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Lawyers try to catch up in tech world
Practice Focuses | 2007/12/30 15:56

Technology was late to come to the world of lawyers and law firms, long known for quill pens and steno pads. But now that it has arrived, it is spreading briskly.

Modern-day law firms, especially megafirms with offices around the world, rely heavily on a vast array of specialized software that helps them run nearly every aspect of their operations. From docketing cases to tracking hours to managing litigation to calculating bills, most legal practices depend on technological solutions.

"Within the past five years, technology in law firms has really, really advanced," said Randi Mayes, executive director of the International Legal Technology Association, an Austin, Texas, group that represents 1,700 US law firms and legal departments.

A primary driver of this evolution is the need for law firms to keep pace with the technology used by their corporate clients.

The explosion of electronic discovery has also forced law firms to become more tech-savvy.

And new federal statutes that require extensive financial reporting and electronic record-keeping, such as the Sarbanes-Oxley Act, have forced the rapid adoption of technology in the legal profession.

Technology has become critical to most industries, of course. But the legal profession resisted the age of technology much longer than many others.

"When I became a lawyer in 1990, the legal profession was a paper-and-pen business, and almost everything was done by typewriter and forms," said Alan Klevan, a Wellesley lawyer who chairs the Massachusetts Bar Association's law practice management section, which helps law firms use technology to enhance the practice of law.

Last month, the association hosted a legal technology expo in Needham that attracted several dozen technology firms that pitched their products to lawyers.

Now, however, the management of cases can be so complicated and time-consuming that technological assistance is critical. Software programs used by law firms handle receipts, billings, expenses, negotiating leases and insurance, personnel issues, time keeping, word processing, cost recovery, conflict checking, marketing, scanning, docketing, and data storage. Special tax-reporting software exists for trusts and estates departments, and financial software aids bankruptcy groups.

During electronic discovery, countless documents, files, phone records, and electronic correspondence are mined in civil litigation. Software can be used to comb through e-mail systems and identify key information, sparing lawyers or legal assistants the task of reading through hundreds or even thousands of e-mails in search of important data.

"Before, we'd get boxes of paper, and paralegals would go box by box by box, coding and figuring out what was important on each page," said Henry Chace, chief information officer at the Boston law firm Burns & Levinson, whose 125 lawyers collectively use about 70 software applications. "Now we just scan those documents and use algorithms to determine what's important or not."

As law firms increasingly become global operations, their multiple offices worldwide must also have time-and-billing software that works with multiple currencies.

At large firms, conflict checking, to ensure that the firm does not represent a client whose interests clash with the interests of another potential client, is also done electronically.

"If you're opening a matter in San Francisco, you have to find out if you have any conflicts with the Tokyo, New York, Singapore, and London offices, and you can't start billing till you know," said Chace, a former president of the International Legal Technology Association. Without software that runs such checks, the process would be unmanageable, he said.

Litigators tend to be at the cutting edge of technological advances because they rely on high-tech software to manage their cases and impress juries during trials.

But other types of lawyers remain well behind the curve. Many real estate lawyers, for example, still make in-person visits to courthouses and registries of deeds to file paper documents.

But that, too, is changing.

"Real estate lawyers used to have to trudge to the registry with a check and documents in hand," said Paul Roth, regional sales director for Simplifile, a system that enables real estate documents to be filed electronically. "Now they just have to sign on [to a computer] and send them in."

Simplifile sells its product in 20 states, but in Massachusetts the only registries of deeds that allow electronic filing so far are in Lowell, Springfield, and Plymouth, Roth said.

Despite these technological advances, "I still drag a lot of solo practitioners kicking and screaming into the technological age," Roth said.

"Most of them say they're fine the way they are, and they really want to leave it to the next generation to change."



Rabbi, 5 Others Plead Not Guilty To Tax Fraud
Tax | 2007/12/30 15:55
The leader of an Orthodox Jewish sect and five other men accused of tax fraud and money laundering pleaded not guilty Monday in U.S. District Court in downtown Los Angeles.

Brooklyn, N.Y., resident Naftali Tzi Weisz, the 59-year-old Grand Rabbi of Spinka, was indicted by a federal grand jury Dec. 18 for allegedly taking part in a scheme that cheated the Internal Revenue Service out of at least $33 million in donations to Spinka charities.

