Just as the recession caused more large companies to turn their attentions toward smaller firms, it had a similar effect on lawyers who traditionally might have been thought of as "big firm material."
Slashes in compensation and questionable job stability at megafirms sent more top-tier law school graduates to midsize and small shops.
Similarly, increasing rate pressure drove some big firm partners to smaller firms.
Still, while the number of young, well-pedigreed job candidates has remained high at small and midsize firms over the past few years, the number of big firm laterals migrating to smaller firms has not reached the heights many first predicted.
But some in the legal community believe the apex of large-to-small lateral market activity is still on the horizon, along with a shift back to big firms for many young lawyers.
LATERAL MOVEMENT? NOT YET
It was widely predicted that the recession would cause a number of large firm partners to jump ship for smaller firms.
The logic was simple: General counsel at big companies would be operating with tighter budgets and big firm lawyers would find it more and more difficult to justify their high rates, so they'd move to smaller shops where there's less overhead.
But some in the legal community reported that, so far, this scenario has played out more in theory than in practice.
Peter R. Spirgel, managing shareholder of Flaster Greenberg in Cherry Hill, N.J., said he's been "surprised" by the lack of big firm lateral interest his firm has experienced over the past few years.
"I'm trying to figure out why and I've called some placement firms we've used and asked, 'Is it me?,'" he said. "But they said no. In fact, they see that partners with nice-sized portable books are less likely to move in troubled economic times. It's just another risk factor they don't want to bear."
Recruiter Frank D'Amore of Attorney Career Catalysts agreed that's part of it.
"Some people have decided, I think, that because of the uncertainties associated with the recession, 'If I can hold my own where I am, maybe now is not the time to take a risk,'" he said.
Both Spirgel and D'Amore said that much of the big-to-smaller firm movement that has occurred over the past few years has involved attorneys who were forced out of big firms because their practices couldn't be supported in tough economic times.
Big firm partners with solid books of business, however, have largely stayed put, according to D'Amore.
Those lawyers, he said, have recently been "protected in a cocoon" in which they've been allowed to offer their clients significant discounts and creative alternative fee arrangements as their firms fought to maintain business and weather the economic storm.
But a healing economy may prove to be worse news for big firms than an ailing one when it comes to losing partners, D'Amore said.
As the economy begins its upswing, he said, megafirms will likely try to return to something resembling their pre-recession selves by scaling back discounts and other client concessions and eventually increasing rates again.
General counsel, however, aren't likely to be as eager to go back to "normal."
If that happens, D'Amore said, partners who stuck it out with their firms over the last few years will have to decide whether they'd be better off somewhere smaller.
"Decision day will come for people who have kind of been in abeyance," he said.
In addition, he said, the recession forced many large firms to define their identities, leading to a market where international, national and regional firms are more clearly demarcated.
Because of this, according to D'Amore, partners with more rate-sensitive practices may increasingly begin feeling like they no longer belong at a firm whose overhead includes, for example, an office overseas.
Partners in certain practice areas may also begin to feel out of place at megafirms.
Patent prosecution and trusts and estates, as well as labor and employment work focusing on the public sector, employment practices liability insurance and individual cases are a few examples D'Amore gave of practices that may become harder to sustain at large firms.
BIG LAW BECKONS AGAIN
While the lateral partner movement has been sluggish, a number of midsize and small firms across Pennsylvania said the last few years have brought a wave of resumes from the type of highly credentialed young lawyers big firms typically scoop up first.
"In this year's summer class of 2010, we had representatives of the University of Virginia, Penn, Duke and George Mason," said David M. Kleppinger, chairman of Harrisburg-based McNees Wallace & Nurick. "In a typical year, we may have seen one or two from those types of schools. This year, it was the entire class."
Spirgel said he's had a similar experience.
"We were always very particular about who we hired," he said, explaining that his firm has long strived to hire attorneys who did well at top-ranked law schools.
The difference now, Spirgel said, is the firm has been hearing from "way more" young lawyers who fit that criteria.
Spirgel attributed this phenomenon to two factors: The shrinking compensation gap and the widening job-security gap between megafirms and smaller firms.
But as the economy begins to recover and large firms become more comfortable, D'Amore said, an increasing number of young lawyers may once again find themselves drawn to big firm life.
D'Amore said a number of large firms are beginning to "wade cautiously" into hiring again, planning summer programs with the hopes of bringing on new attorneys in the fall of 2011 and the fall of 2012.
Likewise, compensation may start to rise again, catching the eyes of both new graduates and young associates currently working at smaller firms, he said.
"When people have been [at a smaller firm] for three or four years and they graduated with a lot of loans and obligations and the market starts to go back, maybe firms won't be going crazy with starting salaries but the edge up will become very attractive," he said.
Kleppinger, however, was reluctant to solely credit the recession with the uptick in well-qualified hiring candidates at smaller firms.
Another component of it, he said, is generational.
"People know that the work requirements in some of the larger city firms are a lot larger than they are here in terms of time commitments and more and more young people are coming out of law school saying, 'I don't want that, I don't need that,'" Kleppinger said.
But D'Amore said that while this can be true, the workloads at midsize firms and large firms are not always that different.
For example, he said, while an attorney at a megafirm may be obligated to bill significantly more hours than a smaller firm counterpart, it will often be easier for the large firm attorney to find time to bill.
So the amount of effort required by each attorney in that scenario is basically equal, according to D'Amore.
More solid selling points for smaller shops hoping to sway young lawyers from going to big firms, he said, are the ability to offer more hands-on experience, a faster partnership track and greater flexibility in terms of work schedules.
http://www.law.com/jsp/article.jsp?id=1202474331627&rss=newswire
Ankit Rawal
The City slowly discovers legal process outsourcing (LPO)
Following in the footsteps of the banking industry and their counterparts on Wall Street, a number of leading City law firms are beginning to seriously consider outsourcing as a way to further cut costs. However and while adopting some form of business process outsourcing (BPO) has become increasingly the norm, legal process outsourcing (LPO) has yet to significantly catch on.
According to a recent article in Legal Week, eight firms among the top 30 City firms are or were currently looking at introducing some aspects of LPO. These firms included Allen & Overy (A&O), Eversheds, Freshfields Bruckhaus Deringer, Linklaters, Lovells, Pinsent Masons, Wragge & Co and Simmons & Simmons while CMS Cameron McKenna and SJ Berwin are in the process of identifying what areas they would like to outsource. Meanwhile, another eleven of the top 30 firms said they had no plans to begin any type of LPO work and some of these firms had already looked at LPO as an option and had discounted it. Nevertheless, more than half of the firms in the top 30 had told Legal Week that they already outsource at least some of their back office functions.
