion unless
you first understand the dispute that the parties wanted resolved.
3) An understanding of the result and reasoning of the majority opinion, as well as
the reasoning of any concurring and/or dissenting opinions. Your emphasis here should
be on understanding the reasoning offered by the judges for the conclusions they make. Why did
the court do what it did? How did the court frame the problem before it, and how did it try to
solve it? What sources of law did they rely on for their ruling? The most important point you
should remember about understanding a court’s legal reasoning is that you absolutely must think
critically about the court’s reasoning. Law is man-made, and Anglo-American law is often
judge-made. Learning to “think like a lawyer” often means learning to think like a judge, which
means learning how to evaluate what rules and explanations are strong, and what rules and
explanations are weak. Courtsoccasionallysaythings that are unconvincing, silly, wrongheaded,
or confused, and you need to think independently about what a judge says. Think to yourself,
what would you have done if you were the judge?
4) The possible effect and scope of the court’s decision. You should also spend a
moment thinking about what the effect of the court’s opinion is likely to be on future cases. In
the next case, the facts will be a bit different: should the outcome be the same? During class, law
professors like to change the facts around and ask you whether the change in facts would change
the outcome. You can think of this as taking the court’s rule “out for a spin,” and it’s important
for a few reasons. First, it’s hard to understand the impact of a legal rule unless you think about
how it might apply to specific situations. A rule might look good in one situation, but reveal a
big problem in another. Second, judges often reason by “analogy,” which means a new case may
be governed by an older case when the legally relevant facts of the new case are similar to those
of the old case. This raises the question, which are the legally relevant facts for this particular
rule? The best way to evaluate this is to consider new fact patterns.
Finally, you should accept that some opinions are ambiguous and vague. Sometimes a
court won’t explain its reasoning very well, and that forces us to try to figure out what the
opinion means. You’ll look for the “holding” of the case, but you’ll get frustrated because you
can’t find one. It’s not your fault; some opinions are just poorly reasoned or written, and others
are written in a narrow way so that there is no clear holding. Rather than trying to fill in the
ambiguity with false certainty, try embracing the ambiguity instead. One of the skills of topflight lawyers is that they know what they don’t know: they know when the law is unclear.
Indeed, this skill of identifying when a problem is easy and when it is hard (in the sense of being
unsettled or unresolved by the courts) is one of the keys to doing very well in law school. When
we professors write law school exams, we intentionally touch on unsettled or unresolved issues.
The best students are the ones who recognize and identify these unsettled issues without
pretending that they are easy. -7-
Part III. Why Do Law Schools Use the Case Method?
I’ll conclude by taking a somewhat broader look at legal education, and the role of cases
in that education. College classes are pretty different from law school classes. In college you
had to read a bunch of books, and the professor stood at the podium and droned on for awhile
about broad themes and interpretations while you sat back in your chair, safe in your cocoon.
You’re now starting law school, and it’s very different. You’re reading about actual cases, reallife disputes, and you’re trying to learn about the law by picking up bits and pieces of it from
what the cases tell you. Even weirder, your professors are asking you questions about those
cases, getting everyone to join in a discussion about them. Why the difference, you may be
wondering? Why do law schools use the case method at all? I think there are two primary
reasons, one historical and the other practical.
The Historical Reason: The legal system that we have inherited from England is largely
judge-focused. The judges have made the law what it is through their written opinions. To
understand that law, we need to study the actual decisions that the judges have written. Further,
we need to learn to look at law the way that judges look at law. In our system of government,
judges can only announce the law when deciding real disputes: they can’t just have a press
conference and announce a set of legal rules (this is sometimes referred to as the “case and
controversy” requirement; the courts have no power to decide issues unless the issues are
presented by actual cases and controversies before the court). To look at the law the way that
judges do, we need to study actual cases and controversies, just like the judges. In short, we
study real cases and disputes because real cases and disputes historically have been the primary
source of law.