Spinka is the name of a Hasidic sect within Orthodox Judaism. The group is named for the European town along the border of Romania and Hungary where it originated.

The six men were accompanied in court by their attorneys and about five supporters at this morning's hearing before U.S. Magistrate Judge Alicia Rosenberg.

Their trial is scheduled for Feb. 12.

According to the indictment, donors to Spinka charities were paid illegal kickbacks, refunding up to 95 percent of the donations, which were laundered through the Israel-based Mizrahi Bank and businesses in downtown Los Angeles' jewelry district.

The donors then claimed a tax deduction on the full amount, prosecutors said.

Weisz is currently free on $2 million bond.

Other named defendants are Gabbai Moshe Zigelman, 60, also of Brooklyn, N.Y.; Joseph Roth, 66, of Tel Aviv, Israel; Yaacov Zeivald, 43, of Valley Village; Los Angeles residents Alan Jay Friedman, 43, and Yosef Nachum Naiman, 55; as well as five Spinka charities.

All six men face lengthy terms in federal prison if convicted on all charges.

Zigelman and the other defendants are free on bond except for Roth, an assistant manager at Mizrahi Bank, who remains in custody. On Friday, U.S. Magistrate Judge Stephen Tillman granted Roth $1.9 million bond, but stayed his decision so prosecutors could appeal it to another judge.


Ohio Supreme Court Upholds Damages Law
Breaking Legal News | 2007/12/29 11:59
The Ohio Supreme Court upheld a state law Thursday that limits how much a person injured by a defective product can collect in pain-and-suffering damages, reversing its stance on a closely watched issue. Attorneys representing injured people and companies that support the concept of caps have followed the lawsuit filed by Melisa Arbino, a Cincinnati property manager, over the Ortho Evra Birth Control Patch made by New Brunswick, N.J.-based Johnson & Johnson. She contended the product caused her permanent physical damage and threatened her ability to have children, and her lawyer argued that limits on damages were unconstitutional.

The majority opinion in the 5-2 ruling, written by Chief Justice Thomas J. Moyer, said the Ohio law revised did not violate the constitutional rights of injured parties to trial by jury, to a remedy for their injuries or to due process and equal protection.

"The decision in this case affirms the General Assembly's efforts over the last several decades to enact meaningful tort reforms," Moyer wrote.

In one of its challenged provisions, the law caps awards at $250,000 or three times the amount of economic damages, whichever is greater, up to an absolute limit of $350,000. The exception is when a plaintiff suffers permanent disability or loss of a limb or bodily organ system.

In another, the law prohibits awards for punitive damages exceeding two times the amount of the compensatory damages awarded the same defendant.

The court threw out a similar law in 1999 in a decision that prompted businesses to criticize Democratic justices who voted against the legislation. Since then, the court has become an all-Republican bench. In the 1999 vote, two Republicans joined the court's two Democrats in striking down the law, which was revised in 2004.

The U.S. Chamber of Commerce, National Association of Manufacturers and the National Federation of Independent Business Legal Foundation had joined in urging the court to uphold the law.

Groups urging the court to overturn it included the Ohio Academy of Trial Lawyers, the Ohio Conference of the National Association for the Advancement of Colored People and Mothers Against Drunk Driving.



Nevada judge abused authority, court rules
Law Center | 2007/12/29 11:42
The Nevada Supreme Court has ruled that Justice Nancy M. Saitta abused her authority when, as a Clark County District Court judge, she issued a gag order and sealed child-support proceedings involving a former judicial colleague.

Saitta did not meet requirements in state law when she sealed court records in 2006 involving former Clark County Family Court Judge Robert Lueck, the court said in the ruling issued Thursday. Lueck at the time was seeking to return to the bench.

The unanimous 13-page ruling, written by Justice Michael Douglas, calls Saitta's decision to seal the case without a written request and without findings or public notice "a manifest abuse of discretion."

The ruling found only that the action was improper and directed the Clark County District Court to open the case to the public. It did not address any motivation by Saitta for sealing the case.

Saitta, who was elected to the Supreme Court in 2006, did not participate in the decision. Senior Justice Deborah Agosti served in her place. Through an aide, Saitta declined to comment Friday.

Saitta was one of the subjects of a Los Angeles Times investigation of Las Vegas judges published in 2006. She was among several judges who were found to have routinely ruled in cases involving business associates or friends.

