Minimum Competence - Daily Legal News Podcast
Minimum Competence
Legal News for Mon 2/12 - Legal Battles in Corporate Boards, Musk SEC Testimony, Law Firm Profits Up and "No Labels" Political Initiative

Legal News for Mon 2/12 - Legal Battles in Corporate Boards, Musk SEC Testimony, Law Firm Profits Up and "No Labels" Political Initiative

Legal battles in corporate boards, Elon Musk's SEC testimony, law firms' profit rebound, and Dan Webb's No Labels political initiative.

A donkey-elephant.

This Day in Legal History: Slobodan Milosevic Trial Begins

On this day in legal history, the trial of Slobodan Milosevic, a pivotal figure in the Balkan civil wars of the 1990s, commenced on February 12, 2002, at The Hague, The Netherlands. Held at the International Criminal Tribunal for the former Yugoslavia (ICTY), this landmark case marked a significant moment in international law. Milosevic, who once held the presidency of Yugoslavia, faced charges that were both grave and far-reaching. Indicted on sixty-six counts, the charges against him included war crimes, genocide, and crimes against humanity, reflecting the severe impact of the conflicts that tore through the Balkans. The trial itself became a focal point for global attention, symbolizing the international community's commitment to holding leaders accountable for their actions. However, the proceedings were abruptly halted by the untimely death of Milosevic due to a heart attack, leaving the case without a formal verdict. Despite its inconclusive end, the trial of Slobodan Milosevic remains a cornerstone in the pursuit of justice for victims of the Balkan wars and underscores the complexities of applying international law in cases of mass atrocities.

Corporate boards are increasingly facing legal battles with activist investors due to the implementation of stringent advance-notice bylaws, designed to complicate the nomination of rival board members. These legal disputes, involving companies like Halliburton Co. and Peloton Interactive Inc., question the extent to which boards can enforce these bylaws to exclude activist nominees from shareholder ballots. The bylaws, seen as a reaction to regulatory changes and a Delaware Supreme Court ruling that lessened scrutiny of potentially disenfranchising measures, have been criticized for their potential to be "weaponized" against dissidents. Recent court cases, including a notable decision involving AIM Immunotech Inc., have resulted in mixed rulings, indicating a complex legal landscape ahead. These bylaws are challenged for various reasons, from their use to uncover conflicts of interest to allegations of being used to unfairly disqualify nominees. The legal community is divided on whether overreaching provisions should invalidate the entire set of bylaws or just be selectively struck down. The ongoing litigation reflects a broader struggle over the balance of power between corporate boards and shareholders, hinting at future legal developments that may redefine the rules of engagement for corporate governance.

Activist Investors Confront ‘Weaponized’ Board Nomination Bylaws

A U.S. judge has mandated that Elon Musk, CEO of Tesla and SpaceX and owner of the social media platform X (formerly Twitter), testify in the Securities and Exchange Commission's (SEC) investigation into his acquisition of Twitter for $44 billion. This order, issued by U.S. Magistrate Judge Laurel Beeler, follows Musk's refusal to attend a scheduled interview in September as part of the SEC's examination into his compliance with legal requirements during the takeover, specifically concerning the filings related to his Twitter stock purchases and the accuracy of his statements about the deal. Musk contested the SEC's request, claiming harassment and arguing that he had already been interviewed twice. However, Judge Beeler dismissed Musk's objections, affirming the SEC's right to subpoena him for information pertinent to their investigation. This legal development is part of a broader history of friction between Musk and the SEC, dating back to a 2018 lawsuit over Musk's tweets about potentially taking Tesla private.

US judge orders Elon Musk to testify in SEC's Twitter probe | Reuters

In late 2023, law firms experienced a notable financial turnaround, buoyed by significant rate growth and an uptick in demand for countercyclical services, which thrive during economic downturns. According to the Thomson Reuters Law Firm Financial Index, which monitors key financial indicators across 173 large and midsize firms, there was a year-over-year increase in profits during the fourth quarter, contrasting with the declines observed in 2022. Specifically, the Am Law 100 firms saw a 6% rise in profits-per-equity partner, while Am Law 200 firms enjoyed a 2.5% increase, and midsize firms witnessed a marginal 0.3% uptick in profitability.

This recovery, however, did not reach the double-digit profit growth rates of 2020 and 2021, marking a period of recalibration for the industry. Law firms demonstrated resilience by aggressively adjusting their rates and managing expenses, particularly those related to associate compensation. The overall demand for law firm services rose nearly 2%, driven by strong performance in litigation and bankruptcy sectors, which saw increases of 3% and over 6%, respectively. Labor and employment demand also went up by nearly 3%.

However, lawyer productivity is on a downward trend, with average billing hours per month dropping to 115 in the fourth quarter of 2023, the lowest since at least 2005. This decline is attributed to the impact of technology and the use of alternative fee arrangements, which decouple hours worked from firm profitability. The industry faces challenges in boosting productivity amid stable demand and headcount, setting the stage for a volatile 2024 with continued staffing and technological risks.

Law firms' profits rebounded in late 2023 amid robust rate growth | Reuters

Dan Webb, a prominent lawyer from Winston & Strawn who has defended Fox News and Boeing Co., is actively supporting the centrist political group No Labels in its effort to launch a third-party "unity" ticket that combines a Republican and a Democrat for the 2024 election. This initiative is driven by a desire to offer Americans an alternative to Joe Biden and Donald Trump, amidst criticism that it could inadvertently benefit Trump. Webb, who identifies as a moderate Republican and has a long history of involvement in politics, including serving as US attorney for Illinois' Northern District appointed by Ronald Reagan, is volunteering for No Labels. He has participated in strategy discussions and is helping to vet candidates for a potential nominating convention. Despite the potential for political backlash and amidst a broader context where law firms are wary of political entanglements, Webb is committed to the cause, citing the unpopularity of both Biden and Trump and the need for a new choice in leadership. No Labels has made progress in getting on the presidential ballot in 15 states, with decisions about a third-party candidacy to be made after Super Tuesday in March. However, the group's efforts have attracted lawsuits and criticism, with accusations of being a threat to democracy and engaging in a "bait and switch" with donors. Webb’s involvement exemplifies his lifelong interest in politics and represents a significant move in the current polarized political landscape.

Trump, Biden Alternative Urged by Lawyer for Fox News and Boeing

Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at