The Practical Reason: A second reason we use the case method is that it can be hard
to understand a particular legal rule, and its merits as a matter of policy, without applying the rule
in the real world. It can be hard to understand the rule because the English language is quite
ambiguous: even a legal rule that sounds definite and clear in the abstract may prove murky in
application. (For example, imagine you go to a public park and see a sign that says “No vehicles
in the park.” That plainly forbids an automobile, but what about bicycles, wheelchairs, toy
automobiles? What about airplanes? Ambulances? Are these “vehicles” for the purpose of the
rule or not?) You need to understand real-life applications of a rule before you can understand
what the rule really means. In a very practical sense, the applications are part of and help define
the rule.
It is also hard to assess the merits of a rule as a matter of policy without specific
examples. Often you will think of a legal rule that sounds good at first. If you try applying your
rule to different facts, however, you will find that specific facts can expose weaknesses in the
rule that you hadn’t thought of before. Law professors like to pose hypotheticals (imaginary fact
patterns) to get you to see that a given rule may not be as good as you first think. After a
semester of law school, you should be able to do this yourself; you’ll be able to think of a rule,
and then think of how different fact patterns that tests the rule. The goal is to get you to see the
strengths and weaknesses of different rules in a more sophisticated way. By studying cases, we
can help train our brains to think of specific factual situations that reveal the strengths and
weaknesses of a particular rule. We can then use that skill to devise better rules.
Good luck!-8-
Tuesday, June 25, 2013
Friday, June 21, 2013
Thursday, June 20, 2013
Wednesday, June 19, 2013
Tuesday, June 18, 2013
Legal risk management: Minimising the risk of litigation: checklist
Legal risk management: Minimising the risk of litigation: checklist
A checklist outlining some of the key steps that companies can take to reduce the threat and impact of litigation.
This checklist outlines some of the key steps that companies can take in their business dealings to reduce both the threat and impact of litigation.
Contract terms
When entering into a contract, consider the following contract terms:
- Liquidated damages. Liquidated damages provisions can prevent future litigation about the quantum of damages payable for a breach of contract by fixing the amount of damages payable. The decision on whether to include a liquidated damages clause in an agreement depends on the type of transaction involved and whether such clause is enforceable in the relevant jurisdiction. This provision can be useful in project development arrangements or other transactions where determining the value of services performed may be difficult. However, it can provide an incentive to litigate on the basis that the liquidated damages clause is an unenforceable penalty clause if the fixed amount is significantly higher than what is actually owed or is otherwise recoverable. In the UK, see Standard clause, Liquidated damages. For US contracts, see Standard clause, General Contract Clauses: Liquidated Damages.
- Limitation of liability. This provision limits the types of claims that can be recoverable under a contract. It may also limit a party's liability to a fixed monetary amount or specific percentage of the agreement's defined monetary value.
- Indemnification. An explicit indemnification clause can help ensure that a party is not liable for damages to third parties. When negotiating:
- the indemnifying party should:
- consider a control of defense clause (to manage third-party indemnity claims);
- consider an indemnified party's assistance requirement, so that an indemnified party's obligations do not stop once its claim is made;
- cross-reference general caps on liability specified elsewhere in the agreement; and
- carve out the negligence or misconduct of the indemnified party, precisely defining the fault standard (for example, negligence versus gross negligence versus wilful misconduct).
- the indemnified party should:
- negotiate against caps on liability;
- define the scope of liability broadly so as to not foreclose any possible claims;
- ensure that the indemnity applies to settled claims as well as claims where liability is proven, and avoid having to prove that settled claims would have resulted in liability;
- carve out liability solely to the extent that the indemnified party is involved; and
- try to set the fault standard as low as possible.
The parties may want to consider a mutual indemnity clause if appropriate for their particular circumstances. In the UK, see Standard clause, Indemnity. For US contracts, see Standard clause, General Contract Clauses: Indemnification. - Exclusive jurisdiction, choice of law and notice (including service of process or suit) clauses. These clauses can lower the cost of litigation by mandating the use of legal fora and systems already familiar to the parties and reducing the expenses of serving proceedings. For UK, EU and international contracts, see Standard clauses, Governing law and Jurisdiction. In the US, see Practice note, Choice of Law and Choice of Forum: Key Issues.
