Losing $500 million was a legal win: outcomes and predictions from a lawyer’s point-of-view

In case you haven’t read it already, there’s a new study that purports to establish that lawyers consistently overestimate the chances of success in their cases (pdf). David Post of the Volokh Conspiracy takes the study and applies the typical academic condescension to practitioners: “I’m constantly amazed, given the obvious fact that half of all litigants are holding losing hands, at how easily most lawyers can persuade themselves of the rightness of their client’s cause.”

Jeff Gamso, a criminal defense attorney (and former English professor!) in Toledo, Ohio who writes a terrific blog, Gamso for the Defense, takes a much more nuanced approach to the study in his post, “Blessed are the Oddsmakers.” First, it’s important to note the difference between criminal defense and civil litigation. As Gamso reminds his readers, in his practice, “[m]ost trials result in guilty verdicts. But most cases aren’t tried; they’re resolved by pleas of one sort or another.” It reminds me of what a friend of mine, a public defender, once told my class in response to the question “what’s the hardest part of your job?” He answered, “Losing 95% of my cases.”

But Gamso reminds us that pleas, the criminal analog to a civil settlement, is a strategic move made with the best possible` estimation of likelihood of success at trial, an estimation by no means easy to make:

The idea of the plea is that it’s a compromise because trials are problematic. They’re a lot of work and they are, ultimately, uncertain. Anyone who’s been at this for a while can tell you that juries and judges sometimes surprise. We win (whatver that means) some cases we should lose. We lose (whatever that means) some cases we should win. The jury, the judge, the world sometimes just gets it wrong.

Accordingly, the decision to accept an offer from the other side is a complicated combination of prediction of an uncertain future, the ability to convey the relevant information to the client, the other side’s own predictions and resulting offer (if any), the client’s own inclinations and decision (it is his decision), and the adversary’s response to the client’s decision.

Perhaps most importantly, however, it’s fundamental to any effective legal representation to understand that lawsuits and prosecutions are not binary, win/loss situations. Overcoming binary thinking is, in fact, one of the most important and difficult tasks in teaching first year law students. It’s difficult enough to get students to understand that the outcome of a case is the only thing that matters to a client, but then also to get them to realize that the result is usually a whole lot more complicated matter than merely stating that the plaintiff or defendant won or lost. (And it’s a shame that Remedies is one of the most neglected courses in law schools these days.) Let’s get this straight: Exxon won the litigation which resulted in it paying over $500 million in punitive damages. Or, as Gamso so pungently puts it in connection with criminal defense:

[David] Dow tells of Van Orman, an innocent man on death row. He simply didn’t commit the crime. He’s also got mental retardation. Dow proves the retardation and gets him off the row. Now the innocent man will do life in prison. “But I’m a death-penalty lawyer and Van Orman won’t get executed, so I count it as a victory. One of my clients committed suicide a week before his execution. That’s a victory. Another died of AIDS. A victory.”

You bet. I had a client who died of hepatitis right after I filed the papers asking the U.S. Supreme Court to hear the case. He died before the state had a chance to reply, certainly before the Court ruled. That goes down as a win. That’s how it works when you’re doing death penalty defense. Whenever the government doesn’t murder your client, you’ve got a win.

All of which is a way of saying that in this business, winning often isn’t an all-or-nothing proposition. Confession suppressed? Win. Even if the drugs aren’t suppressed? Yep. Just not a complete win.

•Get some of the charges dismissed? Win. Even if the client’s found guilty of some things? Yep. Just not a complete win.

•Get a five year sentence? Win if the client might have gotten 8. Or 50.

•LWOP? Win if the alternative was death.

•Continuance? Hung jury? Wins. Even if they’re only temporary. (The old line is that a continuance is as good as an acquittal – it just doesn’t last as long.)

•Client goes home after a not guilty verdict? Big Win.

And on it goes.

The key isn’t that what counts as a win depends. The key is that you need to have a sense of things. (emphasis added)

Yes, the key is to have a sense of things. A win is getting the best outcome the circumstances permit you to get for a client. Do human beings tend to be overconfident in their predictions? Cognitive science establishes that does indeed seem to be the case, and as a lawyer you ought to be aware of it, and you ought to be aware that your adversary shares the same bias, and you ought to be aware of the risks associated with going to trial, and you ought to be aware of your client’s fears and desires and his ability to deal with risk and loss. You need to have a sense of an infinite number of things, and the better your sense of these things is and the better you are at communicating them to your client, the better you will be as a lawyer and the better the outcomes you will produce. Will you be able to tally those outcomes as wins and losses? Only if you have a very flexible understanding of what constitutes a win or a loss.

Richard Prince, Patrick Cariou, and Appropriation Art

Back in January photographer Patrick Cariou sued Richard Prince, alleging that the collages Prince had exhibited at the Gagosian Gallery in 2008 because they had appropriated photographs of Rastafarians Cariou had taken and published in his book Yes Rasta in 2001.  A few days ago Prince filed his answer, claiming his use of the photographs constituted fair use.

As Brian Sherwin explained at myartspace.com last January, if the case is not settled, the court decision in it could have a profound impact on the art world, either clarifying that the widespread acceptance in the art world of appropriation art is legally legitimate or opening the door to an increased number of lawsuits by copyright holders against artists engaged in collage, sampling, satire, and any  number of other genres that have become increasingly easy to engage in with the digitalization of media and the rise of the internet:

[Cariou's] case could be groundbreaking in that it will establish some order concerning fair use– either for or against it. If the court sides with Cariou and his demands are honored it would mean that there will be drastic changes in the art world. Gallerists, curators, and publishers may think twice before promoting an artist with a history of copyright infringement allegations.

