Archive for August, 2009

Check Out This Blog

Thursday, August 27th, 2009

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We were surfing the net just now, and came across an excellent blog by Jonathan Kirshbaum, called “Habeas Corpus Blog: Keeping Track of the Great Writ for New York State Prisoners.” You can check it out here.

What particularly caught our eye was yesterday’s post on Davis, which started off discussing why Scalia’s dissent was probably correct, and then turned into an excellent analysis of the cases touching on actual innocence. It’s recommended reading. Here’s a sample from the second half of the piece:

What is important to keep in mind is that, at the time of Herrera, the concept of actual innocence was more abstract. The decision was rendered before the tidal wave of exonerations based on DNA testing beginning in the early 1990′s. Thus, DNA testing has made actual innocence claims a more certain reality than at the time of Herrera.

It should be noted that in 2004, Congress passed the Innocence Protection Act, which included the Kirk Bloodsworth Post-Conviction DNA Testing Program to help those already convicted obtain DNA testing in their cases. This landmark legislation demonstrates our society’s growing belief in the importance that the wrongfully convicted should obtain justice. In the face of this altered landscape, one would think that the Supreme Court would be compelled to find that a conviction of an actually innocent person does state a constitutional claim.

While Herrera concerned the execution of an innocent person, it would seem that actual innocence claims should apply with equal force in the non-capital context. It clearly is no less tolerable in our society that someone should be incarcerated and further punished based on a conviction for which he is actually innocent.

Once again, this type of actual innocence claim must be distinguished from the so-called “gateway” innocence claim in a habeas petition. In a habeas corpus proceeding, a state procedural default is not a bar to habeas relief where a compelling claim of actual innocence is made. In Schlup, the Supreme Court defined the standard for assessing this type of gateway actual innocence claim. The showing needed to meet this gateway claim would probably be lower than it would be for a hypothetical free-standing actual innocence claim. Schlup, 513 U.S. at 316.

Recently, in House v. Bell, the Supreme Court found that the petitioner had met the standard for a gateway actual innocence claim. House, 126 S. Ct. at 2078-86. The Court acknowledged that it remained an open question as to whether a free-standing actual innocence claim is possible under the U.S. Constitution. Id. at 2086-87. The Court refused to answer this question, stating that whatever burden a hypothetical free-standing actual innocence claim would require, the petitioner had not met it. Id. at 2087.

Thus, there have been strong indications that the Court will find that the claim exists. But it really is not clear under what constitutional right it would fall. But I guess that doesn’t matter so long as it exists somewhere in the Constitution. As I stated in my earlier post, the conundrum is that this right is not clearly established, so getting habeas relief on the claim will require jumping over some major hurdles. That’s why allowing Davis to present his claims to a court is based more on doing what’s right, than doing what’s possible at this point legally.

Good stuff. We’re adding him to our daily list of “must-reads”

Billable Hours vs. Flat Fees

Monday, August 24th, 2009

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Today’s Wall Street Journal has an article on how companies are starting to insist on flat fees for legal services. In the economic recession, companies are starting to complain that lawyers billing by the hour (or the tenth of the hour) only creates incentives for those lawyers to work inefficiently and rack up higher fees.

And of course that’s true. But people forget that it was clients, not lawyers, who first insisted on billing by the hour.

Most lawyers perform transactional services. A lot of this work requires little original effort — the vast majority of corporate formations, contracts, wills, filings, etc. are practically boilerplate. There’s no new research to do, nobody needs to write anything from scratch. Just fill in the names and a few key variables, and the work is done.

Back in the day, lawyers charged flat fees for these services. You want a lease? That’ll be fifty bucks. And everyone paid the same amount, because fees were fixed by the bar associations.

But then clients objected, asking why they should pay fifty bucks for a document that took five minutes to prepare.

So clients started to insist on paying only for the work that their lawyers actually did. They didn’t want to pay for the value of a service, but rather for the time spent performing it.

Lawyers, for the most part, are not dummies. They readily adopted this new way of doing business. Their incentives changed, predictably. Away went the fixed-fee focus on getting the client a desired outcome, and in came the hourly-fee incentive to provide as many incremental services as one could get away with.

By the 1970s, the billable hour had pretty much supplanted the a la carte fees of yore. Now, that fifty-dollar contract had blossomed into several hours of research delegated to a junior lawyer, more hours of legal memoranda summarizing that research for partners who probably already knew it, more hours of drafting and revising, plus phone calls and travel time and meetings and so on.

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Billing by the hour is not necessarily a bad thing. The client gets to see exactly what work is being done for him (if the bill is reasonably itemized). And although there is a real incentive to maximize billable hours, most attorneys we know are professional enough not to pad their bills with unnecessary or duplicative work. (Not saying it doesn’t happen, only that we haven’t had the pleasure of associating with such lawyers.)

Billing by the hour can actually be a bad thing if one happens to be the kind of lawyer who gets results. The lawyer who gets the job done, not just well, but soon. That lawyer has a happy client, but if he’s getting paid by the hour he’s not making a lot of money.

So there are plenty of lawyers who already charge flat fees, or minimum fees. These are very often criminal defense attorneys. The client doesn’t care so much about how many hours you spent researching the law of search and seizure, he just wants the evidence suppressed. He doesn’t care how hard you worked to negotiate a better deal, he just wants the deal.