- Arbitration clause. Arbitration allows for more flexibility in managing risk after a dispute. The New York Conventiongenerally makes an arbitration award easier to enforce around the world than a national court judgment. The rights of appeal against an arbitral award are typically very limited. Parties should consider including a provision for amicable discussions, or in some cases a more formal mediation process, as a required pre-arbitration or pre-litigation step for resolving any disputes.
- Time limits. Consider a provision under which either party forfeits its right to file a claim if it fails to notify the other party of a breach within a defined period of time.
- Exclusion clause. Although in some jurisdictions courts have limited the operation of exclusion clauses, a valid one can exclude liability for certain breaches of contract. If applicable, identify the actions that could limit or eliminate liability.
- Insurance requirements. Consider adding the counterparty to your commercial insurance policies.
- Merger clause. A merger or integration clause (also known as an "entire agreement" clause in contracts governed by English law) states that the contract as written forms the entirety of the agreement, and that prior and subsequent agreements will not have effect unless formed in accordance with that clause. This type of clause can ensure that the other communications that occur throughout and between organisations do not inadvertently change the terms of the contract.
- Non-waiver clause. If at anytime during the lifetime of a contract one of the parties breaches it, the other party, by continuing to perform, may unintentionally waive its right to sue or terminate due to that breach. A non-waiver clause notifies the breaching party in advance that any continued performance does not amount to waiver.
Transaction risk
When entering into a transaction:
- Verify whether the transaction is properly documented and key contractual terms are incorporated. Consider whether any terms may be implied into the contract by statute, custom or industry practice. Determine whether there is any ambiguity in the terms or room for subjectivity and whether recitals should be used to clarify the parties' intentions. Confirm whether the terms accurately set out the scope of services.
- Quantify residual risks and obtain commercial insurance coverage if applicable.
- Check contractual procedures (for example, use of legal department, battle of the forms, post-acquisition reviews and document retention policies).
- Create a document retention policy and appoint a document retention officer. Pay special attention to electronically stored information, including creating and storing back-up tapes.
- Conduct periodic contract audits.
- Identify any potential limitations and risks regarding product performance.
Counterparty risk
When dealing with counterparties:
- Consider industry and financial references. Provide for guarantees from third parties where necessary. Adjust payment terms accordingly and consider whether an upfront deposit is required.
- Carry out credit searches.
- Conduct company research and review creditworthiness on an ongoing basis.
- Inspect accounts.
Country risk
When doing business in another country:
- Consider operating through a subsidiary or third party. Consider the domestic litigation environment and assess the likelihood of national courts "piercing the corporate veil"
- Review and maintain independence of subsidiaries if possible.
- Create a country profile, through Transparency International for example, as part of a due diligence regimen as required by any applicable legislation (for example, the Foreign Corrupt Practices Act of 1977 in the US).
Product risk
When manufacturing, selling or distributing a product:
- Implement quality control systems.
- Prepare product recall and crisis management plans.
- Ensure clear product labelling, instructions and warnings appear on products.
- Draft conditions of sale.
- Contemplate foreseeable uses of products and whether the product is safe enough for those uses.
- Be aware that insurers may insist on some implementation of risk management measures as a precondition to coverage or may consider them when setting premiums.
- Ensure the company's marketing and advertising are consistent with the product's intended use (no false or outrageous claims) and create a review process so that internal parties communicate with the counterparty with a single voice.
Process risk
To minimise process risk, a company can:
- Check regulatory compliance, including:
- environmental;
- health and safety;
- antitrust and competition; and
- specific regulated industries.
- Review employment contracts and procedures.
- Carry out intellectual property audits.
- Ensure intellectual property is protected, including where possible and appropriate, by registering it with the relevant government agencies both domestically and in each foreign jurisdiction in which your company does or plans to do business.
- Identify and profile potential mediators and arbitrators before trouble strikes.