So why is BPO more popular than LPO among City firms? A recent (November 2009) Legal Week Big Question Survey of partners from City firms in London found that half of those surveyed thought that the general standard of work on offer by LPOs could be better. In fact, no one rated LPO services as excellent while 14% rated such services as good, 27% thought they were ok and 7% rated the services as poor. Meanwhile, 36% of responding partners thought that service levels were “much better” in the UK than the standards abroad and another 38% thought that such services were merely “better” while 19% thought there would be “no difference” in terms of outsourcing location.
Despite some doubts though, a clear majority of City partners thought that the traditional law firm model will need to change or evolve substantially. In fact, 58% of City partners said that law firms will need to re-engineer their business models by considerably improving IT infrastructure and process management over the next 10 years while 24% foresee a “massive need” for such changes. However, there was unanimous agreement that outsourcing legal work as opposed to back office functions was much harder to credibly outsource. Hence, only 13% of City partners saw major prospects for the expansion of LPO into commercial legal services and another 34% predicted “considerable” expansion while 53% expected little to no growth.
However, The Times has recently pointed out that attitudes are likely to change given that a new recruit at a leading City law firm can expect a starting salary of about £60,000 which can rise to more than £90,000 at the best paying firms. The Times pointed out that there are studies that suggest that there are already 10,000 lawyers in India who are working for outsourcers and the total revenue for the LPO sector is expected to double in 2010 to US$1 billion and rise to US$4 billion within five years
In other words, LPO will likely catch on in the near future as the recent Legal Week piece had quoted one City law firm partner as saying that the days of paying for all types of work by the hour and having all of those hours under the same roof no matter what the task was are long gone. In fact, the partner even went on to say that there will only be one “profession” (the world’s oldest!) that will soon be left doing that.
http://outsourceportfolio.com/city-slowly-discovers-legal-process-outsourcing-lpo/
According to a recent article in Legal Week, eight firms among the top 30 City firms are or were currently looking at introducing some aspects of LPO. These firms included Allen & Overy (A&O), Eversheds, Freshfields Bruckhaus Deringer, Linklaters, Lovells, Pinsent Masons, Wragge & Co and Simmons & Simmons while CMS Cameron McKenna and SJ Berwin are in the process of identifying what areas they would like to outsource. Meanwhile, another eleven of the top 30 firms said they had no plans to begin any type of LPO work and some of these firms had already looked at LPO as an option and had discounted it. Nevertheless, more than half of the firms in the top 30 had told Legal Week that they already outsource at least some of their back office functions.
So why is BPO more popular than LPO among City firms? A recent (November 2009) Legal Week Big Question Survey of partners from City firms in London found that half of those surveyed thought that the general standard of work on offer by LPOs could be better. In fact, no one rated LPO services as excellent while 14% rated such services as good, 27% thought they were ok and 7% rated the services as poor. Meanwhile, 36% of responding partners thought that service levels were “much better” in the UK than the standards abroad and another 38% thought that such services were merely “better” while 19% thought there would be “no difference” in terms of outsourcing location.
Despite some doubts though, a clear majority of City partners thought that the traditional law firm model will need to change or evolve substantially. In fact, 58% of City partners said that law firms will need to re-engineer their business models by considerably improving IT infrastructure and process management over the next 10 years while 24% foresee a “massive need” for such changes. However, there was unanimous agreement that outsourcing legal work as opposed to back office functions was much harder to credibly outsource. Hence, only 13% of City partners saw major prospects for the expansion of LPO into commercial legal services and another 34% predicted “considerable” expansion while 53% expected little to no growth.
However, The Times has recently pointed out that attitudes are likely to change given that a new recruit at a leading City law firm can expect a starting salary of about £60,000 which can rise to more than £90,000 at the best paying firms. The Times pointed out that there are studies that suggest that there are already 10,000 lawyers in India who are working for outsourcers and the total revenue for the LPO sector is expected to double in 2010 to US$1 billion and rise to US$4 billion within five years
In other words, LPO will likely catch on in the near future as the recent Legal Week piece had quoted one City law firm partner as saying that the days of paying for all types of work by the hour and having all of those hours under the same roof no matter what the task was are long gone. In fact, the partner even went on to say that there will only be one “profession” (the world’s oldest!) that will soon be left doing that.
http://outsourceportfolio.com/city-slowly-discovers-legal-process-outsourcing-lpo/
Legal Process Outsourcing (LPO): Giving lawyers a case of their own medicine?
For certain the legal profession, long despised for its sky high fees, is one profession that few Americans would be sorry to see outsourced to India resulting in large scale job losses – at least for lawyers that is. Hence, will the emergence of Legal Process Outsourcing (LPO) finally cut the legal profession and its fees down to size? Maybe. Or maybe not.
Fortunately or unfortunately depending on how much you love lawyers, the legal profession is one profession that seems to be largely protected from the full blown effects of outsourcing. After all, a lawyer in one country generally cannot practice law in another country as the legal profession is governed by intricate licensure and ethical rules that are set by jurisdiction. Hence, Forrester Research is quoted in the Wall Street Journal as estimating that only 35,000 USA based legal jobs will be moved offshore by 2010 and 79,000 by 2015 – only a tiny fraction of the estimated 1.2 million lawyers in the country.
Moreover, don’t expect any US$500 an hour lawyer to have his or her job outsourced to India any time soon as the brunt of any job shift will be felt by paralegals and junior lawyers as LPO type of work typically includes basic legal research, documentation writing and review and the drafting of legal briefs and pleadings. In other words, routine legal and corporate secretarial type of work that no US$500 an hour lawyer would do themselves.
However, the potential cost savings from LPO are enormous with a recent USA Today article stating that some LPO companies will charge only US$25 an hour for work that would otherwise cost more than US$125 an hour if it were done in the USA. Moreover, starting salaries for new associates at big law firms in the USA can be more than US$200 an hour or US$160,000 per year at large and prestigious law national firms while the national average annual salary for lawyers according to a 2007 Altman Weil survey is US$318 per hour and US$550 per hour at large New York City law firms. However, an experienced lawyer in India can be bill at US$75 to US$100 per hour, roughly what some experienced USA based paralegals charge; while a indian lawyer with five years of experience can be hired for just US$30,000 a year including benefits, half of what an experienced USA based corporate paralegal would earn. And not to mention there is the cost of office space in New York verses Mumbai or Manila.