When the client is concerned with the results, not how they were achieved, the billable hour makes little sense. The client should pay for the value of the service rendered.

That does not mean paying more for better results — that’s not ethical. What it means is, the lawyer can charge five grand to knock out a misdemeanor, even though it didn’t take five thousand dollars’ worth of time, because that’s what that outcome happens to be worth where he practices.

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The big problem we have with this whole discussion is that the participants keep talking about the law as if it is a business. Firms are all about maximizing revenues and profits, we hear. Flat fees are going to cost the same, or more, because the firms will calculate what they would have billed anyway, and add in a fudge factor. And clients will suffer when firms focus their energies on the hourly work, perceiving time spent on flat-fee work as an opportunity cost. And without the billable hour, there is little justification for all the junior associates who generate so much hourly revenue (or their salaries).

But the law is NOT a business. The practice of law is NOT about making money. The practice of law is a profession.

There are only three professions: medicine, the clergy and the law. What sets the professions apart from businesses is that the point is not to make money. Profits are not the point. The only thing that matters is caring for the patient, tending the flock, and representing the client. The client’s interests are paramount. The lawyer owes his loyalty not to his firm, not to any shareholders, but to the client he represents.

The second a lawyer or law firm starts focusing on maximizing revenue, they stop being professionals. There is no reason why lawyers should not be compensated for their representation. And there is no reason why that compensation should not be handsome, when the representation is valuable. (We charge far more than the average lawyer, for example, but we like to think we’re worth it.) Nevertheless, making money must never be the point of doing the work.

So to those who bitch and moan about how switching to flat fees would hurt their bottom line, we can only say that they should stop thinking like shopkeepers and start acting like professionals.

Dersh Being Disingenuous

Wednesday, August 19th, 2009

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We love Alan Dershowitz. And we love Justice Scalia. So at first we were intrigued to hear that Dersh had challenged Scalia to a debate over his recent dissent in Davis. (See our post on it here.)

But it turns out that Dersh is just being disingenuous. Pity.

Quick recap: Davis was convicted of a murder. Since then, several witnesses have recanted. He filed a habeas petition directly with the Supreme Court. Justice Stevens, writing for the majority, passed it on to the District Court to decide whether Davis really is innocent. Justice Scalia dissented, saying that the District Court doesn’t have the power to do anything, even if it does find him innocent.

The reason why Scalia said that — and he really does have a point — is because the law in question only lets the District Court act if there is well-settled Supreme Court precedent allowing it. Scalia pointed out the simple fact, known to any death penalty scholar, that there is zero Supreme Court precedent on this issue. And that is because the Supreme Court has gone out of its way to avoid ever deciding one way or the other whether there is a constitutional claim of actual innocence.

Here’s what Scalia said:

This court has never held that the Constitution forbids the execution of a convicted defendant who has had a full and fair trial but is later able to convince a habeas court that he is ‘actually’ innocent. Quite to the contrary, we have repeatedly left that question unresolved, while expressing considerable doubt that any claim based on alleged ‘actual innocence’ is constitutionally cognizable.

That clearly means nothing more nor less than that the Supreme Court simply hasn’t decided the issue yet.

Now of course there have been plenty of bloggers out there who have mischaracterized and misinterpreted this to mean that Scalia thinks it’s constitutional to execute someone who is actually innocent, so long as their trial wasn’t otherwise defective. That’s not what he said, but there are many who find it easy to believe that he did say that. And there are many more who just don’t get the concept. That’s fine, because those bloggers aren’t highly respected constitutional scholars.

But Dersh is a highly respected constitutional scholar. He has no excuse for misinterpreting what Scalia said. And yet that is exactly what Dersh did in his blog post today on The Daily Beast.

Dersh said he never thought he would see the day when a Justice of the Supreme Court would write an opinion containing the quotation above. Then he explained what he says Scalia meant:

Let us be clear precisely what this means. If a defendant were convicted, after a constitutionally unflawed trial, of murdering his wife, and then came to the Supreme Court with his very much alive wife at his side, and sought a new trial based on newly discovered evidence (namely that his wife was alive), these two justices would tell him, in effect: “Look, your wife may be alive as a matter of fact, but as a matter of constitutional law, she’s dead, and as for you, Mr. Innocent Defendant, you’re dead, too, since there is no constitutional right not to be executed merely because you’re innocent.”

That is absolutely not what Scalia was saying, and Dershowitz ought to know that. He created a straw man, then spent an entire blog post arguing against it.

That was bad enough. But then Dersh made it worse, by challenging Scalia to debate him on it. Dershowitz pointed out that Scalia has publicly promised that, if the Constitution ever compels him to act in violation of the mandates of his Catholic faith, he will resign as a Justice instead. And Scalia has also stated that he could not authorize an execution if he believed it would be immoral.

So Dershowitz says the stakes of their debate would be high: If Scalia loses, he’d either have to change his jurisprudence, or he’d have to resign from the Supreme Court.

But Dersh challenges Scalia to defend a position that Scalia has never taken, that “his constitutional views [permit] the execution of factually innocent defendants.”

And though Dersh imposes high stakes on the man he challenges, he imposes none on himself. If he loses, he loses nothing.