In one instance, the Times investigation found that Saitta awarded $1 million in fees for a certified public accountant and his attorneys, two of whom held a campaign fundraiser for her while the case was pending.

Lueck, a Las Vegas attorney, said he intended to seek a rehearing by the Supreme Court. He said Saitta properly used her judicial authority under Nevada rules of civil procedure to prevent his ex-wife, Jane Johanson, from using the courts to harass and embarrass him.

"This was a small, private matter that had been resolved months before," Lueck said of the child-support dispute between himself and Johanson. "This was done to hurt my campaign."

Johanson asked the Supreme Court through her attorney, Bruce Shapiro, to nullify the gag order and unseal the records of her child-support case involving Lueck. Shapiro did not immediately respond Friday to a message seeking comment.

Shapiro filed a petition last year accusing Saitta of issuing the gag order and sealing the court records to prevent voters from learning that Lueck failed to pay child support.

Lueck, who served on the Family Court bench from 1999 to 2004, lost his bid in 2006 to return to that court. At a July 11, 2006, hearing, Saitta found that Lueck was behind in his $750-a-month child-support payments. But she sealed the case, citing the potential use of the child-support information for negative campaigning.

Saitta was running against incumbent Justice Nancy Becker for the Supreme Court. She acknowledged in October 2006 that she made the statements about negative campaigns, but she denied any favoritism toward Lueck and said she ordered the gag order and sealed the records to protect the child.

State law allows a court to seal certain documents in a divorce case, but only upon written request of one of the parties. The gag order prohibited public discussion of the case by those involved. The court characterized the gag order as unconstitutionally vague and said it violated Johanson's free-speech rights.

The court said such orders could be entered only when there was a clear and present danger or a serious and imminent threat, and when no less restrictive alternatives were available.


US court overturns ruling against Muslim charities
Breaking Legal News | 2007/12/29 11:37
A US court overturned Friday a ruling that ordered Muslim charities with alleged links to the Palestinian Hamas movement to compensate the family of a US teenager killed in the West Bank.

The groups had been ordered in a 2004 civil case to pay 156 million dollars to the family of 17-year-old David Boim, killed in 1996 in an attack. A federal appeals court ruled Friday that the groups' role was not fully established.

It ordered a new trial to examine more closely the links between the organizations and the boy's death.

"The Boims will have to demonstrate an adequate causal link between the death of David Boim and the actions" of the groups, the court ruling said.

"This will require evidence that the conduct of each defendant, be it direct involvement with or support of Hamas's terrorist activities or indirect support of Hamas or its affiliates, helped bring about the terrorist attack that ended David Boim's life."

The groups had been charged with taking part in terrorism by aiding or financing Hamas, a powerful Islamist movement in the Palestinian territories.

"The Boims' theory ... was that in promoting, raising money for, and otherwise working on behalf of Hamas, these defendants had helped to fund, train, and arm the terrorists who had killed their son," the ruling said.

The defendants included the American Muslim Society and the Holy Land Foundation for Relief and Development, which was the biggest Muslim charity in the United States until it was outlawed after the attacks of September 11, 2001.

The foundation also faces separate criminal charges for alleged links with Hamas. It is charged with giving 36 million dollars to committees controlled by the movement from 1992 to 2001.

A leading US Muslim rights group, the Council on American-Islamic Relations (CAIR), welcomed the appeal court's decision Friday.

"This landmark ruling is a strong rejection of the recent disturbing trend of political lawsuits against American Muslims who have committed no crime other than providing humanitarian aid to Palestinians," it said in a statement.

"CAIR deplores the murder of David Boim and hopes that the actual wrong-doers are brought to justice."



SEC chief puts mutual fund changes on his to-do list
Securities | 2007/12/29 10:08
In what will almost certainly be his final year as chairman of the Securities and Exchange Commission, Christopher Cox is preparing to tackle a number of issues — some controversial and some fairly straightforward — in 2008. Cox described an agenda he plans to discuss with senior SEC staffers after the new year. Though he has not announced that 2008 will be his final year at the SEC, it is almost certain that by the time President Bush leaves office in January 2009, Cox will also be gone, if only to allow the next president to appoint his or her own candidate to the position.

Among the goals Cox hopes to achieve in 2008:

•Mutual fund prospectus reform.