Nevertheless, don’t expect much in the way of cost saving to trickle out of large law firms or the legal departments of large multinationals. However, LPO does have the potential to significantly level the playing field for smaller law firms, smaller companies and individuals who can now have an amount of legal work done that could not be affordably attained in the USA. In other words, LPO has the potential to free up and leverage resources that will allow lawyers and Americans in general to do what they have almost always done best: sue each other.
http://outsourceportfolio.com/legal-process-outsourcing-lpo-giving-lawyers-case-medicine/
Fortunately or unfortunately depending on how much you love lawyers, the legal profession is one profession that seems to be largely protected from the full blown effects of outsourcing. After all, a lawyer in one country generally cannot practice law in another country as the legal profession is governed by intricate licensure and ethical rules that are set by jurisdiction. Hence, Forrester Research is quoted in the Wall Street Journal as estimating that only 35,000 USA based legal jobs will be moved offshore by 2010 and 79,000 by 2015 – only a tiny fraction of the estimated 1.2 million lawyers in the country.
Moreover, don’t expect any US$500 an hour lawyer to have his or her job outsourced to India any time soon as the brunt of any job shift will be felt by paralegals and junior lawyers as LPO type of work typically includes basic legal research, documentation writing and review and the drafting of legal briefs and pleadings. In other words, routine legal and corporate secretarial type of work that no US$500 an hour lawyer would do themselves.
However, the potential cost savings from LPO are enormous with a recent USA Today article stating that some LPO companies will charge only US$25 an hour for work that would otherwise cost more than US$125 an hour if it were done in the USA. Moreover, starting salaries for new associates at big law firms in the USA can be more than US$200 an hour or US$160,000 per year at large and prestigious law national firms while the national average annual salary for lawyers according to a 2007 Altman Weil survey is US$318 per hour and US$550 per hour at large New York City law firms. However, an experienced lawyer in India can be bill at US$75 to US$100 per hour, roughly what some experienced USA based paralegals charge; while a indian lawyer with five years of experience can be hired for just US$30,000 a year including benefits, half of what an experienced USA based corporate paralegal would earn. And not to mention there is the cost of office space in New York verses Mumbai or Manila.
Nevertheless, don’t expect much in the way of cost saving to trickle out of large law firms or the legal departments of large multinationals. However, LPO does have the potential to significantly level the playing field for smaller law firms, smaller companies and individuals who can now have an amount of legal work done that could not be affordably attained in the USA. In other words, LPO has the potential to free up and leverage resources that will allow lawyers and Americans in general to do what they have almost always done best: sue each other.
http://outsourceportfolio.com/legal-process-outsourcing-lpo-giving-lawyers-case-medicine/
Growth of Consumer Debt Litigation Keeps Small Firms Busy -- by Zack Needles
A logical chain of events has occurred over the past few years: The recession has caused more consumer debts to go unpaid which, in turn, has led to more legal battles between consumers and their creditors.
On one hand, debt collectors are suing consumers to collect the unpaid debts. On the other, consumer debtors are filing suits claiming debt collection harassment.
Attorneys across Pennsylvania said both types of litigation have been on the rise in the state over the past few years and it's typically been small firms and solo attorneys that have benefited.
Pittsburgh solo attorney Eugene D. Frank, whose practice includes defending consumer debtors against collection actions, said he's seen an uptick in debt collection suits against consumers in recent years, but not necessarily by the original creditors.
"I am seeing more and more of that as we move along, primarily because you're having a lot of junk debt buyers purchasing these delinquent accounts and using more and more aggressive tactics, including lawsuits," he said.
The term "junk debt buyer" refers to an agency that purchases charged off debt from creditors, often in bulk and for pennies on the dollar, and then attempts to collect from the debtors.
Philadelphia solo attorney Michael P. Forbes said this form of debt buying became an industry unto itself during the savings and loan crisis of the 1980s and 1990s and has grown considerably during the most recent economic downturn.
Forbes said junk debt buyers are filing suits against debtors at an increasing clip and, while he has seen his caseload increase, "most people don't know that they can defend the case and can probably beat it."
According to Forbes, these agencies often have poor documentation or no documentation at all to prove they own the debt and to confirm the amount of the debt.
Frank agreed, saying that because junk debt buyers purchase debt in bulk, they often fail to obtain or retain the necessary records.
Documentation tends to become even more shoddy when those agencies resell the debt to other debt buyers, Frank said.
As a result, attorneys defending debtors in collection actions can often get cases thrown out on the grounds that the collection agencies violated civil procedure.
In addition to the more aggressive collection tactics increasingly being used by junk debt buyers, Frank said debt settlement programs are also partially to blame for driving up collection lawsuits.
Often, the programs advise consumer debtors to stop making payments while a settlement is negotiated, operating under the premise that most creditors won't resort to a lawsuit until the four-year statute of limitations has nearly expired, according to Frank.
Typically, however, debtors find themselves being sued within a year or so of discontinuing payment, Frank said, adding that most suits go unanswered and result in default judgments for the creditors.
Both Frank and Forbes said it's often in the debtor's best interest to hire an attorney to fight collection suits because default judgments can result in bank garnishments and liens against real estate and personal property.
"There's no such thing as judgment-proof," Frank said.
Frank said that because consumer debtor defense work is "more volume-based," it's typically handled by smaller practitioners.
Forbes agreed, saying the defendants in those cases are usually represented by solo attorneys or two-lawyer practices.
The same can be said about the attorneys representing the collectors in those cases.
According to Forbes, most of the firms representing plaintiffs in collections actions against consumers have five or fewer attorneys.
Noah P. Fardo, managing partner of four-attorney Flaherty Fardo in Pittsburgh, which represents creditors and debt collection agencies in collections actions, said there's "no doubt" collection activity has increased over the past two or three years.
"I've said it for the last couple years: The worse the economy gets, the busier we get," he said. "Collections is a recession-proof business."
But while both Frank and Forbes blamed the recent spike in collections actions on so-called junk debt buyers, Fardo said his firm usually draws the line at taking those agencies on as clients.
"We've represented some of the debt buyers and those cases are so picked over, so worked, that I don't like to represent those types of clients," he said.
According to Fardo, debt buyers are "typically looking for lawyers on a strict contingency basis and we don't believe the success rate warrants taking on those types of cases."
Part of the reason for that, he said, is the difficulty many of those agencies have in documenting debt that is often four or five years old.
"We have typically stayed away from aged receivables without proper documentation," he said, but added that he has noticed more and more of the creditors his firm represents inquiring about debt-selling opportunities.
