Mark Cuban offers to pay SEC lawyers to speed up the investigation against him

http://abovethelaw.com/2010/10/mark-cuban-wants-to-pay-government-attorneys-to-get-off-their-ass/

by grellas • 16 years ago

59 43 16 years ago

staunch2• 16 years ago

I don't see why it wouldn't make sense. As long as it's handled in a careful way. You can pay extra to expedite all kinds of government services, why not SEC investigations?

vaksel• 16 years ago

expediting other gov't services = getting a few things stamped

can't work with SEC, since they have to do interviews etc

shib71• 16 years ago

That's still a problem that money can solve - hire more interviewers.

VengefulCynic• 16 years ago

According to the WSJ, a big part of the problem is navigating the voluminous paperwork. Adding additional clerks and lawyers to go through the whole file would probably expedite things quite a bit.

steveklabnik• 16 years ago

It could be construed as a bribe. If the money is coming from Cuban, they could be less likely to bring judgement against him.

It doesn't actually matter if this is true or not; perception is reality.

Construct• 16 years ago

It creates a conflict of interest for the attorneys. It sets a precedent that wealthy people can receive faster treatment from the SEC. Of course, the SEC tends to investigate people who have made large amounts of money through potentially illegal means, so this may not be an issue. However, it also provides less incentive for the SEC to move quickly on other cases. If the SEC can accept money in exchange for speeding up the process, they are now one step away from slowing down or drawing out the whole process as a means for extorting money.

mirkules• 16 years ago

"SEC tends to investigate people who have made large amounts of money through potentially illegal means"

I suspect it is illegal to accept illegally-obtained money. Therefore, if Mark was found guilty, the staff cannot be paid. Which also gives incentive to not find him guilty, resulting in a conflict of interest. IANAL, though.

staunch2• 16 years ago

Wealthy people can receive faster service for hundreds of government services.

http://www.google.com/#q=site%3Agov+expedite+fee

btilly3• 16 years ago

So how do you organize legal cases with over 66,000 pages of paperwork? I know that blowing cases up to this size is standard operating procedure, but I'm curious how it is handled in practice.

johngalt• 16 years ago

Usually you setup an organization and review routine, where lower level attorneys do the initial pass and escalate important documents. Let me tell you that 66,000 is nothing. Civil litigation can easily surpass 200k-300k documents. There are a lot of tools out there to help with this (concordance, IPro, Summation).

smalter3• 16 years ago

as a former lawyer who has handled large and small document reviews, i can say that both doc review platforms i used, concordance and caselogistix are horrendous and there is certainly an opportunity here for someone to do this right.

anigbrowl5• 16 years ago

This is tiny, I'm sorry to say! E-discovery requests now yield millions of documents as a matter of routine. Mrs Browl works for a company in this sector, though I'd rather not say which one (it isn't mentioned in this thread though, and yes, most software in this area is hideous).

This is the industry reference that everyone more or less agrees on: http://edrm.net/

Essentially one side can request any and all data concerning people/places/events in the case, though they have to specify (loosely) what they want and why, and what format they want it delivered in - some want native files, some PDFs, some TIFF images, some even want paper.

Typically attorneys of both the plaintiff and defendant work through the terms of a court order, then the defendant's lawyers do a big data collection with the aid of forensic specialists, possibly supervised by the plaintiff's attorneys. This can be as disruptive as an IRS audit, but across the entire company - engineering, sales, business development, finance, executive suite, you name it. Assume everything will be collected, and I do mean everything: the idea is to get a snapshot of all relevant data that was available on the date the court granted the motion. Many firms are now moving towards just archiving everything ahead of time to avoid disrupting operations. Also, that makes it much easier to manage as a rolling process for both sides later. As well as the original files, there's a giant database of all textual content (including transcriptions of audio/video) and case-specific legal metadata referencing the source material.

The plaintiff isn't entitled to see all of this stuff, but is entitled to know it has been preserved as evidence whose completeness can be verified legally, so everything's numbdered and tracked from here on. Then the defendant's lawyers go through looking for a) anything that could fall within the scope of the court order, b) what they think the Plaintiff is going to use against them in particular, and c) what the defendant is entitled to keep from them (eg the communications between the CEO and company counsel, or material which is just not relevant to the plaintiff's case).

They build (a) by doing wide-ranging database searches for each legal issue in the case, of which there can be many. Then a team of review attorneys looks at every document individually to see if it's responsive (relevant) to the issue and/or privileged (legally private), maybe adding a short description that will go into a list of evidence. In a big case like Google v. Oracle there can be over 100 attorneys doing this for months on end, factory style. They're usually contractors, not employees. 5 years ago this paid $60-75/hour or more; now it typically pays half that, and some companies pay as little as $15/hour. The job is so basic that only minimal qualifications are required, so now a lot of material is sent to India; because a bunch of law schools got certified in the years before the financial crisis and many more exaggerated hiring stats for their grads, there's a huge surplus of JDs and far fewer jobs; a lot of law firms went bust in the crisis, and a lot more complain schools graduate too many theorists unprepared to actually practice law; and most of these grads are $1-200k in non-dischargeable debt for their student loans. Hence debt-ridden attorneys being offered $15/hour.

Naturally they aren't happy, and everyone is waiting to see if (more like when) a class action lawsuit gets filed against the whole legal education establishment. In the meantime, most law schools still charge at least $30k/year in tuition.