Monday, February 11, 2013
The GC's guide to Corporate crises
The GC's guide to corporate crises
www.insidecounsel.com/2013/01/28/the-gcs-guide-to-corporate-crises?eNL=51192189150ba0853a00011a?utm_source=ic&utm_medium=email&utm_campaign… 1/6
InsideCounsel
The GC's guide to corporate crises
Tips to help you prepare for and manage unforeseen problems and
emergencies
The Penn State sex-abuse scandal. Wal-Mart exposed for possible Foreign Corrupt Practices Act (FCPA)
violations. The Cinemark movie theater shooting in Colorado. Sandy Hook Elementary School.
Last year, companies and organizations faced an array of crises that forced them to confront some of their
worst nightmares. And general counsel likely were at the front lines. “Often, when there is a crisis, it’s either because of a legal matter—an investigation, some type of bet-the- company litigation—or it’s something that
likely will result in a lawsuit,” says John Wilson, a partner at Foley & Lardner. “Therefore, the general counsel needs to be a key player in forming and carrying out a company’s crisis-management plan.”
Some lawyers who’ve been involved in corporate crises compare the experience to trying to tame a wild beast. “The situation is what one fellow described to me as riding a tiger,” says Tom Campbell, a partner at Pillsbury Winthrop Shaw Pittman and leader of the firm’s crisis-management team. “Over the months, he
became so exhausted and overwhelmed that he felt like he couldn’t hold on. But he knew that if he let go, he’d be consumed alive.” Unfortunately, when it comes to crisis management, experience is the best
teacher, according to Patricia Poole, a partner at Baker Hostetler and head of the firm’s emergency-response and crisis-management team. “Once a company goes through a crisis, no matter how small, it generally knows what its strengths and limitations are,” she says.
Because all crises are fact-specific and unique, it’s impossible to plan out highly detailed response and management strategies. But there are common threads that companies can anticipate, which will help them prepare for forthcoming bumps and prevent problems from evolving into explosions.
GCs guide their companies when they find themselves in dire situations.
Imagining the Worst
Shortly after Sandra Leung became the corporate secretary at Bristol-Myers Squibb in 1999, the biopharmaceutical company experienced a series of regulatory crises that she worked hard to navigate. Leung, who now is the company’s general counsel and corporate secretary, says she’s immensely
proud of helping Bristol-Myers Squibb work through those crises and contributing to a commendable turnaround that has helped the company thrive over the past decade. Part of what helped her to succeed was keeping a level head and following the company’s crisis-management plan. “It’s important to have a crisis plan because if you don’t navigate through the crisis well, you could have disastrous results within the company—not only from a shareholder and stock price perspective, but also from a public opinion
perspective,” she says. “The company’s reputation could be damaged if a crisis is not handled appropriately. Companies must be proactive in crisis management and actually have a plan in place.”
To formulate effective crisis-management plans, GCs should complete broad risk assessments to ascertain their companies’ weaknesses as well as the possible natural disasters they could face. GCs and their boards should conceptualize all encompassing crisis-response plans for their companies, as well as individual
plans for each of the company’s business units.
“Companies should have a written crisis-management plan that includes as many scenarios as possible,” says Poole. “It depends on the nature of the business. For some businesses, a chemical spill or explosion is possible. And depending on location, companies need to plan for tornadoes and snow storms. All companies are subject to fire crises and workplace fatalities, too.” Randy Mastro, a partner at Gibson Dunn and co-chair of the firm’s crisis management practice group, says having procedures and protocols in place for reporting, decision-making, investigative steps, public relations, disclosure obligations and crisis-response actions helps mitigate crises when they actually hit. “There’s a tendency to react spontaneously or emotionally to crisis situations,” he says. “Having protocols in place helps eliminate problems down
the road and reduces panic.” Once plans are in place, companies should drill employees on them and update
them annually, according to Poole.
Cyber Concerns
There’s one potential crisis that threatens nearly every company in the world: cyber-attacks. The Ponemon Institute recently found that the mean annual cost of cybercrime was $8.9 million per company, and companies experience an average of 1.8 successful cyber-attacks per week.