And while he said his firm's creditor clients are "very organized," he has witnessed poor record keeping by both debt buyers and original creditors from the other side of the aisle, defending debt relief companies from creditor law suits.
Fardo said his firm has recently seen an influx of those types of cases, which it accepts provided there are no conflicts with its existing creditor clients.
Through the course of doing that work, Fardo said he's also noticed a trend of creditors failing to present witnesses at arbitration or trial in hopes that debtors will testify against themselves.
"We will often instruct our clients who we represent not to attend hearings with us," he said, explaining that, without a witness, the creditor is unable to prove its case. "We're winning verdicts because credit card companies can be lazy."
But there's another type of creditor-debtor litigation that has kept both plaintiffs and defense lawyers busy recently: debt collection harassment suits.
Both Forbes' and Franks' practices include filing law suits in state and federal court on behalf of debtors who claim their rights have been violated by aggressive debt collectors.
Under the federal Fair Debt Collection Practices Act, consumers can sue third-party debt collectors, but not original creditors, alleging the use of abusive collection tactics.
Frank said those types of cases have remained "pretty consistent" in recent years and Forbes said he's been filing more of those suits since the recession hit.
Like debtor defense work, debt collector harassment claims are mostly filed on behalf of consumers by small firms and solo lawyers, according to Forbes.
But while debt collectors also tend to hire small firms to represent them as plaintiffs, Forbes said he's seen everything from two-lawyer shops to megafirms serve as defense counsel in debt collection harassment cases.
For example, Philadelphia-based Marshall Dennehey Warner Coleman & Goggin, which has more than 400 attorneys, has a consumer and credit law practice group devoted to defending lenders, financial institutions and debt collectors against consumer debtor lawsuits.
Philip B. Toran, a shareholder at the firm and chair of its executive committee, said the practice "has been busy in the last few years."
http://www.law.com/jsp/law/sfb/lawArticleSFB.jsp?id=1202472943270&Growth_of_Consumer_Debt_Litigation_Keeps_Small_Firms_Busy
On one hand, debt collectors are suing consumers to collect the unpaid debts. On the other, consumer debtors are filing suits claiming debt collection harassment.
Attorneys across Pennsylvania said both types of litigation have been on the rise in the state over the past few years and it's typically been small firms and solo attorneys that have benefited.
Pittsburgh solo attorney Eugene D. Frank, whose practice includes defending consumer debtors against collection actions, said he's seen an uptick in debt collection suits against consumers in recent years, but not necessarily by the original creditors.
"I am seeing more and more of that as we move along, primarily because you're having a lot of junk debt buyers purchasing these delinquent accounts and using more and more aggressive tactics, including lawsuits," he said.
The term "junk debt buyer" refers to an agency that purchases charged off debt from creditors, often in bulk and for pennies on the dollar, and then attempts to collect from the debtors.
Philadelphia solo attorney Michael P. Forbes said this form of debt buying became an industry unto itself during the savings and loan crisis of the 1980s and 1990s and has grown considerably during the most recent economic downturn.
Forbes said junk debt buyers are filing suits against debtors at an increasing clip and, while he has seen his caseload increase, "most people don't know that they can defend the case and can probably beat it."
According to Forbes, these agencies often have poor documentation or no documentation at all to prove they own the debt and to confirm the amount of the debt.
Frank agreed, saying that because junk debt buyers purchase debt in bulk, they often fail to obtain or retain the necessary records.
Documentation tends to become even more shoddy when those agencies resell the debt to other debt buyers, Frank said.
As a result, attorneys defending debtors in collection actions can often get cases thrown out on the grounds that the collection agencies violated civil procedure.
In addition to the more aggressive collection tactics increasingly being used by junk debt buyers, Frank said debt settlement programs are also partially to blame for driving up collection lawsuits.
Often, the programs advise consumer debtors to stop making payments while a settlement is negotiated, operating under the premise that most creditors won't resort to a lawsuit until the four-year statute of limitations has nearly expired, according to Frank.
Typically, however, debtors find themselves being sued within a year or so of discontinuing payment, Frank said, adding that most suits go unanswered and result in default judgments for the creditors.
Both Frank and Forbes said it's often in the debtor's best interest to hire an attorney to fight collection suits because default judgments can result in bank garnishments and liens against real estate and personal property.
"There's no such thing as judgment-proof," Frank said.
Frank said that because consumer debtor defense work is "more volume-based," it's typically handled by smaller practitioners.
Forbes agreed, saying the defendants in those cases are usually represented by solo attorneys or two-lawyer practices.
The same can be said about the attorneys representing the collectors in those cases.
According to Forbes, most of the firms representing plaintiffs in collections actions against consumers have five or fewer attorneys.
Noah P. Fardo, managing partner of four-attorney Flaherty Fardo in Pittsburgh, which represents creditors and debt collection agencies in collections actions, said there's "no doubt" collection activity has increased over the past two or three years.
"I've said it for the last couple years: The worse the economy gets, the busier we get," he said. "Collections is a recession-proof business."
But while both Frank and Forbes blamed the recent spike in collections actions on so-called junk debt buyers, Fardo said his firm usually draws the line at taking those agencies on as clients.
"We've represented some of the debt buyers and those cases are so picked over, so worked, that I don't like to represent those types of clients," he said.
According to Fardo, debt buyers are "typically looking for lawyers on a strict contingency basis and we don't believe the success rate warrants taking on those types of cases."
Part of the reason for that, he said, is the difficulty many of those agencies have in documenting debt that is often four or five years old.
"We have typically stayed away from aged receivables without proper documentation," he said, but added that he has noticed more and more of the creditors his firm represents inquiring about debt-selling opportunities.
And while he said his firm's creditor clients are "very organized," he has witnessed poor record keeping by both debt buyers and original creditors from the other side of the aisle, defending debt relief companies from creditor law suits.
Fardo said his firm has recently seen an influx of those types of cases, which it accepts provided there are no conflicts with its existing creditor clients.
Through the course of doing that work, Fardo said he's also noticed a trend of creditors failing to present witnesses at arbitration or trial in hopes that debtors will testify against themselves.
"We will often instruct our clients who we represent not to attend hearings with us," he said, explaining that, without a witness, the creditor is unable to prove its case. "We're winning verdicts because credit card companies can be lazy."
But there's another type of creditor-debtor litigation that has kept both plaintiffs and defense lawyers busy recently: debt collection harassment suits.
Both Forbes' and Franks' practices include filing law suits in state and federal court on behalf of debtors who claim their rights have been violated by aggressive debt collectors.