Noting that U.S. investors have invested about $3 trillion of their retirement funds in the stock market, and that half of that sum is invested via mutual funds, Cox says he wants the mutual industry to do a better job communicating basic information to investors about their offerings.

Currently, an employee trying to decide where to invest 401(k) contributions either has to wade through a mutual fund's prospectus, or look at sales material for the fund, which doesn't provide an adequate description of what the fund is about.

In November, the SEC put a proposal for mutual fund prospectus reform out for comment. In a few months, after reviewing the comments, the SEC will vote on the matter. "It's not that people need things dumbed down," Cox says. "But people are busy. There's a reason that CEOs insist on having executive summaries. It's important to put the vital information upfront."

•New rules on 12b-1 mutual fund fees.

These add-on fees were approved by the SEC in 1980 as a way for mutual funds to promote themselves, attract new investors and, theoretically, reduce the cost of operating a mutual fund. But with the explosive growth of mutual funds over the past 25 years, the fees have morphed into pools that fund managers can use to reward brokers they do business with.

The SEC's department of investment management is considering a proposal that would clarify the role that independent directors should play in approving a fund's 12b-1 plan. "You can expect the SEC to engage in rulemaking on 12b-1," Cox says. "Independent directors have been urging us to make changes in this area, and I think we can bring a great deal of clarity that is currently lacking."

•Proxy access.

Cox promises to revisit a topic that has generated the most severe criticism he has endured since being sworn in as SEC chair more than two years ago: the ability of shareholders to have access to a public company's proxy materials.

Last month, Cox voted in favor of a proposal that solidified the SEC's long-standing position that public firms can rebuff shareholders' attempts to get their own director candidates on proxy ballots. Citing ambiguity in the SEC's position, a federal appeals court ruled in 2006 that shareholder activists could force their candidates onto proxy slates through litigation.

Cox's vote to close the "ambiguity" loophole drew outrage from investor-rights advocates. But Cox said at the time of the vote that he was not willing to proceed with a meaningful overhaul of the commission's proxy-access rules with a commission hobbled by the absence of one Democratic appointee.

The August departure of Roel Campos, one of the Democratic appointees to the commission, changed the dynamics surrounding proxy access and scuttled any chance at meaningful reform for 2007. The other democratic commissioner, Annette Nazareth, also plans to step down.

If and when the Senate votes to confirm their likely replacements — Democrats Luis Aguilar and Elise Walter — Cox vows to revisit the issue.

•Protection of seniors.

Cox has made protecting older investors a priority, cracking down on abusive "free lunch" promotions and the like. For 2008, he wants to reach out to investor advisers to find out answers to potentially tricky questions.

If, for example, an investment broker has a longtime client who develops Alzheimer's, how should financial decisions be handled?

Cox realizes that every situation will have a unique set of facts and circumstances, but with a boomer population rapidly moving toward retirement age, he says he wants to develop some "best practices" in the area.



Deloitte to settle Delphi investor suit for $38 mln
Legal Business | 2007/12/28 11:51
Deloitte & Touche LLP has agreed to pay $38.25 million to settle an investor lawsuit over alleged accounting improprieties at bankrupt auto parts maker Delphi Corp plaintiffs' lawyers said on Thursday.

The case in U.S. District Court in Detroit stems from an accounting scandal at Delphi that led to the company restating financial results going back several years in June 2005, the law firms said. Deloitte was Delphi's outside auditor.

The plaintiffs, who were seeking to represent investors who bought Delphi securities from March 7, 2000 to March 3, 2005, sued Delphi, some company officials, Deloitte and certain other entities, the law firms said.

Most of the defendants, including Delphi, have already agreed to settle the case, said Stuart Grant, lawyer for one of the law firms representing plaintiffs in the case.

The value of the settlement with Delphi is about $204 million, with plaintiffs expecting to be paid in the company's common stock and warrants once it emerges from bankruptcy, Grant said.

Delphi, formerly a unit of General Motors Corp, filed for bankruptcy in October 2005 and plans to emerge from Chapter 11 in the first quarter of 2008.

Besides Grant's law firm Grant & Eisenhofer, other firms representing the plaintiffs are Bernstein Litowitz Berger & Grossmann; Schiffrin Barroway Topaz & Kessler; and Nix, Patterson & Roach.

The settlement agreements need to be approved by U.S. District Judge Gerald Rosen, the law firms said.



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