Prince has been engaged in a particularly confrontational style of appropriation since the 1970′s.  As Randy Kennedy has written:

“Since the late 1970s, when Richard Prince became known as a pioneer of appropriation art – photographing other photographs, usually from magazine ads, then enlarging and exhibiting them in galleries – the question has always hovered just outside the frames: “What do the photographers who took the original pictures think of these pictures of their pictures, apotheosized into art but without their names anywhere in sight?”

Most civil lawsuits — the vast, vast majority (over 90%) — settle, of course.  And it seems likely Cariou’s lawsuit will settle too.  Prince is very, very succesful, and there likely will be some amount of money he is willing to pay and Cariou is willing to take for them both to avoid a decision that, if it goes against Prince, almost undoubtedly would be appealed and the outcome of which may be very much debatable.  So it’s unlikely we’ll end up with the legal clarification the art world might desire.  The fact the development of judge-made law is entirely dependent on the outcomes of individual lawsuits is precisely why such questions can remain so long unresolved.  The fact such questions remain unresolved, however, may not be a problem.  It is, perhaps, a better thing for artists who appropriate and artists whose work is appropriated — as well as the world of critics, museums, galleries, collectors and patrons that exists as a result of those artists — to slowly work to a solution of these questions themselves.

Dow v. Rohm & Haas, settled

One of the more controversial pieces I have written on this blog was in connection with the lawsuit brought by shareholders of Rohm & Haas to force Dow Chemical to complete its purchase of Rohm & Haas pursuant to a contract entered last summer that pegged the purchase price at $78 per share of Rohm & Haas.  My principal point was in response to an article written by Joe Nocera in the New York Times that to even suggest “that maybe, just maybe, deals that stop making sense ought to be called off, or at least rejiggered, especially in the middle of a once-in-a-lifetime financial crisis – invites withering scorn, especially if you say it to someone on Wall Street or in the legal profession.”

My point was that when something stops making sense, the law, if it is working properly, should not force the nonsensicle result.

Responses varied from the grateful to the withering.

The outcome, however, makes remarkable sense.  Last week, Dow and Rohm & Haas settled their dispute over the $15.3 billion merger.  Pursuant to the settlement agreement, Rohm & Haas’s shareholders will get the $78 per share Dow originally promised.  But hedge fund manager John Paulson and the Haas  family shareholders will in essence re-invest their proceeds from the sale for preferred stock in Dow. Doing so gives Dow “enough room to purchase Rohm without immediately running aground. Dow had earlier refused to close the merger, saying its business would be hurt if it had to draw heavily on risky short-term debt.”

In essence, Paulson and the Rohm & Haas family shareholders are helping Dow finance the purchase, protecting the deal they had negotiated for the rest of the Rohm & Haas shareholders.  In exchange, Paulson and the Haas family get great value in return.  Moreover, if I read the situation correctly, there may be tremendous tax advantages for the Haas family.  If the transaction is treated as an exchange of Rohm & Haas stock for Dow preferred stock, it will not be a taxable event.  Moreover, upon transfer to the Haas family heirs via testamentary disposition, those heirs would be considered to have a tax basis in those shares equal to their value upon that testamentary disposition.  In short, whatever gain the Haas family earned in the Dow transaction and whatever gain is earned in the future in the Dow stock they received in exchange will never be taxed to the Haas family or its heirs.

Everyone comes out ahead, and Dow was not forced to go through with the deal it had originally contracted for and so many thought would have to be enforced.

Settlement imminent in lawsuit against the Google Library Project?

I’ve long been fascinated by the Google Library Project, considering it one of the greatest boons to research since Gutenberg. I’ve written on this blog of my bafflement at its opponents, especially those authors who fear their inclusion within the project. I’ve written elsewhere at the utter misconceptions that govern some views of the project. (I have, however, been called a “dickwad” for pointing out these misconceptions, a characterization unsupported by reference to any law.)

The good news is that, as Open Access News reports, “Andrew Albanese reports in Library Journal, October 10, 2008, that Google and a group of publishers may be close to settling the publishers’ lawsuit against the Google Library Project:

Nearly three years after its initial filing, it appears a settlement may finally be near in publishers’ lawsuit over Google’s controversial program to scan books from library shelves. Although rumors of a settlement have flared up and died down intermittently over the years, sources wishing to remain anonymous this week told the LJ Academic Newswire and Publishers Weekly that talk of a final agreement has indeed heated up, with one publishing insider confirming that a settlement was “imminent,” although no solid time frame was known….

A settlement has long-been expected, as it would avoid what is setting up to be a messy trial. Industry-watchers have predicted the two parties eventually would reach some kind of blanket license agreement, noting that avoiding a court decision involving murky copyright and fair use boundaries is the logical, least risky-and least costly-option for both parties.

From the start, publishers have maintained that the wholesale scanning of copyrighted books from libraries is an unreasonable expansion of fair use, and that Google is creating a valuable asset without compensating rightsholders. Google has countered that its plan, which makes only “snippets” of copyright-protected books viewable online, is fair use, and that publishers, can also “opt out” of having their books scanned….

[T]he AAP suit, filed in October 2005 on behalf of McGraw-Hill, Pearson Education, the Penguin Group, Simon & Schuster, and John Wiley & Sons, does not seek damages. It seeks an injunction that would essentially declare that Google’s scanning of an entire book still under copyright without permission is infringement. . . .