Under the federal Fair Debt Collection Practices Act, consumers can sue third-party debt collectors, but not original creditors, alleging the use of abusive collection tactics.
Frank said those types of cases have remained "pretty consistent" in recent years and Forbes said he's been filing more of those suits since the recession hit.
Like debtor defense work, debt collector harassment claims are mostly filed on behalf of consumers by small firms and solo lawyers, according to Forbes.
But while debt collectors also tend to hire small firms to represent them as plaintiffs, Forbes said he's seen everything from two-lawyer shops to megafirms serve as defense counsel in debt collection harassment cases.
For example, Philadelphia-based Marshall Dennehey Warner Coleman & Goggin, which has more than 400 attorneys, has a consumer and credit law practice group devoted to defending lenders, financial institutions and debt collectors against consumer debtor lawsuits.
Philip B. Toran, a shareholder at the firm and chair of its executive committee, said the practice "has been busy in the last few years."
http://www.law.com/jsp/law/sfb/lawArticleSFB.jsp?id=1202472943270&Growth_of_Consumer_Debt_Litigation_Keeps_Small_Firms_Busy
Justices Consider Limits on Employer Background Checks in NASA Case -- By Marcia Coyle
Lawyers for the federal government clashed with lawyers for a group of California scientists at the U.S. Supreme Court on Tuesday over how much information the government can demand in background checks on potential employees before violating their privacy rights.
And the justices themselves appeared to have conflicting concerns about background investigations. "Are there any limits on what the government can ask?" Justice Sonia Sotomayor pressed Acting Solicitor General Neal Katyal shortly after he opened his argument in National Aeronautics and Space Administration v. Nelson. Can the government ask someone about his genetic makeup because "we don't want someone prone to cancer?" she added.
"Does NASA have a right to know that an employee has a sign on his front lawn saying, ‘I hope the space shuttle blows up?' " Justice Samuel Alito Jr. asked the scientists' counsel, Dan Stormer of Pasadena, Calif.'s Hadsell Stormer Keeny Richardson & Renick.
Katyal wants the Court to overturn a preliminary injunctionissued by the 9th U.S. Circuit Court of Appeals (pdf). The appellate court agreed with the scientists -- 28 long-term, low-risk, contract employees at a NASA research facility in California -- that certain questions on the NASA background forms for contract employees were so intrusive as to violate their right to informational privacy.
One question involves illegal drug use in the past year. The scientists did not object to being asked whether they used, possessed, supplied or manufactured illegal drugs, but they did object to providing information about any treatment or counseling received. They also objected to an open-ended question on a second form, which seeks any information bearing on the person's suitability for employment -- "derogatory as well as positive information." The questions were not narrowly tailored to achieve legitimate government interests, according to the appellate court.
In answering questions from Sotomayor and other justices, Katyal stressed there is no constitutional limit on the government's collection of information in the employment context as long as there are adequate privacy safeguards. The federal Privacy Act, he added, contains the necessary protections against disclosure.
"This case doesn't force the Court to answer the outer limits of what the government can do," he said. If the 9th Circuit's reasoning is applied to a permanent injunction, he warned, it "could preclude the government from asking for all kinds of information."
Chief Justice John Roberts Jr. asked Katyal why the government needs information about drug counseling or treatment. When Katyal responded, "It's for the good of the employee," Roberts rejoined, "Whenever the government says that, you have to be suspicious. It's one thing to say, ‘I had a drink.' It's another to say, ‘I'm in AA.'"
Stormer, too, faced his share of skeptical questioning. In response to Alito's hypothetical about the sign hoping the shuttle would blow up, Stormer conceded that NASA had a right to know about it. Alito then said, "I don't see how to do that without open-ended questions. You would have to have a question on the form asking: Does the person have a sign on the front lawn saying, 'I hope the space shuttle blows up.'"
The alternative to open-ended questions, added Alito, would be to compile a list of everything that makes a person unsuitable for employment -- an "impractical" alternative.
Throughout the hour-long argument, Justice Antonin Scalia challenged the existence of a right to informational privacy. He noted that legislatures, including Congress, have acted in this area to protect private information. "Maybe you don't need us," he told Stormer. The scientists' lawyer said the right was grounded in the Fifth Amendment's concept of ordered liberty.
The Supreme Court has never used the term "right to informational privacy," but in two cases from the 1970s, the justices have said the right to privacy contains "the individual interest in avoiding disclosure of personal matters." As lower courts have dealt with related issues, that interest has come to be known as the right to informational privacy.
http://www.law.com/jsp/article.jsp?id=1202472929254
And the justices themselves appeared to have conflicting concerns about background investigations. "Are there any limits on what the government can ask?" Justice Sonia Sotomayor pressed Acting Solicitor General Neal Katyal shortly after he opened his argument in National Aeronautics and Space Administration v. Nelson. Can the government ask someone about his genetic makeup because "we don't want someone prone to cancer?" she added.
"Does NASA have a right to know that an employee has a sign on his front lawn saying, ‘I hope the space shuttle blows up?' " Justice Samuel Alito Jr. asked the scientists' counsel, Dan Stormer of Pasadena, Calif.'s Hadsell Stormer Keeny Richardson & Renick.
Katyal wants the Court to overturn a preliminary injunctionissued by the 9th U.S. Circuit Court of Appeals (pdf). The appellate court agreed with the scientists -- 28 long-term, low-risk, contract employees at a NASA research facility in California -- that certain questions on the NASA background forms for contract employees were so intrusive as to violate their right to informational privacy.
One question involves illegal drug use in the past year. The scientists did not object to being asked whether they used, possessed, supplied or manufactured illegal drugs, but they did object to providing information about any treatment or counseling received. They also objected to an open-ended question on a second form, which seeks any information bearing on the person's suitability for employment -- "derogatory as well as positive information." The questions were not narrowly tailored to achieve legitimate government interests, according to the appellate court.
In answering questions from Sotomayor and other justices, Katyal stressed there is no constitutional limit on the government's collection of information in the employment context as long as there are adequate privacy safeguards. The federal Privacy Act, he added, contains the necessary protections against disclosure.
"This case doesn't force the Court to answer the outer limits of what the government can do," he said. If the 9th Circuit's reasoning is applied to a permanent injunction, he warned, it "could preclude the government from asking for all kinds of information."
Chief Justice John Roberts Jr. asked Katyal why the government needs information about drug counseling or treatment. When Katyal responded, "It's for the good of the employee," Roberts rejoined, "Whenever the government says that, you have to be suspicious. It's one thing to say, ‘I had a drink.' It's another to say, ‘I'm in AA.'"
