biz org class 11

IPO: initial offering of a class of securities to the public.

there's primary and secondary market. basically when securities are traded, bought, sold, etc
is the secondary market. the primary market is when the company creates and publicly sells
shares.

talk about how badly GM has been managed. the accounting was shotty in a mindboggling way, accounting was outsourced, hope that the government will

problem 1. suppose you are member of the board of a truck company. when the trucks are driven through PA, they are subject to a penalty of $200 fine. the risk of being caught/fined is about 20%. your practice and your competitors practice is to ignore, the alternative is to comply with the PA law. the cost of doing the alternative makes it impossible to compete without losing money.

problem 2. suppose the facts are the same as in the preceding, but you also learn that it is often possible to avoid the fine by paying a bribe to state officals. what do you do?

should shareholders be liable for breaking the law when they're breaking the law to make money for shareholders?

problem 1 and 2 are about fraud.

would you serve on a board where you would give bribes?

duty of loyalty. almost always brought with duty of care.
pre-requistes to duty of care.
- adequate care
- non gross negligence
- two approaches to the biz judgment rule as applied to duty of care

any board engaging in a grossly negligent process is a violation of duty of care.

kamen v. american express
smith v. van gorkom

all of this needs to be attached to 102(b)(7) and to the abstention approach.

duty of loyalty.
bayer v. beran
conflict of interest - this lead the court to conclude that the hiring didn't deserve the business judgment rule and the court would examine both the process and the substance of the decision. there's no judicial deference because there's a conflict of interest. the court closely examined the decision, and examined the process and then the substance as far as the fairness to the corporation.


who bears the burden of showing fairness?
business judgment rule doesnt' apply at the stage of showing conflict.

most of the board were insiders, so they were invested in the hiring of the singer.

benihana v. benihana

preferred shareholders

why did the benihana board end up in court?
because aoki sits on both sides of the transaction as beneficiary.
what saved the board is that it met to discuss the cost, the sale...
did all the things that smith v. van gorkhom didn't do

benihana made a three-member committee. the deal to sell to BFC
was better than the otehr possibilities. the full board approved the sale.
but the preferred was issued in 2 servings, which reduced the holding
company's voting power. so the sale of the prefereed diluted
benihana of tokyo in the company.

see 144(a) - only works if there's full disclosure, and BOT made a bad
argument that there wasn't full disclosure.

proRo class 11

shouldn't certain issues of obligation and loyalty.

if lawyers really couldn't accept any matter that was adverse to any former client, the ability to accept new cases in certain cases, certain subjects, and

can a law firm representing client A "fire" A when B comes to firm for a law suit against client A?

the attorney gained confidences, the presumption is that it was ethically through learning everything you can about your client. this allows the plaintiff to avoid making confidences that would just

in the event the plaintiff doesn't consent, the firm is disqualified.

supporters of screening often contend that objections to screening show skeptism/ cynicism about lawyers' ethics. the major purpose of the old rule was to put some trust back into the system.

then the recession hit, and it was felt that some relaxation of the conflict rules was in order and it was necessary to make lawyer migration from firm to firm easier. that's how we get to rule 1.10(a)(2)

the new provisions apply when
a lawyer moves from firm A to firm B and the question is if firm B can rep a matter that's the same or substantially similar to the matters/clients of the lawyer before he moved from firm A to firm B, and where the interests of the former and current client are materially adverse? YES

the lawyer only needs to follow the screening procedures under 1.10(a)(2)

under the cassis case, there may be an exception

in order to get an idea about what kind of screening procedures are sufficient, see comments 7, 8, 9, 10 on rule 1.10 which are technical requirements that make screening procedures adequate.

rule 1.10(b)
the context in which this arises: 1.10(b) covers situations in which a lawyer leaves a firm and the concern is what the old firm can do after the lawyer has left -- when a lawyer moves from firm A to B taking his clients with him, what can firm A now do? the firm is NOT precluded from representing
a client of the lawyer who left with interests materially adverse to the interests of other clients, assuming/unless
1. the matter on which the client needing new representation wants representation that is the same/ similarly related to how the former lawyer related him
2. any lawyer remaining at firm A has information protected by rules 1.6 and 1.9(c) that is material to the matter

so even if the lawyer takes off, the firm can still represent the client.
almost all imputed conflicts are consentable. the sole exception is that if the conflict is non consentable
under 1.7, then it's non consentable for the firm under 1.10.

when is a situation non consentable?
1. when prohibited by law
2. 1.7(b)(1) conflict rule

substantial relationship test: does the lawyer have information that would be useful in the current case?

hypo. "you don't know anything"

lawyer moves from PRIM law (under 4 years, represented axy-martin 

on employment matters and age discrimination) to CCC law firm. 

at CCC, is asked to do a case against axy-martin. 

1. can the lawyer take this case?

this is the playbook problem -- axy can say that the facts of the 

discrimination cases are distinct from sex discrimination but that the 

lawyer has learned details about the axy-martin employment, labor, 

salaries, past misdeeds, settlement, and business positions with are useful to discovery. is this 

a basis for finding the age and sex cases are related?

the playbook problem of litigation strategy does expand the reach of the 
substanitally related test very far. however, details with respect to 
specific employment practices of the company are substantially related 
potentially.
2. can CCC take this case?