So our favorite constitutional scholar has challenged someone to defend a position he never took, with extreme penalties for losing, and at no risk to himself? Badly done, Dersh. Bad form.

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And by the by, the majority in Davis has tried to force the issue. Whichever way the District Court goes on this, it’s coming back to the Supreme Court, so they may well have to decide once and for all whether there is a constitutional claim of actual innocence. They may not, because this isn’t the strongest case of innocence — it’s a he-said-he-said situation with witnesses who merely recanted testimony — and so they may have other grounds to avoid the issue.

But if they do decide the issue, we have no trouble predicting that Scalia would opine that the our law does provide for a claim of actual innocence. He’d probably refer to the fact that English courts going back to the Middle Ages widely accepted the principle that innocence trumps other considerations. He’d probably quote Fortescue and Blackstone. He could well throw in the maxims of tutius semper est errare in acquietando quam in puniendo, ex parte misericordiae, quam ex parte justiae, and of prestat reum nocentum absolve, quam ex prohibitis indiciis & illegitima probatione condemnari. Heck, if he’s feeling mischievous, he might even cite the rules of Star Chamber (such as In Camera Stellata, 29 April 1607, in Court of Star Chamber, Les Reportes del Cases in Camera Stellata 1593 to 1620).

We wouldn’t be a bit surprised. And Dersh shouldn’t be, either.

Yet More Prosecutorial Misconduct by the Feds

Tuesday, August 18th, 2009

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We’ve asked it before, but what the heck is going on with some of these federal prosecutors nowadays? There was the whole Ted Stevens fiasco over the winter, when the feds actively withheld exculpatory evidence and witnesses in their rush to convict the former Senator. Then the 7th Circuit directed an acquittal after the feds blatantly misrepresented the facts in a food labeling case. The W.R. Grace case was screwed by federal prosecutors who withheld exculpatory evidence and gave the judge reason to say he has “no faith in anything the Government says” any more.

And now we get yet another case of the feds blatantly misrepresenting the facts. This time, the 9th Circuit reversed and ordered a new trial, though it’s doubtful that there will be another one.

The case is U.S. v. Reyes, decided this morning. This was one of those options backdating cases that were all over the news for a while back in ’06 and ’07. (“Backdating” is when a company retroactively picks an effective date for stock options, so as to maximize the potential value of those options. It’s a crime when the extra value isn’t accounted for as an expense, because then the books give investors a false image of the company’s finances.)

Gregory Reyes was the CEO of Brocade Communication Systems. In August 2006, Reyes was charged with securities fraud and related crimes for backdating options without properly accounting for them. At trial, his defense was that he had no intent to deceive. He just signed off on the options in good-faith reliance on his company’s Finance Department.

High-ranking Finance Department employees had given statements to the FBI, describing how they knew all about the backdating scheme. But they didn’t testify at trial. Instead, the prosecution called a Finance Department employee who said she didn’t know about the backdating.

The prosecutor was well aware of the fact that others in the department knew all about it. But during closing arguments, he told the jury that the Finance Department employees “don’t have any idea” that backdating was going on.

After several days of jury deliberations, Reyes was convicted. He was sentenced to 21 months in prison with $15 million in fines. That was stayed pending appeal.

This morning, in an opinion byJudge Schroeder, the 9th Circuit held that this was prosecutorial misconduct, and reversed the conviction, ordering a new trial. Reyes argued that he didn’t know the Financial Department wasn’t accounting properly for the backdating, and the feds argued that the Financial Department didn’t know about the backdating. So that was a key question for the jury to decide. And the feds had lied to the jury.

And this wasn’t just a simple little throwaway line, either. The prosecutor did not even limit his argument to the testimony of the witness he’d cherry-picked to give the false impression that nobody in the Finance Department knew about it (which might actually have been permissible). No, the prosecutor:

asserted as fact a proposition that he knew was contradicted by evidence not presented to the jury. In direct contravention of the statements given to the FBI by Finance Department executives that they did know about the backdating, the prosecutor asserted to the jury in closing that the entire Finance Department did not know about the backdating, and further that the government’s theory of the case was that “finance did not know anything.”

“Our theory is that those people didn’t know anything. . . . [The cherry-picked witness] says finance didn’t know. Did you need everybody in the Finance Department to come and tell you that they didn’t know?”

The government even displayed for the jury a diagram explaining the prosecutor’s position that the Finance Department did not know of the backdating. The prosecutor asked the jury to assume other employees of the Finance Department would testify that they did not know about Reyes’ backdating procedure, when the prosecutor knew they did.

Federal prosecutors have “a special duty not to impede the truth.” As the 9th Circuit pointed out today, there is good reason to hold prosecutors to a higher standard: Their words carry the weight and imprimatur of the government itself, which can be very persuasive to a jury.

The 9th Circuit didn’t go so far as to direct an acquittal or dismiss the indictment, because the defense had also played it pretty aggressively. Instead, they ordered a new trial. It is anyone’s guess whether the feds will be up to the task of trying the case all over again, years after the fact. But we’ll go out on a limb and predict that this case will never see a jury again.

For crying out loud, feds! And for shame.

