decoration decoration
Stories

GROKLAW
When you want to know more... 		decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books

Gear

Groklaw Gear

Click here to send an email to the editor of this weblog.

You won't find me on Facebook

Donate

Donate Paypal

No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.

What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments

Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
This Month's Modest Bill from Berger Singerman and Some Shares Returned
Friday, January 25 2008 @ 06:33 AM EST

SCO's lawyers, Berger Singerman, have joined the line for their monthly money. December's bill [PDF], however, the firm's fourth interim bill, is for a mere $21,983.00, plus expenses of $159.85. This firm's prior bills were for $65,331, $175,516 and $296,323.25 and expenses of $2,526.40, $5,177.33 and $13,027.33. I think you can see that December's bill represents quite a change, particularly since the first bill was for only a half month, September 14 through the 30th.

Now you see why Novell objected to the leases and noted its concerns about the first Mesirow bill -- it was sending a message, and I'd say it was received loud and clear. Everyone seems to be going on a crash diet in Delaware.

The most intriguing item is on page 12, where the firm says they spent 12.60 hours discussing with co-counsel and conducting research in connection with "the possible removal or transfer of litigation". I don't know if they are trying to escape from Delaware or from Utah. Actually, judging by Exhibit A's page 12, it looks to be about the Wayne Gray trademark litigation. In any case, they began drafting a notice of removal. And on page 11, we learn the firm "communicated with the Debtors with respect to the claim of Sun Microsystems, Inc." I have no idea what it means. The firm also communicated with co-counsel "regarding the Debtors' fourth quarter employee bonuses". Yes. Bonuses.

Exhibit A has an interesting notation also: on 12/10 there was a conference call about resurrecting the York deal. And there is a reference to an "ICC Arbitral Order", a procedural order. That has to be the Swiss arbitration, I assume. And R. Duff Thompson, a Director, has voluntarily returned to SCO 11,923 shares, at no consideration.

The firm once again carefully itemizes its efforts to keep accurate time records and to keep the bill down, stating, for example, beginning on page 7 that they have everyone keep handwritten notes as they go through the day and are very sensitive to the issue of "lumping", and "unless time was spent in one time frame on a variety of different matters for a particular client, separate time entries are set forth in the time reports," they state. Further they reduced the charges for non-working travel time to 50 percent of the usual rate, and "to the extent feasible, BSPA professionals attempt to work during travel."

What is lumping, you ask? Here's a ruling [PDF] that explains it, in a patent case decided in April of 2007, Synthon IP v. Pfizer, No. 05-1267 (E.D. Va. 2007), as reported on the Orange Book Blog. The court decided to award attorneys fees to Pfizer, saying that Synthon had "copied and sought patents on what it knew to be Pfizer's work and then, once those patents had issued, filed against Pfizer what it knew, or should have known with reasonable investigation, was a baseless suit for willful infringement of two invalid patents." So, that made up exceptional enough circumstances that the court felt the plaintiff should pay for the defendant's lawyers. But the amount requested was reduced by 20 percent, and part of the reason was lumping:

Although a review of Pfizer's submissions reveals a reasonable hourly rate for the various attorneys and legal personnel involved, Pfizer's petition is replete with instances of lumping multiple tasks together under the same entry, thereby preventing a confident assessment of the quantum of, and hence reasonableness of, the time expended on each task.... The petition also includes numerous instances of excessive, duplicative, nondescript, unnecessary and/or inefficient work. For these reasons, and based on a review of the record as a whole ... a 20% overall reduction in Pfizer's fee request is reasonable and appropriate in the circumstances...

A client might not know what is reasonable in a legal bill, but another lawyer or a judge will. If your lawyer tells you that he spent 4 hours or 15 hours or 28 hours doing legal research on your case, how do you know what's reasonable and what's just crazy? But lawyers and judges do legal research, so they are more likely to pick up on what seems to be a padded item on a bill or a symptom of inefficiency.

Legal research is an art but it's also a skill, one that requires you to be efficient, to cut off your side-issue curiosity and just focus completely on the immediate task assigned, without letting yourself stray away from that goal. That's harder than it sounds, because it is all so interesting, but at a certain point you have to say, "I know enough now. I found what I need to be assured of the position we can take and what the case law is". And after some years of doing research, you can probably estimate with some degree of accuracy about how long a research project should take, assuming it's not some wild and unusual topic regarding new law and it's within your field.

Lumping, though, makes it quite hard to figure anything out. If your lawyer submits a bill for 5 hours for "legal research, phone meeting with client, and conference call with co-counsel", how can you even guess whether it's reasonable? You don't know how long each task took, so the legal research could be 15 minutes, for all you know, or it could be 4 and a half hours. You know how long you were on the phone, but for the rest, you have to accept what you are told. Who can say? And if the entire month's bill is like that, it's Never Never Land, where no one knows for sure what the lawyer spent time on. And it's all on the honor system. How would you *prove* he didn't spend 4 and a half hours on legal research if he says he did? Judges can't prove it either, but they have a good idea of what's likely to be in the ball park, particularly because they sat through the trial and all the events leading up to it, so they know who did what.