After the review team has classified everything to legal standards, the defendant's attorneys - the ones earning real money this time - then go through double and triple checking what's responsive, redact any information that might be privileged, and approving each document required for production to the plaintiff, they're all given another set of numbers and converted to the agreed-upon output format. They also (typically) approve lots more documents which look responsive but aren't and are safe to give away, so as to bury the plaintiff's attorneys in as much irrelevant data as they possibly can - because the plaintiff's lawyers don't get access to this trove of metadata, just the bare document in digital or occasionally printed form.

Then the other side puts all those into a big database of their own, hires a smaller bunch of review attorneys, and does essentially the same thing. Often the defendant has launched a countersuit against them in the meantime, and requests discovery of the original plaintiff's documents...this process sometimes takes a few years before the trial proper starts.

There are huge profits to be had, but lots of competition; also most law firms are conservative about technology. So it's not a fast buck.

The_Fox• 16 years ago

So John Grisham wasn't joking in his novels. Ouch.

jacquesm• 16 years ago

I looks to me like we're reaching some kind of information singularity that will ground down the wheels of legislation any day now. After all, you can get a million documents with the click of a mouse to presumably support your case. But you'll still have to comb through them in order to get to the good stuff and automation will only help so much with that. In the end it boils down to human analysis.

kylelibra• 16 years ago

I'm not up on this case at all. Any other thoughts as to Cuban's motives here?

kscaldef• 16 years ago

Presumably, having a pending investigation hanging over his head is bad for business.

smalter3• 16 years ago

the procedural history of cuban's case is somewhat confusing. there are actually two ongoing suits right now.

one is the insider trading lawsuit. the sec's suit against cuban was dismissed by a district judge in dallas for failure to state a claim (even if all the facts accused were true, they still wouldn't be enough to support a conviction of cuban). however, the court of appeals overturned that on appeal and sent the case back to the district court to keep going on the case. that happened relatively recently. the basic issue is whether cuban agreed to keep confidential the information he received.

not long after the sec sued cuban, cuban sued the sec in district court in washington dc based on the freedom of information act (foia). this is the case being discussed in the article. he wants documents the sec used in its investigation of him and other documents. presumably cuban would get ahold of the relevant documents as part of the discovery process in the first lawsuit, but perhaps cuban sought some pr benefits of looking like he was going on the offensive and perhaps he thought he could learn more about what the sec had on him to prepare for the first litigation. the gist is that the sec acted in bad faith by withholding relevant documents from cuban.

there was some discussion about whether the sec was stalling in the hopes that they'd get an exemption to foia provided by congress, but i believe obama repealed that provision in early october. cuban has been pretty brash this whole time, and as a matter of law, it's clearly not an open and shut case. the bravado i find somewhat embarrassing because it's pure grandstanding -- no court would ever grant his request (although judge walton is known as a bit of a renegade). as a matter of litigation strategy, i don't see much benefit to what cuban is doing here. the sec isn't going to back down and has been quite dogged about pursuing the case against cuban. i don't see any advantage in terms of litigation strategy. seems like pure pr.

semipermeable• 16 years ago

Maybe the SEC should counter by saying that they will take his money to make their entire operation faster -- his case will be processed faster, along with everyone elses!

iwr• 16 years ago

The ammount of paperwork is astounding. Make simpler, better rules instead of just more regulations!

mahmud• 16 years ago

Good point, make that into a 55k page recommendation and attach it to a morality bill, then congress will look at it.

philwelch• 16 years ago

If by "look at it" you mean "ignore it and vote based upon the title of the bill, its nominal purpose, which party proposed the bill, and how the party whips say to vote on it"...then yes, Congress will "look at it".

_delirium• 16 years ago

A lot of the paperwork in these kinds of cases is the volume of evidence rather than the complexity of the regulations. Even if the regulations were written extremely simply, it would still be expensive / time-consuming to sift through 100k+ of a company's documents looking for evidence.

anigbrowl5• 16 years ago

Define 'better.' Now try to get everyone else to agree. Good luck!

Seriously, the federal government has actually been trying to improve this since the 90s: http://www.plainlanguage.gov/

Unfortunately, Congress doesn't have to follow these guidelines.

corin_• 16 years ago

He can't expect it to actually happen, so presumably his aim is to give the impression that he's confident of winning the case (and, I hope, to create a little entertainment - I sure found it bloody hilarious.)

aguynamedben• 16 years ago

Keep in mind that this is the same guy that responds to NBA fines by donating a matching amount to charity. Also, after getting fined for claiming a referee "wasn't fit to run a Dairy Queen", he worked at a Dairy Queen for a day.

guynamedloren• 16 years ago

Mark Cuban is my hero. This guy has balls and he's not afraid to use them.

pasbesoin• 16 years ago

If Cuban can draw some attention to the SEC's chronic, deliberate under-funding, more power to him.

Congress has for years siphoned off the majority of the fees the SEC collects. They raise enough revenue to do significantly more than they have (whether, politically, they would ever be allowed/enabled/encouraged to, is another matter). But Washington gathers it up and wastes (err, spends) it elsewhere. [1]

A few years ago, there was a lot of hoopla and excitement over the SEC's "receiving" additional funding for 100 more attorneys to prosecute investigations and regulatory proceedings (100, IIRC). Last I checked (earlier this year), SEC management was still "optimistic" that that additional funding would soon be showing up. (My resulting impression after that conversation was, 'yeah, RSN (Real Soon Now)'.)

[1] This is off the top of my head (or out of my *ss), but I seem to recall a few years ago seeing SEC fee and whatnot revenues quoted as being in the $600 million range, while their annual budget was set at around $100 - $110 million. Maybe someone else here will have better knowledge of this.

Mark Cuban offers to pay SEC lawyers to speed up the investigation against him

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