Wow! Supreme Court Puts Actual Innocence in Play

Monday, August 17th, 2009

 

The Supreme Court did something today it hasn’t done for generations — it took an “original writ” of habeas corpus (a request made directly to the Supreme Court itself, instead of first filing it in a lower court), and then it ordered a federal District Court to hold a hearing on whether the convict is actually innocent.

The really dramatic thing about this is not the acceptance of an original habeas petition, but the fact that the Court’s order seems to imply that a convict may not be executed if he can prove actual innocence. As demonstrated most recently by the Court’s Osborne decison, it has persisted in absolutely refusing to decide that issue. They have gone out of their way, in fact, to repeatedly leave the question “unresolved, while expressing considerable doubt that any claim based on alleged ‘actual innocence’ is constitutionally cognizable,” as Scalia said this morning.

Troy Anthony Davis was convicted 18 years ago, in Georgia state court, for the shooting death of an off-duty police officer, Mark Allen McPhail. At trial, Davis had insisted that he was innocent, though he had been present at the time. The jury didn’t believe him, and there were no constitutional problems with his trial.

Since then, seven of the witnesses against him have recanted their testimony, and evidence has come forward that the prosecution’s main witness was the actual killer. Davis has invoked the Supreme Court’s original habeas jurisdiction, relying on Court Rule 20.4(a) permitting such discretionary powers under “exceptional circumstances.”

A majority of the Court (new justice Sotomayor did not take part) agreed with Davis, found the necessary exceptional circumstances, and transferred the petition to a District Court. The District Court has been instructed to hold a hearing to determine whether evidence that could not have been obtained at the time of trial clearly establishes Davis’ actual innocence.

This appears to have set off quite a debate among the justices, in the middle of their summer recess.

Justices Scalia and Thomas are adamant that the Court did the wrong thing here. Most importantly, they point out that the District Court can’t grant Davis the relief he seeks, even if it wants to. So this transfer “is a confusing exercise that can serve no purpose except to delay the State’s execution of its lawful criminal judgment.”

District Courts only have power to release convicts pursuant to the Antiterrorism and Effective Death Penalty Act of 1996. That statute prohibits habeas corpus for claims that were adjudicated on the merits in state court, unless that decision violates “clearly established Federal law, as determined by the Supreme Court of the United States.”

Because the Supreme Court has gone out of its way not to determine the issue of whether actual innocence is a valid basis for habeas release, Scalia and Thomas hold that it cannot be “clearly established Federal law, as determined by the Supreme Court of the United States.”

Justice Stevens, writing for the majority (joined by Justices Ginsburg and Breyer), simply sidestepped the issue. The AEDPA might not apply in an original habeas petition, he mused. And even if it does apply, it might be unconstitutional for it to prevent relief for someone who has established his innocence. Or, in the alternative, one might find that clearly established Court precedent already permits such relief, as it “would be an atrocious violation of our Constitution and the principles upon which it is based” to execute an innocent person.

Stevens’ closing paragraph, however, makes it clear that he understands that the Court has never dealt with the issue before, but he feels that it is time to create some new law. “Imagine a petitioner in Davis’s situation who possesses new evidence conclusively and definitively proving, beyond any scintilla of doubt, that he is an innocent man.” Applying the law as it exists, the way Scalia and Thomas would have the Court do, “would allow such a petitioner to be put to death nonetheless.”

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In the 2008 term, Stevens seemed to be going out of his way to create a legacy. Writing as if he was about to announce his own retirement, his opinions seem to have sought for better principles rather than the application of existing ones. His jurisprudence is not about objective law, but subjective justice.

So this opinion fits right in with his others. To hell with the Court’s insistence on staying out of the “actual innocence” defense. here was a perfect opportunity to force the Court to deal with it once and for all. By sending it to the District Court expressly for the purpose of establishing that defense, he has ensured that the case will re-appear before the Supreme Court to decide it.

If Davis wins, the State of Georgia will surely appeal, claiming that the District Court lacked the power to decide the issue. If he loses, he’s sure to appeal, along with amici like the NAACP, claiming that the District Court abused its power in rejecting his claim.

Either way, the Supreme Court would eventually be faced with deciding the issue of whether actual innocence is a valid basis for a habeas petition.

It looks to us like Stevens is gaming the system for activist purposes. For the record, we firmly believe that actual innocence should trump procedure and all other legalistic concerns. But it remains to be seen whether he’ll succeed in getting the law to shape itself accordingly.

5 Tips for a Killer Appellate Brief

Thursday, August 13th, 2009

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We’ve seen too many appellate briefs that suck. They’re too hard to follow, demand too much effort to figure out, and give clerks and judges every reason to stop paying attention. There’s no excuse for such bad writing.

There are tons of books and treatises out there on how to write a brief. Many of them are quite good, giving thoughtful, clear and detailed advice on writing compelling briefs. But obviously, there are tons of lawyers who haven’t gotten the message. Maybe it’s because they can’t be bothered to read a whole book on the subject.

So for those who want to improve their appellate writing skills, but don’t want to wade through a whole book about it, here are a few suggestions:

1. Be Brief.

It’s not called a “brief” for nothing. But some lawyers tend to write as if they’re getting paid by the word. That is a huge mistake.

