Category Archives: Reuben Guttman Articles

Certain things in life are predictable. A kid tilts the gumball machine when the candy does not roll out. A soda machine is kicked when the pop gets stuck. A baseball manager is fired when a team fails to make the playoffs. And, oh yes, don’t forget this one: politicians threaten to give away government functions when they do not work right. In recent days, with word of veterans waiting in line to get health care services, the big boys on Capitol Hill were once again doing their own form of “soda machine kicking” with calls for the privatization of Veterans Administration Health care services.

The rational for outcries to privatize are traced to the purported justification that the private sector is more efficient and works better than government. Really? Do the names Tyco, WorldCom, Enron, and, more recently, General Motors mean anything? What about the hospital chains like Hospital Corporation of America or the drug companies like Pfizer, GlaxoSmithKline, Abbott, and Amgen that over the years engaged in conduct that drew the ire of the Department of Justice?

Setting aside the list of bad actors that could fill a few notebooks, maybe there is something to be said about the idea that the private sector does it better. But is that really true when the private sector contracts with the government, or is a government contract merely a license to steal? Consider this: once government services are contracted out and long term civil service employees are displaced with contractors, there is – as Eddie Murphy might say – “no going back.” And some contractors have such a grip on their relationship with government agencies, it is virtually impossible for the government to keep them in line through any form of adult supervision. Take the case of Lockheed Martin Corporation. It has approximately $37 billion in government contracts currently. In other words, at the same time the United States Department of Justice is pursing Lockheed for violations of the False Claims Act, it is rewarding it with hundreds of millions of dollars in government contracts.

No doubt it is unrealistic to advocate for the elimination of all government contracts. It is, however, reasonable to explore their extent and focus on means to hold contractors accountable. So let’s focus on their extent. Most Americans do not know that government contractors have been hired by agencies to provide guidance on the drafting of regulations that have the force and effect of law. Presumably when this occurs the government is monitoring these contractors for potential conflicts of interest. But sometimes things fall through the cracks, like when the Nuclear Regulatory Commission retained SAIC to work on a rule governing the “free release” into commerce of recycled radioactive metal. It turns out that the NRC did not realize that its trusted advisor stood to benefit from these rules because it had subcontract to aide in the recycling of radioactive nickel from Tennessee’s Oak Ridge K-25 nuclear weapons site. Nor do most Americans realize that the Centers for Medicare Service, a part of the Department of Health and Human Services, actually contracts with insurance companies to dole out government health care dollars. And as to prescription drugs, those insurance companies rely on private “compendia” publishers for guidance on whether the use of drugs for non-FDA-approved purposes is reasonable. Turns out that the compendia publishers rely on committees with doctors who are on the gravy train of the drug companies who stand to benefit from non-FDA-approved use of their drugs.

With all my grousing someone reading this might say “tell it to the judge.” But did I mention that our Supreme Court is pushing to privatize the judicial system through compulsory arbitration. The rent-a-judge movement is no minor anecdote. Arbitrators are not required to adhere to judicial precedent and their opinions — if they even write one — are not subject to review for non-adherence to law.

The privatization of America is a threat to anyone who is not the beneficiary of a government contract. I suppose, of course, that even government contractors have some worry; if they are actually placed in prison for misdeeds they may find themselves under the thoughtful oversight of a private prison company.

All of this goes to the point that on June 20 — at its annual convention in Washington — the American Constitution Society will convene a panel on the “Privatization of America.” It is the first of what will be many much needed dialogues about this subject.

Trade Union general counsel Maria Ludkin tells Reuben Guttman about the connections between life as an art lawyer and her current role as general counsel of the GMB. This blog written by Reuben Guttman who practices at of Guttman, Buschner & Brooks PLLC and was published in the Global Legal Post on May 12, 2014.

Maria Ludkin knows a lot about art. As counsel to Christie’s for over 12 years, the UK solicitor spent seven years in London as head of litigation and a further five in New York. These days Ludkin is back in the UK – in a different, albeit equally creative role. As General Counsel of the GMB, the UK’s third largest and fastest growing trade union with 635 thousand members, she and her team design campaigns to focus attention on the wages and working conditions for its members who are low wage earners in the public, retail, and utilities sectors. Talking to Ludkin about the GMB’s campaigns, the idea of them being an art form is not so far-fetched. For Ludkin, her artistic “mediums” are the press, the legislature and the courts. She has an acute understanding of how efforts that utilise these three forums lead to results.

Background

Shortly after her graduation from Brunel University with a degree in law and international relations, Ms Ludkin found herself representing 3000 elderly home owners on the verge of losing their homes through mortgage fraud. She orchestrated a media and political strategy that brought her clients relief and led to tightening of UK’s rules governing the selling of endowment securities. This “triumph in the face of a difficult situation” has inspired some of her more recent campaigns.