So, that's why this firm always stresses that they didn't lump, they were careful not to duplicate, they kept track daily, they took notes, etc. I believe they do keep track like that, because good firms are very careful with things like this. And, just as a side point, it's why you never want to hire a law firm that is willing to lie for you -- if they'll lie for you, they'll lie to you also, and the lies will likely be on the bill.

Of course, with the focus now on Utah, things were quieter in December than in November, so that's part of the reduced bill too. If you look at the breakdown of the hours, Grace Robson did the lion's share, and she's an associate at the firm. If you recall, she argued the lease motion, whereas it before had always been Arthur Spector, who is a partner. He billed 21 hours to her 33.70 for December, and he charges $100 an hour more than she does. It makes a difference.

But the categories are interesting too. 24.20 hours, the largest chunk, was for "Fee/Employment Application". That wasn't just preparing their own bill. It included working on documents for Tanner and the German lawyers and CFO Solutions and whatnot, but still, it's hardly moving the bankruptcy forward. Only 6.40 was for "Case Administration" and 4.30 for "Plan and Disclosure Statement". This is a bankruptcy as slow as molasses. Or, more accurately, if you've ever been to a race track, it's like getting the horses lined up in the starting gate, only to have a number of false starts, horses causing delays as they skittishly go half in circles or take off before the gun goes off, and the race can't seem to get going into the actual racing part, the purpose for the horses being there at all. Similarly, this feels like a bankruptcy with no finish line.

Here is the filing with all the trimmings:

314 - Filed & Entered: 01/24/2008
Application for Compensation
Docket Text: Monthly Application for Compensation (Fourth) for Services and Reimbursement of Expenses, as Co-Counsel to the Debtors in Possession, for the Period from December 1, 2007 through December 31, 2007 Filed by Berger Singerman, P.A.. Objections due by 2/13/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Certificate of Service and Service List) (Jones, Laura Davis)

Thompson's Shares

If you are curious about the shares being returned, and would like to figure out the history of who got what shares, I did a page on insider trades way back when, in 2003, and with regard to Thompson, in addition to that older page covering 2002 and 2003, you'll find more here, regarding a bona fide gift of 5,000 shares and a notation that after the gift, Thompson had 11,923 shares. Oddly, the gift was in 2003; it was reported in 2006. Here's his bio, in the most recent proxy statement, April of 2007. And to impress you further, here's a presentation he made to the USPTO, back when he was a VP and General Counsel at WordPerfect Corporation, all about how damaging software patents are. I know. The former Chairman of the Business Software Alliance and I agree that software patents should never have happened. And here's a quotation of his on the subject, from an article in Science and Technology in 1991:

"I'm not familiar with any type of ligation that is any more costly than patent litigation," says R. Duff Thompson, vice president and general counsel of the WordPerfect Corporation. But Thompson's greatest fear is that software patents will wipe out young, independent programmers, who until now have been the software industry's source of inspiration. Imagine what happens, says Thompson, when "some 23-year-old kid who has a terrific idea in a piece of software is hammered by a demand letter from someone holding a patent."

Yes, one can just imagine. I guess we can count our blessings. At least SCO didn't have any patents.

This S-1 from December of 2005 indicates he held 84,423 shares, and this 424B says the same number, which "Consists of options to purchase 67,500 shares of common stock and 16,923 shares of common stock received for service on the Board of Directors".

Update: Here's the certificate of no objection on the third bill:

312 - Filed & Entered: 01/22/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Third Interim Application of Berger Singerman, P.A. for Compensation for Services and Reimbursement of Expenses as Co-Counsel to the Debtors in Possession for the Period from November 1, 2007 through November 30, 2007 (related document(s)[287] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

  


This Month's Modest Bill from Berger Singerman and Some Shares Returned | 223 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Here
Authored by: feldegast on Friday, January 25 2008 @ 06:40 AM EST
So they can be fixed

---
IANAL
My posts are ©2004-2008 and released under the Creative Commons License
Attribution-Noncommercial 2.0
P.J. has permission for commercial use.

[ Reply to This | # ]

Very generous.
Authored by: rfrazier on Friday, January 25 2008 @ 06:46 AM EST
They must be worth, what, just a bit under $1000?

Is this a first step in cutting connections? Or, is having no equity interest
if one is a Director useful in some sort of court proceedings?