Judges and clerks have to read these things. A brief that’s super wordy, taking forever to lay out the facts, taking forever to reason out an argument, taking forever to complete a thought… let me tell you right now, nobody wants to read it. A judge is going to stop reading carefully if you keep making the same point over and over. A judge is going to stop reading carefully if you’re using dozens of paragraphs to make a point you could have made in three sentences.

You may think you’re being artful and brilliant. You may think you’re advancing your case by laying out your thesis as thoroughly as possible. You may think that your lengthy discussions are causing the judges to spend more time considering your points. But in reality a repetitive, verbose brief is only going to wind up being skimmed. Judges will actually spend less time reading it.

A brief that gets to the point, however, is the mark of a good lawyer. That’s really what judges think. The fewer words your brief has, the more likely they are to think you have the winning argument, before they even turn a page.

Also, the more concise you are, the more attention your words receive. Instead of diluting your thoughts in a sea of verbiage, you’ll make them stand out. Judges and clerks will pay more attention to what you say. Fewer words make each one more valuable.

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2. Don’t Overdo It.

Pick and choose your arguments. Don’t waste time with lame ones. Way too many lawyers think they have to throw in everything they can think of, for fear of waiving a valid issue. But that’s just lazy and stupid. If an argument is a loser, what do you care if it’s waived?

Including weak garbage in your brief only weakens the reader’s trust in you. You may have a good, solid point in there, but now it’s tainted by association with the lame points you included out of misguided “thoroughness.” It makes you look dumb, because you obviously think those arguments have merit.

A good brief selects only the strongest arguments. By focusing only on the issues where a valid case can be made, the lawyer earns the trust of the court. And the court winds up focusing on your best points, without distraction.

Also, put your best argument up front. Don’t stick it in the middle. Just because it involves the third of five elements, that does not mean it has to be the third point. Start winning on page one. Give the court the easiest path to rule in your favor. Arrange your points in order of effectiveness.

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3. Get Organized.

A poorly-organized brief is the surest sign of bad lawyering. Arguments are disjointed, without a simple and compelling logical flow. Fact sections are confusing, presenting the events in no logical order. Important thoughts are buried, so the reader doesn’t realize their importance, if they’re noticed in the first place.

Poor organization means you don’t understand what you’re saying. If you can’t explain what happened in a straightforward narrative, then you don’t really know what happened. If you can’t make an argument in a simple syllogism (the law says “if A then B;” the facts are A; therefore B) then you don’t understand the issues.

Poor organization screams to the judge that your brief is the loser.

Good organization is not hard to do. It can be time-consuming, but it’s not rocket surgery.

First, the fact section. Presuming that you’ve spotted the issues already (you do know why you’re appealing, don’t you?), draft a narrative of the facts with those issues in mind. Do not be one of those idiots who just plugs in facts in the order they popped up in the transcripts below. And don’t just plug in everything that happened, whether it’s relevant or not. Write a story. Make a point.

This is not argument. Don’t argue in your fact section. But by all means be persuasive. Emphasize the facts you want emphasized. Carefully choose your language. Humanize your client. Make language your tool, your weapon.

The best way to tell the story is to do it chronologically. Start at the beginning: Who are the players, what was their relationship, and how did this all get started? Then describe the facts as they progressed. Your source material will of course not be organized this way, but you must organize it this way. In doing so, you will master the facts, if you haven’t done so already. And more importantly, your readers will master them easily and quickly.

Do include all relevant facts, even if they hurt you. Leaving them out only damages your credibility. Where facts are in dispute, present your version of the facts — but be sure to indicate that this is only your version. (You could say “there is evidence that…” for example.) Let the other side present its version, but don’t be dishonest and write as if yours is the only one.

Next, organize your arguments. Argument should be as simple as a syllogism. State what the law is. Explain how your facts fit the law. Then apply the law to your facts like a formula.

Obviously, your real work is the second step, explaining how your facts fit. But you’d be amazed how many lawyers don’t even bother with figuring out the first part. It’s just a matter of looking up the controlling law and saying what it is. So do it. (And don’t be afraid to base a rule on simple common sense from time to time — the law is not the only principle we live by.)

Likewise, the third part should be as easy as pie. “Applying this rule to these circumstances, we therefore get this result.” Not exactly an exercise of brainpower. And yet lawyers screw it up. They misapply the rule (demonstrating that they don’t understand it). They misapply the facts (demonstrating that they haven’t mastered the case). Worst of all, some lawyers don’t even bother to state the conclusion! They just throw out a bunch of law and a bunch of facts, and leave it up to the reader to figure out what it means.

Be careful not to over-state the law. If that case doesn’t really say what you claim, you’ve just killed the credibility of your whole case. (One rule of thumb — if a citation doesn’t point to a specific page, then the case probably doesn’t say what the lawyer claims. So always give pinpoint citations, and make sure the case really says what you say it says.)

Break your argument down into its component parts. Each one should be organized Law, Facts, Conclusion. If you can’t do that, then you either don’t understand the issue, or you still need to break down your argument a little more. Your argument may have only one heading (“The District Court Abused Its Discretion in Denying the Motion”), but it may have to be broken down into several sub-headings.