Private equity campaign

Keeping pace with efforts by multinationals and private equity investors to skim more profits by suppressing wages and eliminating benefits is undoubtedly a challenge which demands creative solutions, much persistence and a solid knowledge of corporate law and finance.

In 2007, Leicester University Professor of Labour Relations Ian Clark worked with Ms Ludkin and Paul Malloney of the GMB on its submission to the Treasury Select Committee inquiry into private equity. In his account of the experience, Clark said that it established that private equity investors often break implicit contracts with the workforce and that “these investors are largely unregulated by the government.” Ms Ludkin added that while private equity investors “may be good for short term investors, it is usually a disaster for employees and the long term health of the company.”

In this campaign, Ms Ludkin broke out of traditional campaigning models and utilised not only press, politicians, and stunts, but also identified activist shareholders whose interests aligned with the campaign and even reached out to rival firms and competitors to comment on her campaign. She successfully had what was usually the opposition press telling her story of cleaners paying more taxes than the private equity partners whose offices they were cleaning. Such tactics ensured that Ludkin won the moral high-ground and successfully brought about changes in regulations of private equity firms.

The Amazon workers

The GMB’s campaign to communicate the plight of Amazon’s 20,000 UK warehouse workers who are paid low wages with minimal benefits is another case in point. “We had to create a visual image of these contract employees who work 10.5 hour shifts walking over 15 miles a day,” says Ms Ludkin. “The warehouses are massive and workers must record fifteen miles on their feet or face termination.”

For Ludkin and her team, focusing on the 15 mile figure was the essential element in creating a visual image of worker mistreatment. “We have an incredible team with incredible researchers and I love it when ideas gel,” says Ludkin. In the case of Amazon, Ludkin’s GMB team wanted to show that workers were “being treated like robots.”

Looking back on her career path, Ludkin reflects that while she “loved working with the extraordinary colleagues in the art world,” she wanted to work on issues with a bigger impact than “just solving rich peoples’ problems.” As for her current work, she points out that “the working poor need good lawyers.”

Tips for lawyers

What advice would this lawyer give other practitioners? Ms Ludkin has the following tips:

• In choosing a practice area, decide what makes you happy, otherwise you will get frustrated and ultimately bored.
• Being able to tell a good story is the key to delivering a message.
• Try to create visual images of the problem and raise issues that will make the listener continue to think about what you said.
• Stretch outside your comfort zone and work with a diverse group of people, not just people like you; the best messages come after testing them out with people who have diverse personalities and skills and sharpening your arguments by listening to people who have completely opposing views to your own.

How should law schools be judged? Reuben Guttman questions the current law school rankings and urges law school professors to follow suit.

Cosying up to NGOs is just one of the corporate tricks used by big business to distract from problems.

The Washington Capitals recently faced off in a National Hockey League contest against the New York Rangers. Amidst the fanfare of a stadium packed with more than 20,000 fans, during breaks in the action the jumbotron hanging above centre ice flashed season highlights. Curiously, the highlights included not just slick passing and scoring plays but fights. Why was this curious? Well, the National Hockey League at least hints that it is trying to crack down on fighting. But how serious is the NHL when team highlight reels tout fighting? It turns out that the League’s rules outline various penalties for fighting, but nowhere – at least I cannot find it – do the rules say that the league does not condone fighting or that fighting is not part of hockey. The truth is that while the NHL packs its arenas with people who want to see fights, it struggles from a public relations perspective to guard against criticism that hockey is a violent sport; hence the purported rules that create the illusion of addressing these concerns. Remember the old joke, “I went to a fight and a hockey game broke out.” As an aside, this is a shame because ice hockey – without the fights – is quite glorious.

Masters of illusion

The point is that professional hockey is a business. These days big business is the master of illusion; focusing attention on benevolent activity as a distraction from conduct that is problematic from a legal or public relations vantage point. Take the case of Wal-Mart and the Walton family which created the company and owns the majority of its shares. The Walton Family Foundation has given millions to the Environmental Defense Fund, a US based environmental NGO, which in turn has praised Wal-Mart for being a “green company.” At the same time Wal-Mart is winning accolades for its greenness, it is being pursued by the United States Department of Justice and various State Attorneys Generals for violations of the US Clean Water Act. Embracing NGOs that perhaps were at one time corporate critics is just one facet of the illusion game.

What about companies that tout job safety but continue to place workers at peril? Do they really favour safe workplaces or do they just want to focus attention away from that which is problematic? Or what about the big pharmaceutical companies which have, in recent years, pleaded guilty to violations of the US Food Drug and Cosmetics Act for marketing derelictions? No doubt each of these companies had internal compliance programmes and explicit rules proscribing that which lead to guilty pleas. In almost all cases employees were made to sit through training sessions where the rules were purportedly taught. Yet, at the end of the day, were these programmes really meant to deter wrongful conduct or were they really designed to focus attention away from wrongful activity? Were they just a clever means of convincing employees that scrutiny of corporate conduct is pointless because wrongdoing is not possible for a company with rules that proscribe bad acts?