According to a survey from FTI Consulting Inc. and Corporate Board Member, 55 percent of general counsel rated data security as a major concern, up from 23 percent who felt that way in 2008. One-third of GCs say they don’t believe their companies’ boards are effectively managing cyber risk. Less than half of
company directors say their companies have crisis-management plans in place to respond to cyber-attacks. “I hate to say this, but I think it is going to take several well-publicized security breaches before a supermajority of corporate boards finally embrace the fact that doing business today without a prudent crisis plan in place is a formula for disaster,” Corporate Board Member President TK Kerstetter wrote in the
study. “Cyber risk and social media developments only increase the odds that it will happen to your organization—so boards should take steps to protect their company’s reputation.”
Key Players
The members of companies’ crisis-management teams will vary depending on the crisis. For example, if the crisis relates to a government investigation, the general counsel should recruit the CEO, chief financial officer, head of corporate communications and the heads of any business units that may be implicated as
team members. For other crises, such as white-collar crime, members of senior management may need to be excluded from the team. In all crises, it’s critical for companies to seek help from outside counsel who are
experts in the types of crises they’re facing. “Crisis-management professionals go from crisis to crisis to crisis, and they begin to identify and see patterns in highly complex circumstances,” Campbell says. “Those complex circumstances, to someone who has seen and done it before, are far more manageable than
they are to somebody who’s experiencing that complexity for the first time. Don’t go it alone.” Campbell adds that companies should designate their crisis-situation outside counsel before crises even unfold. “You don’t want to be putting your team together in the midst of the crisis because there’s a very good chance that you will not find the right people in time,” he says. It’s also crucial for companies to select outside counsel they’ll feel comfortable working with in high-stress, high-emotion situations. “The last thing you want to
do is be stuck in the proverbial lifeboat with someone who you really don’t like and don’t particularly trust,” Campbell says. “Literally, in these crisis-response situations, you will be staking your professional career on the experience and judgment of your crisis-management team.”
Companies also must seek help from external public relations firms that are already familiar with them. Experts say it’s imperative that companies develop these relationships ahead of time. “If there’s an inkling that something might evolve into a crisis, giving the public relations firm a heads up so they can help
the company be the eyes and ears of what’s being said about the crisis is a very good practice,” Leung says.
A good PR firm will help companies develop draft questions and answers that will
be readily available in the event of a crisis or negative event. They’ll also guide
the company in choosing crisis-response spokespeople. “Spokespeople should
be selected for their quality, their ability to look good during a crisis and [their
ability] to think on their feet,” Poole says. “The head media spokesperson, even if
it’s not that person’s full-time job, is a very important role and should be assigned
to someone who’s going to put the company in the most favorable light.”
Game Time
Once a crisis hits, GCs should begin investigating immediately. “You need to understand what it is that happened,” Campbell says. “The general counsel needs to lead the crisis-management team, most often in coordination with a very senior executive so that you have both the management and legal
sides of the equation.” Leung says GCs should focus on integrity as they enact their crisis-management
plans. “You must make sure that the facts are known and not let emotions or subjectivity get in the way,” she says. She adds that it’s important for GCs to realize that employees will rely on them for leadership during crises. “People will look to you and will open up to you if they know you’re someone they can trust.
It’s important to have that reputation within the company before the crisis happens—to be known as a person who will do the right thing and the type of person people can go to for advice.”
Overall, Leung says, a crisis is a time for a general counsel to shine or to fail. “People will remember how you reacted and how you supported them,” she says. “It’s important to remember that not all crises are the same, and general counsel have to think about how they will lend the most value in each situation. You have
to think beyond just getting the company through that particular crisis and have a view toward how to avoid that type of crisis in the future. All the actions you take have to be taken in a bigger-picture context. Sometimes that means additional training, fixing a few processes or something even deeper than that. But it’s really important to learn what led the company to be in that position to have that crisis arise and try to avoid that.”
When a crisis breaks, GCs must remind their companies and PR teams that there isn’t a quick fix. Crises often involve investigations, remedial plans and sometimes litigation. Therefore, delivering accurate information in the correct tone and at the appropriate time is essential.