Stormer, too, faced his share of skeptical questioning. In response to Alito's hypothetical about the sign hoping the shuttle would blow up, Stormer conceded that NASA had a right to know about it. Alito then said, "I don't see how to do that without open-ended questions. You would have to have a question on the form asking: Does the person have a sign on the front lawn saying, 'I hope the space shuttle blows up.'"
The alternative to open-ended questions, added Alito, would be to compile a list of everything that makes a person unsuitable for employment -- an "impractical" alternative.
Throughout the hour-long argument, Justice Antonin Scalia challenged the existence of a right to informational privacy. He noted that legislatures, including Congress, have acted in this area to protect private information. "Maybe you don't need us," he told Stormer. The scientists' lawyer said the right was grounded in the Fifth Amendment's concept of ordered liberty.
The Supreme Court has never used the term "right to informational privacy," but in two cases from the 1970s, the justices have said the right to privacy contains "the individual interest in avoiding disclosure of personal matters." As lower courts have dealt with related issues, that interest has come to be known as the right to informational privacy.
http://www.law.com/jsp/article.jsp?id=1202472929254
Hill Dicks pilots business outsourcing and reviews use of outside providers -- ByClaire Ruckin
Hill Dickinson is examining the role of its outside providers and has launched an outsourcing pilot as part of a cost cutting review being rolled out across the firm.
Managing partner Peter Jackson and financial director Colin Wardale launched a review of the firm's practices over the summer in a bid to cut back on expenses. As part of the project, the national firm is attempting to cut money spent on outside providers in areas including training, education and business development resources.
The firm stressed the process was not with a view to making redundancies but an attempt to go over budgets with each of the seven practice group heads.
The move comes after the firm kicked off a business process outsourcing pilot earlier in the year across part of its secretarial function to see if it can boost savings. The pilot, led by head of HR Andrew Rushworth, is being conducted in Hill Dickinson's claimant and professional services teams with two different outsourcers in the UK.
Jackson (pictured) commented: "When we first started our large expansion plans [six years ago] we didn't have the infrastructure to support the business; now we are thinking that we may have too much. We are not taking a knife to the business and cutting out major things but we are objectively analysing whether everything we are spending our money on is necessary."
Jackson and Wardale are likely to present their findings to the board at the end of the year.
The firm is also considering whether it should take advantage of its geographical position and act as an outsourcer for the major City firms.
http://www.legalweek.com/legal-week/news/1730605/hill-dicks-pilots-business-outsourcing-reviews-outside-providers
Managing partner Peter Jackson and financial director Colin Wardale launched a review of the firm's practices over the summer in a bid to cut back on expenses. As part of the project, the national firm is attempting to cut money spent on outside providers in areas including training, education and business development resources.
The firm stressed the process was not with a view to making redundancies but an attempt to go over budgets with each of the seven practice group heads.
The move comes after the firm kicked off a business process outsourcing pilot earlier in the year across part of its secretarial function to see if it can boost savings. The pilot, led by head of HR Andrew Rushworth, is being conducted in Hill Dickinson's claimant and professional services teams with two different outsourcers in the UK.
Jackson (pictured) commented: "When we first started our large expansion plans [six years ago] we didn't have the infrastructure to support the business; now we are thinking that we may have too much. We are not taking a knife to the business and cutting out major things but we are objectively analysing whether everything we are spending our money on is necessary."
Jackson and Wardale are likely to present their findings to the board at the end of the year.
The firm is also considering whether it should take advantage of its geographical position and act as an outsourcer for the major City firms.
http://www.legalweek.com/legal-week/news/1730605/hill-dicks-pilots-business-outsourcing-reviews-outside-providers
Banks to allow local groups to buy foreclosures -- By ALAN ZIBEL AP Real Estate Writer
The Obama administration says local officials could benefit from acquiring these properties and using the land for redevelopment projects. Congress has provided $7 billion in money to buy the homes.
These groups have been outbid by speculators who are snapping up foreclosures.
The administration says the largest mortgage lenders in the country, including Bank of America Corp. and Wells Fargo & Co. have agreed to let the groups purchase the properties ahead of private speculators.
http://news.findlaw.com/ap/f/1310/09-01-2010/20100901070502_07.html
Former Halliwells partners on the hook for further bank loans -- By Claire Ruckin
Second cash call and St James's deal leave some liable for £500k
Halliwells partners look set to be asked to repay more than £2m in additional bank loans taken in 2010 as further details of the now-defunct firm's finances and partner liabilities emerge.
The firm conducted a voluntary cash call at the beginning of the year which saw 28 partners contribute a total of £2.3m, facilitated by professional practice loans (PPLs) taken out from The Co-operative Bank.
Partners put in varying amounts depending on whether they had received a payout on completion of the firm's new offices in Spinningfields. Those who received the windfall contributed £20,000 per equity point, while those who did not put in £10,000 per point.
The capital raising was at the request of the Royal Bank of Scotland (RBS) and came at the same time that the firm renegotiated £19.8m of loan facilities with the bank.
The cash injection came in addition to a mandatory capital raising conducted in 2008, when partners doubled what they had in the firm. At the time PPLs were taken out with Handelsbanken.
Partners will now be expected to pay back outstanding loans with The Co-op, Handelsbanken and RBS - with some partners liable for in excess of £500,000.
A spokesperson for The Co-op commented: "We can confirm that The Co-operative Bank does have professional practice loans in place with Halliwells partners. However, due to customer confidentiality we are unable to discuss specific details."
News of the additional cash call comes as it emerges that the former 40-strong Halliwells equity partnership is facing liabilities of up to £3m on its former Manchester premises at St James's Court.
The firm agreed to a rental contract with a break clause in 2013; however, it left the premises in 2007 when it relocated to Spinningfields. A number of partners including litigation partner Paul Thomas and former senior partner Alec Craig acted as guarantors for the 40,000 sq ft space.
Thomas has sent letters of demand to meet rent liabilities to former equity partners. The firm is hoping to negotiate a discount with the landlord, but it is likely partners will owe at least £25,000 each.
Thomas has also contacted the London Court of International Arbitration and is hoping that former Halliwells partners will agree to participate in an arbitration process. He has instructed John McGhee QC of Maitland Chambers to advise on the matter.
In addition to Thomas and Craig, former Halliwells partners Matt Wightman and Chris Phillips are also named as guarantors on the St James Court lease. However, both are disputing this, given they left the firm in 2009 under the assumption their role as guarantors would be passed onto existing members within the firm.