The illusion game is big business and no doubt there are consultants who have given serious thought to that which I write about here. Cozying up to NGO’s, touting compliance programmes, ethics rules, and training seem to be tricks of the trade. All of this presents a challenge to regulators. Think of the safety and health investigator questioning employees about a mining disaster:

Mr. Smith, have there been safety issues in the workplace?
Oh, no; our employer has workplace signs that say “safety first.”

The tragedy of the illusion game is that at the end of the day there is a price to be paid. Remember Enron, Tyco, and Worldcom? They could do no wrong because they all had internal compliance programmes. As I watched the hockey game my mind drifted to Reggie Flemming, a one-time New Yorker Ranger forward who passed on a few years back. As a player, Flemming was known as an enforcer because of his fighting prowess. Flemming once joked that he spent so much time in the penalty box that he had his mail delivered there. Unfortunately Flemming’s final years were spent in a nursing home. After his death at age 73 doctors at Boston University studied his brain and found that he had Chronic Traumatic Encephalopathy; a brain disease associated with boxers.

Of course, the NHL has rules about fighting, so I suppose that if players fight they do so at their own peril. No doubt like other corporate masters of illusion, the NHL likes it this way.

A few years back, a colleague from Beijing made his first journey to the United States to present a paper we wrote together for an academic conference in San Francisco. I frankly do not remember much about the paper or the conference – what I do remember is our lunch break. We took that time to walk over to San Francisco’s UC Hastings College of the Law Library. “What are all of these books?” my colleague asked me. I told him about the doctrine of stare decisis or adherence to precedent, how we publish judicial opinions, and the importance of those opinions to our common law tradition. He seemed a bit perplexed. I remembered that China has laws but no judicial precedent interpreting the laws or precedent establishing common law in the absence of statute.

It is, of course, such judicial precedent that creates expectations and obligations in our common law system. Guided by the doctrine of stare decisis, judicial authors including Learned Hand, Benjamin Cardozo, Roger Traynor, and others wrote opinions that used age-old logic to address the conflicts of their time. Their opinions did not change the law as much as they explained its application to newer problems. Writing an opinion, in some respects, is akin to a mathematician showing his work. The legal opinions essential to our common law tradition allow us to understand the answer, even if we do not agree with it. And, if the process leading to the answer is flawed, it is easier to spot the flaw and correct the result. Of course, through the doctrine of stare decisis, jurists make an art of reading the law and applying it to contemporary fact patterns. Emory Law Professor Frank Vandall’s book, A History of Civil Litigation: Political and Economic Perspectives (Oxford University Press: 2011), masterfully portrays the elegance of our common law tradition through a history of the evolution of products liability law.

To illustrate the importance of transparency, our next stop was the United States Federal Courthouse. “We have to make an appointment,” my colleague told me, strongly hinting that we risked getting arrested. I told him that our court system is open for all to watch. Keeping the courts open, I explained, is integral to maintaining confidence in the results, even where people disagreed with the outcome. We visited the Clerk’s office where the person at the counter partially allayed my colleague’s fears by saying, “Honey, you can look at any file you want.” Next, we walked into a courtroom where there was a live trial. I vividly recall that convincing my colleague to enter the courtroom was about as difficult as giving our cat a bath.

I think that, after our visits, my colleague got at least an inkling of our system. The openness of our courts and the transparency of the common law tradition are the mechanisms that safeguard – and sometimes recalibrate – our system of checks and balances. Just as the judicial branch can review the conduct of the executive branch, the legislative branch can engage in corrective or balancing legislation. Yet, the legislative branch can only perform its balancing when the work of the judicial branch is an open book. A vivid example of this balancing act is the Ledbetter case and the subsequent Lilly Ledbetter Fair Pay Act of 2009.

I was pleased that my colleague appreciated our legal system, but I have a confession: I did not have the heart to tell him that it has become an endangered species. Through opinions by the Supreme Court in American Express Co. v. Italian Colors Restaurant and AT&T Mobility LLC v. Concepcion, we are doing to the judiciary what we have done to many inherently governmental functions; we are privatizing it. Litigants who would otherwise have the right to a hearing before a publicly appointed judge are being told that their case must be heard by a private judge, an arbitrator. The hearings are not as a matter of right open to the public and there are – more often than not – no written opinions. And, even if an arbitrator does “show his work” through an opinion, reviewing courts will not upset the opinion for factual or even legal error or plain neglect for precedent.

They say arbitration is more efficient and less costly than traditional legal proceedings. Who knows whether this is true. Yet, one thing does seem clear; its imposition is not without externalities, including the impact on our common law tradition and our system of checks and balances.

In the span of a lifetime there are things that come and go and we often find ourselves saying, “Remember when?” More often than not we say that about things we really do not miss. Remember the slide rule or the Betamax? They were replaced with better products. Can we say the same about our common law tradition?