“Developing the right public message while you are doing the hard work that needs to be done to find out the true facts is critically important,” Mastro says. “There have been situations where the company is intent on doing exactly the right thing, but because of the PR message that comes out at the outset of the
crisis, there’s a distorted view or misperception about the company that will linger and dog the company throughout. That can be a real problem in these situations: perception replacing reality. You have to give reality a chance to catch up to perception, but you have to play some role in shaping the perception by being
smart about the public message.”
Staying Sane
Experts say it’s important for general counsel to keep stress at bay when dealing with crises.
Tom Campbell, a partner at Pillsbury Winthrop Shaw Pittman and leader of the firm’s crisis-management team, says it isn’t unusual for GCs to want to lash out in the heat of the moment. But they should resist the temptation to respond to crises in anger. “You should always operate in a cool, dispassionate and
reasonable way,” he says.
There are a variety of ways GCs can keep a level head. Sandra Leung, general counsel and corporate secretary at Bristol-Myers Squibb, says practicing yoga has helped her destress and stay focused in her career, especially when she has faced crises. “Staying calm is the most important thing,” she says. “It helps me have a clear view of what’s most important.”
Foley & Lardner Partner John Wilson says GCs also can relieve stress by hiring top outside counsel. “They can do a lot of the legwork and take care of the details,” he says. “That allows the general counsel to focus on their two most important jobs: communicating with the board and communication with the rest of senior management.”
EVENTS
Deal With It
In the heat of the crisis, GCs must prioritize communication with management, the board, outside counsel, insurance carriers and PR teams to effectively coordinate a response.
“What I learned from working with [Bristol-Myers Squibb] in these types of situations is the importance of staying calm and focused, and making sure your board of directors are fully informed as to what’s going on,” Leung says. “You must keep them abreast of the facts, and that means sometimes having regular meetings or information sessions for the board; you don’t want any information gap with your board.” Poole says GCs also must keep in mind the expense and time involved in dealing with crisis. “You have to keep a handle on who’s doing what and how much it’s going to cost,” she says. “Try to come up with a budget. Although it’s hard to anticipate what the needs will be depending on how the scenarios change as they go, you must keep a handle on the work being done and the hours being spent so there isn’t sticker shock when you get the bills.”
Experts say successfully ushering a company into a crisis-recovery phase depends on how good of a crisis-response plan the company had in the first place. “If you had protocols in place and they worked, that’s the most comforting thing for everyone,” Mastro says. “Typically, what will come out of an internal investigation is fact-finding and remedial recommendations, which will ultimately go to company management and the board. What you’re really trying to do as a GC is to make sure the company responsibly addresses the crisis by finding out the true facts, assessing the different potential exposures and liabilities, and proposing a plan for how to address them and prevent such crises from occurring in the future. If you have that kind of action plan as a GC, you will have gone a long way toward the corporation coming back to normal after those steps have been taken.”
Essential Addendum
In this day and age, technology enables bad news to surface in the public domain almost instantaneously. Patricia Poole, a partner at Baker Hostetler and head of the firm’s emergency-response and crisis-management team, says one way to mitigate the risk of leaks is to instill a rigorous social media
and technology policy.
“I prefer in most environments—particularly manufacturing environments, where injuries could be gruesome—that the policy be no mobile phones allowed and no photographs allowed,” she says. “Additionally, a lot of times companies want to protect their processes, customer lists or formula—they need to protect those for business reasons, copyright reasons or trademark reasons. Companies don’t want every employee to be able to take pictures in the workplace. So there’s a legitimate business reason to have a social media
policy. It should be an appendix to the crisis-management plan.”
Monday, January 28, 2013
In-house counsel to Business counsel
Read this article to know how in-house counsels are expected to become more of business counsel:
http://www.nabarro.com/downloads/from-in-house-lawyer-to-business-counsel.pdf
http://www.nabarro.com/downloads/from-in-house-lawyer-to-business-counsel.pdf
Tuesday, January 22, 2013
Lease Vs Leave and License : Which is better?
Leave and Licence Agreements are preferred by the parties
to get out of the rigours of landlord-tenant relationship. Many
types of agreements are made for the occupation of
property like lease
deeds, lease or
tenancy agreements, rental agreements etc.