You want your conclusion to be on solid ground. It’s the result of one big syllogism (“if a court abuses its discretion, its decision should be reversed; that court abused its discretion; therefore its decision should be reversed”). But the first and second premises may each need to be established through syllogisms of their own. Those become sub-sections of this argument point. Maybe there are several ways in which the court abused its discretion, too — these alternative theories become sub-sections of a sub-section.

This will also make your headings more concise and easy to follow. Judges and clerks love that. Section headings that take up a block of text are (a) not read, and (b) proof that your argument sucks.

If you’re thinking logically — if you’re thinking like a lawyer — then your arguments will naturally organize themselves as you read and revise your draft. When you’re finished, they’ll be brief, they’ll be compelling, and they’ll be effective.

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4. Don’t Overdo It, Part II.

Show, don’t tell. You’re not writing for a soap opera. You’re not writing a children’s book. So don’t tell the readers how they ought to feel. Let your assertions speak for themselves.

So cut out the adjectives that characterize facts. Delete the rhetorical flourishes. Strike out all the fancy phraseology. You’re not making an emotional appeal to a jury, and rest assured that Judges resent it.

That’s not to say you can’t use some dramatic skills. The very best actors and orators know that, if you really want your audience to feel an emotion, don’t let them see that emotion on your face. If you act indignant, then you’re going to be the only one feeling it. But if you hold it back, and simply give your audience the reason to feel the injustice, without telling them to… they’ll be clamoring for justice before you’ve finished.

Although there’s no need to be dry and pedantic, you should by all means be straightforward and reasonable. Write as clearly as possible. Use the shortest sentences you can. Reason, not emotion, is how you get judges to agree with you. A matter-of-fact tone will raise you in the court’s estimation. It is the most compelling way to present a legal argument.

And God forbid you should ever cast aspersions on opposing counsel. Nobody cares that the other lawyer acted like a jackass to you. It has nothing to do with the legal issue before the court. Characterizing opposing counsel makes you seem petty, and indicates that you don’t have a firm grasp of the actual issues here.

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5. Write the Opinion for the Court.

The best briefs make the clerks and judges work the least. The most effective style is one that writes the court’s opinion for them. Write the decision that you want published.

It often seems that lawyers don’t really understand their relationship to the appellate court. You are not the judges’ teacher. Neither are you begging on your knees. You are their colleague. You’re all on the same team. They have to make a decision, and your job is to help them make the right one.

If you keep that in mind, and act accordingly, you are going to shine. You’ll be respectful, but not obsequious. You’ll be a valuable help, not a condescending instructor. You’ll be “one of us,” and you will be taken seriously.

That carries over into oral argument, as well. But your brief will reflect this attitude, and add that much more credibility to your arguments.

So write the just and fair opinion that still rules in your favor. Don’t ignore the stuff that might hurt you — explain why it doesn’t. If there are inconvenient but relevant facts, deal with them. If there are cases that don’t go your way, take a moment to point out why they aren’t pertinent here.

Give the court the facts it needs to side with you, the law that enables it to do so, and the arguments that do it. Do that, and don’t be surprised to see your own words in the opinion that ultimately comes down.

Hoist on Their Own Petard — How Forensic Accountants Catch Small-Time Scammers

Tuesday, August 11th, 2009

 

No law today. Let’s have a police procedural for a change. We’re in the mood for some white-collar stuff, so here goes.

Forget about the Madoff case. Most financial crimes are nowhere near as headline-worthy, nor do they involve such massive amounts of other people’s money. But smaller scams are just as likely to get prosecuted, and they’re just as much a felony as the big ones. And though the news may not report it, people get caught and convicted all the time.

And like Al Capone, the smaller scammers aren’t caught by the gun-toting detectives so much as by the green visor-wearing accountants.

It’s usually a case of self-incrimination. Defendants usually create the very evidence that puts them behind bars, in their financial books and records. Of course, most of them aren’t doing it on purpose. They’re not creating blatant records that flatly proclaim “here there be crimes.” Most take pains to avoid creating records of improper doings, and to conceal or camouflage the rest. But it is often those very attempts to hide their activities that wind up calling attention to them.

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Every law enforcement agent knows that, to catch the “bad guys,” you need to follow the money. Who wound up with the cash or the assets? How did the money get from person A to person B, and so on to Mr. X?

One easy way to start is to look at public documents. Lots of records get publicly filed, for anybody to look at, and they can be good leads. Does Mr. X own a house? Pull the deed from the county clerk’s office. There’s going to be information that leads to the mortgage itself, and then Mr. X’s bank records are just a subpoena away. Probate records lead to the estate, which leads to more bank records and real estate records. Does someone have a rap sheet already? Maybe they had to post bond in an earlier case. That’s going to show the source of the lien, and lead to more assets. Dun & Bradstreet and similar records can tell whether someone has a lien against Mr. X — such people are often more than willing to give more information to law enforcement. Heck, even newspapers can be a source of leads to get an investigation started.

Paper begets paper. Or computer data. It is nigh impossible to have dealings of any significance without some record being kept somewhere, in some form.

When following leads, the investigator ought to have an idea of what he’s looking at. What kind of business is this company in? Where are they located? What do they spend money on? The investigator can’t tell whether something is unusual unless he knows what the usual looks like.