Phillips left to become a consultant at Keoghs, while Wightman became chief executive of HL Interactive, the bulk legal services business which demerged from Halliwells last year. The duo have instructed Walker Morris to advise.
Halliwells issued notice of intention to appoint administrators in June, concluding the break-up and sale of its business the following month.
http://www.legalweek.com/legal-week/news/1730588/former-halliwells-partners-hook-bank-loans
Halliwells partners look set to be asked to repay more than £2m in additional bank loans taken in 2010 as further details of the now-defunct firm's finances and partner liabilities emerge.
The firm conducted a voluntary cash call at the beginning of the year which saw 28 partners contribute a total of £2.3m, facilitated by professional practice loans (PPLs) taken out from The Co-operative Bank.
Partners put in varying amounts depending on whether they had received a payout on completion of the firm's new offices in Spinningfields. Those who received the windfall contributed £20,000 per equity point, while those who did not put in £10,000 per point.
The capital raising was at the request of the Royal Bank of Scotland (RBS) and came at the same time that the firm renegotiated £19.8m of loan facilities with the bank.
The cash injection came in addition to a mandatory capital raising conducted in 2008, when partners doubled what they had in the firm. At the time PPLs were taken out with Handelsbanken.
Partners will now be expected to pay back outstanding loans with The Co-op, Handelsbanken and RBS - with some partners liable for in excess of £500,000.
A spokesperson for The Co-op commented: "We can confirm that The Co-operative Bank does have professional practice loans in place with Halliwells partners. However, due to customer confidentiality we are unable to discuss specific details."
News of the additional cash call comes as it emerges that the former 40-strong Halliwells equity partnership is facing liabilities of up to £3m on its former Manchester premises at St James's Court.
The firm agreed to a rental contract with a break clause in 2013; however, it left the premises in 2007 when it relocated to Spinningfields. A number of partners including litigation partner Paul Thomas and former senior partner Alec Craig acted as guarantors for the 40,000 sq ft space.
Thomas has sent letters of demand to meet rent liabilities to former equity partners. The firm is hoping to negotiate a discount with the landlord, but it is likely partners will owe at least £25,000 each.
Thomas has also contacted the London Court of International Arbitration and is hoping that former Halliwells partners will agree to participate in an arbitration process. He has instructed John McGhee QC of Maitland Chambers to advise on the matter.
In addition to Thomas and Craig, former Halliwells partners Matt Wightman and Chris Phillips are also named as guarantors on the St James Court lease. However, both are disputing this, given they left the firm in 2009 under the assumption their role as guarantors would be passed onto existing members within the firm.
Phillips left to become a consultant at Keoghs, while Wightman became chief executive of HL Interactive, the bulk legal services business which demerged from Halliwells last year. The duo have instructed Walker Morris to advise.
Halliwells issued notice of intention to appoint administrators in June, concluding the break-up and sale of its business the following month.
http://www.legalweek.com/legal-week/news/1730588/former-halliwells-partners-hook-bank-loans
Botox Maker to Pay $600 Million in Settlement Over Off-Label Uses -- By Sue Reisinger
Allergan, Inc. Wednesday said it has agreed to pay $600 million in criminal and civil penalties and plead guilty to one misdemeanor count of "misbranding" its drug Botox as part of a global settlement (pdf) with the federal government over off-label uses of the drug.
As part of the plea deal, the Irvine, Calif.-based drug company agreed to drop its First Amendment legal action against the U.S. government. This action, filed last fall, contended that the government's legal position -- that it's a crime for a drug company to communicate truthful information to physicians about off-label uses of its products -- violates the First Amendment and is inconsistent with the Federal Food, Drug & Cosmetic Act.
(Also See: Allergan Press Release (pdf))
At the time the action was filed, critics said it threatened the entire federal regulation of pharmaceuticals.
But one of the top First Amendment experts in the country, Harvard Law School professor Laurence Tribe, said at the time, "I think that Allergan has a strong First Amendment case for a right to market lawful but off-label uses for its drugs in a truthful and non-misleading way." But now the suit is dead.
Tony West, U.S. assistant attorney general in the civil division, said Allergan had also paid kickbacks (pdf) to doctors to try off-label uses. West trumpeted the size of the settlement as "impressive, to be sure."
But Allergan is paying only a fraction of the record $2.3 billion that Pfizer Inc. paid last year to settle misbranding allegations over its pain killer, Bextra. A Pfizer subsidiary also had to plead guilty to a felony in that case.
In Allergan's plea deal, the company admitted that between 2000 through 2005, its marketing of Botox -- not to be confused with its cosmetic cousin -- resulted in intended but off-label uses for the treatment of headache, pain, spasticity and juvenile cerebral palsy.
In March 2010, the Food and Drug Administration approved Botox for the treatment of adults with upper limb spasticity, and the company said clinical trials are under way to gain approval for the other uses.
Over 70 other countries already approve the use of the drug for juvenile cerebral palsy, and doctors in the U.S. can and do legally prescribe it. But it remains illegal for Allergan to discuss that off-label use with the doctors until the FDA approves it.
Of Allergan's penalty, $225 million will go to resolve civil claims asserted by the Department of Justice under the False Claims Act. The company continues to deny liability associated with the civil allegations.
"This settlement is in the best interest of our stockholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with government enforcement action," said Douglas Ingram, Allergan's executive vice president. Ingram was previously the company's chief legal officer dealing with the government's investigation and supervising the First Amendment suit.
The settlement still must be approved by the federal courts overseeing the criminal and civil cases. Allergan was represented by Paul Clement, a partner at King & Spalding in Washington, D.C., and a former U.S. solicitor general.
The deal also required the company to enter into a corporate integrity agreement with the Department of Health and Human Services. Under the agreement, Allergan will maintain its updated compliance program and undertake a series of compliance-related obligations, including additional monitoring, maintenance of specific written standards, auditing, training, education, reporting and disclosure, for five years.
The agreement also provides for an independent third-party review organization to assess and report on Allergan's compliance program.
Allergan estimated it will record pre-tax charges of between $610 million and $615 million in its third quarter in connection with the settlement. The amount includes interest and attorneys fees.
http://www.law.com/jsp/article.jsp?id=1202471484515
As part of the plea deal, the Irvine, Calif.-based drug company agreed to drop its First Amendment legal action against the U.S. government. This action, filed last fall, contended that the government's legal position -- that it's a crime for a drug company to communicate truthful information to physicians about off-label uses of its products -- violates the First Amendment and is inconsistent with the Federal Food, Drug & Cosmetic Act.