Despite these agreements,
most owners prefer
to give their premises on leave and license basis rather than tenancy or lease basis.
The process of eviction of tenants is generally difficult. The law is
tilted in favour of the tenant for various
purposes. Generally it is being witnessed that a person having a vacant apartment will never rent it out fearing what if
the tenant decides not to vacate and makes the apartment his own. That
is why tenancy has been put on the backburner and
Leave and Licence is now the most popular option.
The word “leave” has many meanings. In Leave and Licence
Agreements, it is used to indicate “permission”. The occupancy is in essence a
permission granted by the landlord or owner
to use and occupy the property concerned.
Mention should be made that the practice of entering into
“Leave and Licence Agreements” was adopted in Mumbai. In
Mumbai, the provisions contained under the then Bombay
Rents Hotel and Lodging House Rates Control Act, 1947, popularly known as the “Bombay Rent Act” were considerably in
favour of the tenants. Further, Tenancy
or Lease
Agreement had to be stamped and
registered. Even if the Agreements were duly stamped and registered, the
eviction of tenants was still a very tough and
time consuming procedure.
With the
hope of getting over the stamp duty and registration requirements and also with
the view of not creating any tenancy, that will be covered by the said Act, a practice of entering into “Leave and Licence
Agreements” was adopted.
Lease, Licence and Rental Agreements
The licence is not a lease. The lease and the license
both are different. The word “licence” under Section 523 of the Indian
Easement Act, 1882 is a grant by one person to another or to a definite number of persons, a right to
do, or continue to do, in or upon the immovable property of the
grantor, something which would, in the absence of such right, be unlawful. If the right granted as licence does
not amount to an easement or an interest in the property,
then it would be a licence.
A lease of immovable property as per Section 105 of the Transfer of Property Act is a
transfer of a right to enjoy such property. It may be for a specified period,
express or implied. The price or payment of money is usually referred to as the
“rent”.
In a Leave and Licence Agreement, the juridical possession
of the premises is deemed to remain with the licensor and the
licensee is said to be in constructive possession of
the said premises. Thus a leave and licence does not create any interest in the premises in favour of the licensee but
gives the licensee the mere right to use and
occupy the premises for a temporary period.
A Rental Agreement between the landlord and tenant sets
down the terms which will be followed while the tenant lives
in the rental unit. Month-to-Month Agreement is
commonly called a "Rental Agreement". This agreement is for an indefinite
period of time,
with rent usually
payable on a
monthly basis. The agreement itself can be in
writing or oral, but if any type of fee or refundable deposit is being paid,
the agreement must be in writing.
Lease and Licence: Distinction
The cardinal distinction between a lease and a licence
is that in a lease there is a transfer of interest in the premises, whereas
in the case of a licence there is no transfer of interest, although the licensee
acquires a right to occupy the premises. When premises are given out on lease or tenancy basis the legal
possession of the premises in these cases is also deemed to be
transferred to the lessee and tenant
respectively.
Whether
an agreement to occupy the premises between the landlord and tenant is allowed to occupy was an agreement to
lease or an agreement of leave and license has been a subject of many
Supreme Court & High Court rulings. In a number of judgements various High Courts as well as the Apex Court have
distinguished the lease and the license.
Factors to be Considered While giving out
Premises on Leave & Licence Basis
In deciding whether to give out premises on leave &
licence basis some of the factors to be considered
are as follows:
— Possession: In a leave and licence agreement, the owner is deemed to
be in
legal or judicial possession of the premises and the licensee is in constructive
possession of the premises.
legal or judicial possession of the premises and the licensee is in constructive
possession of the premises.
— Income Tax: In a leave and license agreement the owner has to pay the
applicable rate of tax.
applicable rate of tax.
— Municipal Tax: In a leave and license
agreement the Municipal Authorities may charge
taxes as applicable in the area and if there is a security deposit amount sometimes the Municipal Authorities may calculate a notional interest on
the securities deposit amount and charge tax thereon.