Maybe this is a kickback scheme. If I am demanding kickbacks from you, or bribes, or extortion payments so I allow you to keep doing business with me, then maybe I don’t want that money coming directly to me. And maybe you don’t want it coming directly from you. So perhaps I set up a “consulting” company to receive payments from you. Or maybe you set up a “customer” company to make payments to me. Or perhaps we do both. Maybe we have lots of shell companies, or only one. If the investigator figures it out, though, our cautions might turn around to condemn us.

Maybe you pay me with a no-show job. If so, you’d better be careful about who is holding back my payroll checks or delivering them to me. And is my pay typical of my job? A steady, constant paycheck is more typical of an office worker than a blue-collar worker, after all. These are possible tipoffs to an investigator. And paper begets paper.

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So how else do they get the paper, apart from going to public records?

Subpoenas are the main stock-in-trade of the white-collar investigation team. Smart teams won’t subpoena the world, of course, because that just makes for far more work than necessary, while increasing the odds of tipping off Mr. X to the existence of the investigation. Instead, they’ll just limit their subpoenas to what they really need. Narrow requests also make more subpoenas necessary down the road, which keeps open a line of communication.

A shotgun subpoena followed by a narrower one just tips off defense attorneys like us. We see something like that, we have a chat with the client, and figure out what the investigators are probably looking for. We get all that extra time to prepare our defense.

When in doubt, utility bills are a common lead-generator, to figure out how someone is paying for their phone, cable, electricity, etc.

One thing they’ll probably want to see are old tax returns, especially for a business. Tax returns can be a mine of useful information, such as who formed the business, who the officers are, how much they get paid, who their accountant is (always a good person to interrog… ah, interview). And if the tax returns don’t match reality, well that’s another charge for the grand jury to hear, isn’t it?

The company’s accountant often did the tax returns for the owners and officers, too. Investigators can request the accountant’s retained copies of those returns, and find out all kinds of information about assets, mortgages, sources of income, etc.

Canceled checks are a high-want item. They’re one way of seeing who’s paying money to whom.

Bright investigators don’t settle for photocopies, but insist on originals. Critical information could have been whited out before copying. Photocopies are often illegible, and may not include the all-important information on the back of checks showing who deposited it and to what account.

In general, subpoenas are going to be issued to non-targets. There’s little point in asking the suspect to provide the evidence that will hang him. All it does is raise him up. And a savvy defense attorney is going to bring that client in to present the documents to the grand jury — because here in New York, for example, it is far too easy for the prosecutor to slip up and confer total transactional immunity on the client right there in the grand jury. (That’s a topic for a whole nother post.)

No, suspects aren’t usually the ones who get subpoenaed. They get searched.

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Search warrants are a unique chance for the investigators to get all that stuff they never would have gotten from a subpoena. The “second set of books,” rather than the official set they keep for the IRS and other outside eyes. The secret records. (Although these can sometimes be viewed by an undercover posing as a legitimate potential buyer of the business.)

That’s what the investigators are hoping for: a “smoking gun” document of some kind. Original documents with all the info that got whited out in the subpoena response. Records of illicit payments made, cash skimmed, investors gypped. Evidence that customers were told one thing, but reality was something else entirely. It may be buried somewhere in all those boxes of docs and all those hard drives, but they can’t wait to find it.

These records may be as simple as a notebook or a wad of scratch paper. They could be as detailed as anything. Maybe there’s evidence of a cash payroll — which leads to questions of where that cash came from (the bank? really?) on top of issues of tax and benefits evasion. Maybe there’s a little black book recording paid bribes, or extortion payments received.

Search warrants are often a fine way to gain evidence of embezzlement. Maybe those personal expenses were paid for with the business’s money, or with investors’ deposits. A good search warrant team will have agents who know what they’re looking for, others speaking to the subject. Others will be busy talking to witnesses, family members, employees and others at the location, letting them think the cops know exactly what’s going on, so they’d better come clean.

In a suspect’s home, the search team might see pictures of that really nice boat, or expensive collections, or the like. Investigators love to see things like that, especially when the checkbook doesn’t show those expenses. A lifestyle and possessions beyond one’s official means is going to make them poke around for illegitimate sources of cash.

Obviously, the execution of a search warrant means the investigation ain’t a secret any more. So these usually come at the end of an investigation.

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So how about some examples. Let’s say I have ABC company. Law enforcement subpoenaed or seized a bunch of payroll checks. Every week, my company is cutting a few dozen checks to employees. They all look totally legit, until one of the forensic accountants notices that Joe Blow tends to deposit four or five checks at a time, all on the same day. That means he’s probably not getting them each week like a normal employee, but is receiving a bunch of them once a month. That is typical of a no-show job. Joe Blow and I are now just that much closer to getting caught. Thanks, Joe.

Meanwhile, my manufacturing company DEF sends out invoices every month or so to Jack Nimble, charging tens or hundreds of thousands of dollars for all kinds of different products being delivered. Payment is due on receipt, send the check to my headquarters at 1405 Blank Lane, Suite 120. Unfortunately, the forensic accountant noticed that each month’s invoice number is one more than the previous month’s. Do I only have one customer, for all these things I’m selling? And Suite 120 turns out to be a mail drop box number. Suspicious. They’re going to watch that box and I.D. who uses it, and maybe figure out who’s paying for it. And due on receipt? Someone’s standing on the loading dock with a check for a couple hundred grand? No way. And anyway, how come there are no bills of lading, shipping records, or anything else indicating this really happened? This looks like Jack Nimble is paying me some kickbacks through a shell company.