(Also See: Allergan Press Release (pdf))
At the time the action was filed, critics said it threatened the entire federal regulation of pharmaceuticals.
But one of the top First Amendment experts in the country, Harvard Law School professor Laurence Tribe, said at the time, "I think that Allergan has a strong First Amendment case for a right to market lawful but off-label uses for its drugs in a truthful and non-misleading way." But now the suit is dead.
Tony West, U.S. assistant attorney general in the civil division, said Allergan had also paid kickbacks (pdf) to doctors to try off-label uses. West trumpeted the size of the settlement as "impressive, to be sure."
But Allergan is paying only a fraction of the record $2.3 billion that Pfizer Inc. paid last year to settle misbranding allegations over its pain killer, Bextra. A Pfizer subsidiary also had to plead guilty to a felony in that case.
In Allergan's plea deal, the company admitted that between 2000 through 2005, its marketing of Botox -- not to be confused with its cosmetic cousin -- resulted in intended but off-label uses for the treatment of headache, pain, spasticity and juvenile cerebral palsy.
In March 2010, the Food and Drug Administration approved Botox for the treatment of adults with upper limb spasticity, and the company said clinical trials are under way to gain approval for the other uses.
Over 70 other countries already approve the use of the drug for juvenile cerebral palsy, and doctors in the U.S. can and do legally prescribe it. But it remains illegal for Allergan to discuss that off-label use with the doctors until the FDA approves it.
Of Allergan's penalty, $225 million will go to resolve civil claims asserted by the Department of Justice under the False Claims Act. The company continues to deny liability associated with the civil allegations.
"This settlement is in the best interest of our stockholders as it resolves all matters at issue in the investigation, avoids substantial costs of litigation, as well as the substantial risks to Allergan associated with government enforcement action," said Douglas Ingram, Allergan's executive vice president. Ingram was previously the company's chief legal officer dealing with the government's investigation and supervising the First Amendment suit.
The settlement still must be approved by the federal courts overseeing the criminal and civil cases. Allergan was represented by Paul Clement, a partner at King & Spalding in Washington, D.C., and a former U.S. solicitor general.
The deal also required the company to enter into a corporate integrity agreement with the Department of Health and Human Services. Under the agreement, Allergan will maintain its updated compliance program and undertake a series of compliance-related obligations, including additional monitoring, maintenance of specific written standards, auditing, training, education, reporting and disclosure, for five years.
The agreement also provides for an independent third-party review organization to assess and report on Allergan's compliance program.
Allergan estimated it will record pre-tax charges of between $610 million and $615 million in its third quarter in connection with the settlement. The amount includes interest and attorneys fees.
http://www.law.com/jsp/article.jsp?id=1202471484515
Calif. rejects ban on plastic shopping bags -- By ROBIN HINDERY Associated Press Writer
SACRAMENTO, Calif. (AP) - California lawmakers on Tuesday rejected a bill seeking to ban plastic shopping bags, after a contentious debate over whether the state was going too far in trying to regulate personal choice.
It would have been the first statewide ban, although a few cities already prohibit their use.
The Democratic bill had been the subject of a furious lobbying campaign by the plastic bag manufacturing industry, which called it a job killer.
The Senate took final action at the very end of the legislative session, reflecting how difficult it had been to muster support. The bill received just 14 votes in the Senate, seven short of the majority it needed.
Supporters of AB1998 said the 19 billion plastic bags Californians use every year harm the environment and cost the state $25 million annually to collect and transport to landfills.
Sen. Gil Cedillo, who carried the measure on the Senate floor, said it offered California an opportunity to emerge at the forefront of a global trend.
"If we don't solve this problem today, if we don't create a statewide standard, if we don't provide the leadership that is being called for, others will," the Los Angeles Democrat said.
A handful of California cities already ban single-use plastic bags, after San Francisco became the first to do so in 2007. Palo Alto, Malibu and Fairfax have since followed, while a ban approved in Manhattan Beach is tied up in litigation, said Matthew King, a spokesman for Heal the Bay, the Santa Monica-based nonprofit that sponsored AB1998.
The bill called for the ban to take effect in supermarkets and large retail stores in 2012. It would have applied to smaller stores in 2013.
Republicans and some Democrats opposed it, saying it would add an extra burden on consumers and businesses at a time when many already are struggling financially.
"If we pass this piece of legislation, we will be sending a message to the people of California that we care more about banning plastic bags than helping them put food on their table," said Sen. Mimi Walters, R-Lake Forest.
Sen. Lois Wolk, D-Davis, was one of half a dozen Democrats to vote against the bill. She said the state instead should offer incentives for reducing the use of plastic bags before imposing a statewide mandate.
http://news.findlaw.com/ap/f/1310/09-01-2010/20100901000501_02.html
It would have been the first statewide ban, although a few cities already prohibit their use.
The Democratic bill had been the subject of a furious lobbying campaign by the plastic bag manufacturing industry, which called it a job killer.
The Senate took final action at the very end of the legislative session, reflecting how difficult it had been to muster support. The bill received just 14 votes in the Senate, seven short of the majority it needed.
Supporters of AB1998 said the 19 billion plastic bags Californians use every year harm the environment and cost the state $25 million annually to collect and transport to landfills.
Sen. Gil Cedillo, who carried the measure on the Senate floor, said it offered California an opportunity to emerge at the forefront of a global trend.
"If we don't solve this problem today, if we don't create a statewide standard, if we don't provide the leadership that is being called for, others will," the Los Angeles Democrat said.
A handful of California cities already ban single-use plastic bags, after San Francisco became the first to do so in 2007. Palo Alto, Malibu and Fairfax have since followed, while a ban approved in Manhattan Beach is tied up in litigation, said Matthew King, a spokesman for Heal the Bay, the Santa Monica-based nonprofit that sponsored AB1998.
The bill called for the ban to take effect in supermarkets and large retail stores in 2012. It would have applied to smaller stores in 2013.
Republicans and some Democrats opposed it, saying it would add an extra burden on consumers and businesses at a time when many already are struggling financially.
"If we pass this piece of legislation, we will be sending a message to the people of California that we care more about banning plastic bags than helping them put food on their table," said Sen. Mimi Walters, R-Lake Forest.
Sen. Lois Wolk, D-Davis, was one of half a dozen Democrats to vote against the bill. She said the state instead should offer incentives for reducing the use of plastic bags before imposing a statewide mandate.
http://news.findlaw.com/ap/f/1310/09-01-2010/20100901000501_02.html
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