India: Pledge Vs Hypothecation: did you know?
HYPOTHECATION AGREEMENT
Hypothecation is
a form of
transfer of property
in goods.
Hypothecation
agreement is a document by which legal property in
goods
passes to the person who lends money on them, but the
possession
does not pass. This form of transfer is not regulated in
India
by any statute.
Neither the Transfer of Property Act, 1882, nor the Indian
Contract Act, 1872, nor the Sale of Goods Act, 1930, recognize the
non-possessory hypothecation of immovables
and the rights and remedies of the parties are regulated by the courts according to the general law of contract.
In hypothecation, there must be an intention of the
parties to create a security on the property on which the money
has been lent. If that intention can be established, equity gives effect to it.
A
hypothecation not merely of moveable existing on the premises at the time but also in respect of moveable which might be
subsequently acquired and brought there, is valid though it is not governed by
the Transfer of Property Act or by the Indian Contract Act, 1872. An oral or written
hypothecation is permitted under the law in India.
Hypothecation is an extended form of pledge. Pledge has
been codified by the Indian Contract Act. Sections 172 to 176 deal with pledge of goods. Under
Section 172, a pledge is a bailment of the goods as
security for payment of a debt or performance of a promise. Section 172
entitles a pawnee to retain the goods pledged as security for payment of a debt and under Section 175 he is entitled to
receive from the pawnor or the pledger any extra-ordinary expenses he incurs for the
preservation of the goods pledged with him. Section 176
deals with the rights of a pawnee and provides that in case of default by the pawnor the pawnee has the
right to sue upon the debt and to retain the goods as
collateral security and to sell the goods after reasonable notice of the intended sale to the pawnor. Once the pawnee,
by virtue of his right under Section 176 sells the
goods, the right of the pawnor to redeem them is extinguished. However, the pawnee is
bound to apply the sale proceeds towards satisfaction of the debt and pay the
surplus, if any, to the pawnor. So long the sale does not take place the pawnor is
entitled to redeem the goods on payment of the debt. Therefore, when a pawnee files
a suit for recovery of debt, though he is entitled to retain the goods, he is bound to return them on payment of the debt.
The right to sue on the debt assumes that he is in a position to re-deliver the goods on
payment of the debt and, therefore, if he has put himself in a position where he is not
able to re-deliver the goods, he cannot obtain a
decree.
As against pledge of goods, the transfer of legal title
in the goods in the case of a hypothecation, the rights of the lender and the borrower are
strictly governed by the terms and conditions of the hypothecation
agreement executed by the parties. No assumptions can be drawn in such a case. Hypothecation is resorted to mostly by banks and other financial institutions
for securing their long-term and medium-term loans and limits of working capital,
bill discounting, letters of credit and guarantees to limited companies, partnerships etc. Alongwith the hypothecation agreements,
the
loaning institutions
including banks have a plethora of other documents executed by the
borrowing companies e.g.
demand promissory note,
collateral personal guarantees of managing directors,
directors and other persons having substantial interest in the borrowing entities,
second charge on fixed assets like land and building
and plant and machinery permanently
attached to land by legal or equitable mortgage and so on and so forth.
Hypothecation
agreements usually cover
moveable machinery, equipment, stocks of finished
and semi-finished goods,
raw materials, consumable
stores, present and future available in factories and
godowns of the borrower and also enroute to the borrower's factories and book debts. While these items as
moveable assets, remain in the possession of the
borrower and he has absolute right to convert them, sell them and deal with them in any manner the borrower likes in
the course of his
business, the legal
title vests in
the lending institution
by virtue of the hypothecation agreement. Pledge, which
is regulated by the Indian Contract Act, 1872, as stated
above, technically speaking,
cannot exist without
bailment or possession. Though not accompanied by
delivery of possession, the validity of hypothecation of moveables has been
recognised in India and it has sometimes been enforced even against
a bona
fide purchaser without
notice. Since such hypothecation is not governed by the Transfer
of Property Act, 1882 or the Indian Contract Act and even the Sale of
Goods Act, 1930, the Court is thrown back upon principles of equity and justice.
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