Minimum Competence - Daily Legal News Podcast
Minimum Competence
Legal News for Weds 11/29 - AI Disclosure by Law Firms, SCOTUS Looks at SEC In-House Enforcement, Adobe Defends Figma Acquisition in EU and Meta to Appeal Privacy Ruling

Legal News for Weds 11/29 - AI Disclosure by Law Firms, SCOTUS Looks at SEC In-House Enforcement, Adobe Defends Figma Acquisition in EU and Meta to Appeal Privacy Ruling

Law firms contemplating how much AI disclosure is necessary, SCOTUS takes up SEC in-house enforcement, Adobe defends Figma acquisition in EU, and Meta says it will appeal privacy ruling.

A conceptual sketch of the Vietnam War.

On this day in legal history, November 29 marks a significant turning point during the Vietnam War era. In 1967, Robert S. McNamara, the U.S. Secretary of Defense, announced his resignation from the position to become president of the World Bank. This decision came amidst the escalating unpopularity of the Vietnam Conflict both in the United States and internationally.

McNamara, who had a rapid ascent from being an automotive executive, had become one of the most powerful Defense Secretaries in American history. His tenure, starting in 1961 under Presidents John F. Kennedy and Lyndon B. Johnson, was marked by a strong managerial style and significant involvement in foreign affairs, particularly the Vietnam War. Initially, McNamara was a staunch supporter of U.S. involvement in the war and played a key role in advising President Johnson to escalate the conflict in 1964. However, as the war progressed, he began to privately question U.S. policy in Vietnam and eventually advocated for a negotiated settlement.

In the summer of 1967, McNamara was instrumental in drafting the San Antonio formula, a peace proposal that sought to end U.S. bombing in North Vietnam and invited the North Vietnamese to engage in productive talks. However, this proposal was rejected by North Vietnam in October of the same year. Following this, in early November, McNamara submitted a memorandum to President Johnson, recommending that the U.S. freeze its troop levels, halt the bombing in the north, and shift the responsibility of the ground war to the South Vietnamese. These recommendations, however, were outright rejected by President Johnson.

McNamara’s resignation was a significant moment in the history of the Vietnam War. He had become a target for the ire of the U.S. anti-war movement due to his initial support for expanding the Vietnam War. His departure marked the end of his tenure as the longest-serving Secretary of Defense. He was succeeded by Johnson adviser Clark Clifford. McNamara's resignation highlighted the internal conflicts and changing views within the U.S. administration regarding the Vietnam War. It also underscored the increasing unpopularity and complexity of the conflict, which continued to shape U.S. foreign policy and legal considerations for years to come.

Law firms are grappling with whether to inform clients about their use of generative artificial intelligence (AI) in legal work. While AI promises to enhance efficiency and speed, it raises questions about disclosure practices. Cleary Gottlieb Steen & Hamilton, for instance, hasn't decided on a firm policy but emphasizes full disclosure in any AI use. This issue has sparked debate within the legal community, with differing opinions on whether and how AI use should be communicated to clients.

Former U.S. magistrate judge and New York State Bar Association AI task force member Ron Hedges questions the need for detailed disclosure of every AI research tool used but stresses the importance of transparency about data use and client awareness. Various state bar associations are also weighing in. The California Bar recently advised lawyers to consider AI disclosure, while the Florida Bar recommends obtaining informed consent for AI use that involves sharing confidential information.

AI disclosure is expected to feature in engagement letters, with law firms likely to follow client preferences. Ultimately, the consensus is to adhere to client instructions regarding AI use, but proactive disclosure policies run the gamut.

Law Firms Wrestle With How Much to Tell Clients About AI Use

On November 29, the U.S. Supreme Court is set to deliberate on the legality of the Securities and Exchange Commission's (SEC) in-house enforcement proceedings. This follows an appeal by President Biden's administration against a decision by the 5th U.S. Circuit Court of Appeals, which ruled in 2022 that the SEC’s internal tribunal system violates the U.S. Constitution's Seventh Amendment right to a jury trial and infringes on presidential and congressional powers.