Original checks are a treasure trove. I’m cutting tons of them to small suppliers, nothing more than $9500 or so. Oddly enough, however, they all tend to get cashed at the same check-cashing joint. They’re not deposited to anyone’s accounts. Looks like I’m laundering some money. Investigators are going to check up on these companies to see if they’re legit, maybe subpoena invoices, bills of lading and purchase order forms to see what’s going on.

Allegations of Union Corruption in NYC? We’re Shocked… Shocked!

Wednesday, August 5th, 2009

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In a series of predawn raids this morning, the FBI arrested the boss of New York City’s carpenters’ union and nine other men. The 29-count indictment alleges a scam whereby construction contractors paid bribes to union officials, in return for which they were allowed to use cheaper non-union labor. The Genovese crime family is mentioned. (If you’re looking for some light reading, here’s a copy of the 90-page Carpenters Union Indictment.)

Like all federal racketeering indictments, this one looks awful at first glance. It’s 90 freaking pages long! It talks about conspiracies, and schemes, and bribes, and fraud. It says they used code words to conceal the true nature of their actions. Someone said so-and-so would never rat them out, but if he did, “we’d fuckin’ have to kill him.” How in God’s name can one defend a case like that?

Well, it can certainly be done. There are several potential weak spots in any investigation case, which of course law enforcement tries to shore up as best they can. But a good defense attorney knows where the case is likely to be weakest. If there are wiretaps, he knows how to challenge that evidence. (Check out our CLE course on how to do this here.) If there are conclusions, matters of interpretation, he knows how to undercut them. By making the prosecution work harder to prove its case, by finding flaws and weaknesses, he can advocate for better plea bargains and less punishment — or even stand a chance to fight it at trial.

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This is something we actually have some experience with. The last big case like this involved the roofers’ union. We investigated and prosecuted that case, back in the days before we came over to the side of the angels. That investigation involved something like a year and a half of wiretaps on dozens of phones, “debriefings” of too many individuals to count, analyzing a warehouse-full of seized documents, and a six-month grand jury presentation. That’s just the stuff before anyone got arrested. By the time the case was over, we saw the first New York conviction of a labor union, as well as convictions of all the union leadership and the Genovese guys controlling them. So this case sounds pretty familiar.

In a nutshell, what happens is this: Let’s say you’re a contractor doing some work on a project. It’s a union project, which in this part of the world means you can’t put anybody on the job unless they’re a dues-paying member of a labor union. And your company has to be a union shop, complying with the collective-bargaining agreement. (State laws like prevailing-wage laws and the like actually force this kind of situation.) But you don’t like union workers. Their wages are too high. You have to pay more for their union benefits. The union collective-barganing agreements make you use manpower-intensive, inefficient labor techniques (to maximize union revenue). You have to hire more workers than you’d otherwise need, to comply with the union rules. And to top it all off, in your experience, union workers around here just aren’t as competent or skilled as the non-union guys.

So what do you do? You do what your father did, and what his father did. When you get a union job, one of the union officials meets with you, and you give him an envelope of cash. In return, the union looks the other way, and doesn’t enforce its collective-bargaining agreement with you. You get to higher fewer, cheaper and better workers, and you wind up making more profits off the job. The union bosses get extra cash. And the union guys get to sit in the union hall, wondering why there’s no work today.

And if you don’t pay up? Well, it’s no secret that there might be some people who might take it amiss if you did not do so. Everybody knows this, right? Don’t you watch movies? But did anyone actually say that to you… well, no. Did anyone ever actually threaten you? Not exactly. It’s just something you understood.

So maybe you’re a victim of extortion — pay up and make extra profits or else. Or maybe you’re a willing participant — it’s just the way things are done around here, might as well play along.

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Of course, this whole setup is wholly created by the law itself. In states like New York, the law gives huge power to labor unions, compels union work more often than not, and essentially requires union labor in government contracts. And there is no way to opt out. This is not a right-to-work state. And when the law prohibits the economically-rational decision, basic economics dictates that a black market will arise. And so you get a black market in labor.

It’s costly. The law raises the cost of doing business for the law-abiding, while creating profits for those who flout it. Higher costs mean higher prices and rents for the average Joe. And we pay more taxes to cover the expensive investigations, prosecutions and monitoring of those who would take advantage of the distorted incentives.

It’s not surprising that organized crime always seems to be involved. The mantra of organized labor — thou shalt not compete — just happens to be the mantra of organized crime. O.C. types enforce the lack of competition, and resulting extra costs, in return for a piece. And O.C. types are perfectly placed to take advantage of any black market created by foolish government policies.

So if anyone is ultimately to blame here, we’d say it’s the politicians. The idealists who create rules that would only work if the world didn’t happen to work differently. Rules that create incentives for honest people to do the economically-rational thing. Which creates a market for people — union officials who look the other way, others who protect the arrangement — who can fill that rational need. So long as these foolish laws continue to artificially warp the supply and demand curves for labor around here, we’re going to keep seeing these kinds of cases again and again.