Best wishes,
Bob

[ Reply to This | # ]

  • Very generous. - Authored by: Anonymous on Friday, January 25 2008 @ 01:10 PM EST
  • Very generous. - Authored by: Anonymous on Friday, January 25 2008 @ 08:41 PM EST
OT - Off Topic
Authored by: groklawdranem on Friday, January 25 2008 @ 07:08 AM EST
Please post a Summary of any links you reference

use them HTML for posting links


Thanks PJ for a Great website to fill our time ;-)

[ Reply to This | # ]

NP - News Picks
Authored by: groklawdranem on Friday, January 25 2008 @ 07:10 AM EST
Discuss Right Hand Column Newspicks in this Thread

Posting a Link? Use HTML and Preview to confirm they work

[ Reply to This | # ]

This Month's Modest Bill from Berger Singerman and Some Shares Returned
Authored by: Anonymous on Friday, January 25 2008 @ 07:34 AM EST
<<Imagine what happens, says Thompson, when "some 23-year-old kid who
has a terrific idea in a piece of software is hammered by a demand letter from
someone holding a patent.">>
Simple.
Don't have your idea - or even use DNS, webserver or any connection possible
with/in USA. Plus, use TOR.
Then, as my friend used to say, "They can stick their heads up a dead
bear's bottom!"
After all, US is only 4.7% of the earth's population. There's other, bigger fish
to fry.
No sweat.
-Andy


[ Reply to This | # ]

Color me cynical
Authored by: Anonymous on Friday, January 25 2008 @ 09:11 AM EST
The initial cash burn was enough to have spent all of the available cash by the
end of January. But SCO's lawyers gave the judge a lot of ammunition to convert
this to Chapter 7 with their courtroom antics. We can sell stuff to which we
don't have clear title and reserve the money for future litigation while
incurring even MORE debt to our Stalking Horse is not a way to earn
credibility.

The judge (being this is business-friendly Delaware) asks some very basic
questions in Chapter 11: How does this rehabilitate the DIP? What is the best
way to pay back as much as possible to the creditors? The asset sale and huge
bills were making a strong case to convert to Chapter 7 and Novell was getting
ready to push for it.

So, now the bills have gone down and there is only a little bit of work to bring
back the asset sale. I am sure SCO will start spending money like MAD on a
"Renewed and Improved Sur Sur Sur Reply Asset Purchase Agreement"
immediately before the Utah trial. Now that a date for their demise is set,
they can calculate exactly how much money they need to spend and when to do it.

[ Reply to This | # ]

A comment on research.
Authored by: dbc on Friday, January 25 2008 @ 02:50 PM EST
IANAL, but I know a bucket load. One GC of casual acquaintance switched his
company's corporate work from a name-brand West coast firm to a NY firm with a
big corporate practice because it lowered costs. Basically, (and I probably
have the $numbers wrong, but you can get the idea) getting billed for a 15
minute phone call to a $800/hour partner that knows the answer to an esoteric
question off the top of his head is cheaper than two hours of $400/hour senior
associate research.

The whole question of what is a reasonable legal bill and what is a reasonable
hourly rate is indeed very complex, and requires a finely and subtly tuned BS
detector. I assume that any bankruptcy court judge has one.

[ Reply to This | # ]

Research Question
Authored by: LaurenceTux on Friday, January 25 2008 @ 06:06 PM EST
If a firm has N clients that somehow need to get the same exact chunk of info
how does the firm charge for that? lets say it takes M hours to gather does the
firm charge

N*M (each client gets charged)
M+Y (with each client getting charged (M/N)+Y)

assuming somehow this could even be legal how does that get handled??

[ Reply to This | # ]

  • Research Question - Authored by: Anonymous on Saturday, January 26 2008 @ 11:15 AM EST
This Mounth's Modest Bill from Berger Singerman and Some Shares Returned
Authored by: Anonymous on Friday, January 25 2008 @ 09:17 PM EST
"The firm also communicated with co-counsel "regarding the Debtors'
fourth quarter employee bonuses". Yes. Bonuses."

In the view of some, bonuses are always called for.

--If the company is doing well, the bonuses are deserved for the exceptional
effort the employees must have put out.

--If the company is doing poorly, the employees deserve bonuses for hanging in
there through hard times.

[ Reply to This | # ]

Cutting Edge Business Practices - This Month's Modest Bill from Berger Singerman and Some ...
Authored by: Anonymous on Saturday, January 26 2008 @ 08:14 AM EST
SCO is pioneering new ground!

SCO the company that brought you Unix is once again thinking outside the box.

In a bold move to re-define bankruptcy practices, SCO is incentivizing their
employees in spite of the fact they are in bankruptcy.

Realizing that the moral of the employees is more important than sound fiscal
policies, SCO will fight to pay employee bonuses, a practice un-heard of for
companies in bankruptcy.

(Please don't ask me when I last received a bonus!)

[ Reply to This | # ]

atscap and pchdtvr GPL revoked [PJ: supposedly]
Authored by: mhoyes on Saturday, January 26 2008 @ 08:36 AM EST
How can a person retroactivly revoke the GPL from software that has been
distributed?

This is the code that is used for the HD5500 to record HDTV shows.

I can understand stopping development on the version and all future versions
being non-GPLd, but I do not understand being able to revoke prior versions.
This would lead to a ludicrous situation where people could release code under
the GPL then when it becomes reallyused, revoke the GPL. The thing is, it has
already been released to the public domain under the GPL, so once the horses are
out of the barn, how can you put them back?

meh

[ Reply to This | # ]
Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details ) 		Site layout based on Woodlands theme by Bryan Bell.
Groklaw logo by John Crowley.
News Picks logo by Ted Thompson.
Powered By GeekLog
Created this page in 0.05 seconds