The case centers on hedge fund manager George Jarkesy, who was fined and barred from the securities industry by the SEC for securities fraud. Critics argue that the SEC holds an unfair advantage in its administrative proceedings compared to federal court juries. The SEC conducted 270 in-house proceedings in the fiscal year ending September 30, exceeding the 231 cases in federal court.

The Supreme Court's ruling could significantly impact enforcement actions against misconduct in various sectors, potentially hampering the SEC and other agencies. The court has previously expressed skepticism towards broad federal regulatory powers, including in a 2018 ruling on the SEC's selection of in-house judges and a 2021 decision facilitating challenges to agency actions in federal court.

Jarkesy's challenge, backed by various conservative and business groups, reflects broader concerns about the regulatory reach of the federal "administrative state" in areas like energy, environment, and financial regulation. The SEC, after investigating Jarkesy and his firm Patriot28 LLC, found them guilty of several violations, including misrepresentation, and imposed significant financial penalties.

The 5th Circuit's decision criticized the SEC's discretion in choosing case venues and found that job protections for its administrative judges infringe on presidential powers. The Supreme Court's ruling, expected by the end of June, could also influence upcoming decisions on the constitutional conformity of the Consumer Financial Protection Bureau's funding structure and federal agencies' regulatory actions defense in court.

US Supreme Court weighs legality of SEC in-house enforcement

Adobe is set to defend its proposed $20 billion acquisition of Figma at a closed hearing on December 8, addressing EU antitrust concerns. The European Commission has previously warned that this acquisition could reduce competition in the global market for interactive product design software, where Figma is a significant player. The Commission is concerned that the deal might reinforce Adobe's dominance in vector and raster editing tools, eliminating Figma as a competitor. During the hearing, Adobe will have the opportunity to present its case to senior Commission officials, national antitrust watchdogs, as well as rivals and third parties. Adobe has expressed willingness to propose remedies to address regulatory issues. The EU antitrust enforcer is expected to make a decision on the deal by February 5. Additionally, the acquisition has raised concerns in Britain, with its competition agency indicating that the deal could negatively impact innovation in software used by the majority of UK digital designers.

Adobe to defend Figma deal at Dec. 8 EU hearing, sources say

Meta Platforms, the owner of WhatsApp, Instagram, and Facebook, plans to appeal a U.S. judge's ruling in its ongoing privacy dispute with the Federal Trade Commission (FTC). Judge Timothy Kelly of the U.S. District Court for the District of Columbia denied Meta's motion for the court to oversee the dispute, leading Meta to file an appeal to the U.S. Court of Appeals for the District of Columbia. The core of the dispute is whether an FTC judge or a district judge should decide on potentially tightening a 2019 consent decree, which primarily affects Meta's earnings from users under 18. This legal battle began when the FTC proposed modifying the 2019 settlement, under which Facebook (now Meta) had to pay $5 billion. The FTC aims to restrict Meta from profiting from data collected on users under 18 and impose broader limitations on its use of facial recognition technology. The FTC also accused Meta of misleading parents about the controls in its Messenger Kids app. Additionally, the FTC has sought to force Meta to divest Instagram and WhatsApp in a separate legal action.

Meta says it will appeal US judge's ruling in privacy fight with FTC | Reuters

The evolving U.S. energy policy, particularly with the focus on clean energy and infrastructure, is significantly increasing the demand for legal advisors experienced in these fields. This demand has led to notable partner hires among major law firms. 

The clean energy infrastructure legal market is rapidly expanding as governments and corporations prioritize sustainable energy solutions. This growth is driven by new regulations, incentives, and public demand for environmentally friendly energy sources, creating a plethora of opportunities for legal professionals specializing in this sector. Tax attorneys, contract lawyers, and regulatory specialists are increasingly sought after to navigate the complex legal landscape surrounding clean energy projects and investments.

US clean energy push keeps deal lawyers in demand | Reuters

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