Minimum Competence - Daily Legal News Podcast
Minimum Competence
Tues 7/25 - Lawyers on Boards, X Trademarked by Many, Quinn Emanuel Data Breach, US Sues TX Over Drowning Border, Column Tuesday on 501c3s

Tues 7/25 - Lawyers on Boards, X Trademarked by Many, Quinn Emanuel Data Breach, US Sues TX Over Drowning Border, Column Tuesday on 501c3s

More lawyers seeking board seats than ever, “X” trademark claimed by Musk also held by hundreds, Quinn Emanuel data breach, US sues TX over dangerous water border, Column Tuesday on 501c3 reform.

In this day in history, July 25th, the National Security Act of 1947 was passed. The act linked the military and national security organizations and set the tone for the relationship between the two that persists to this day. 

The National Security Act of 1947, a cornerstone in the reorganization of the United States' foreign policy and military institutions, led to the establishment of significant bodies such as the National Security Council (NSC) and the Central Intelligence Agency (CIA). The NSC was formed to discuss long-term and immediate national security issues, composed of high-ranking officials including the President, Vice President, Secretary of State, Secretary of Defense, and Director of the CIA. Over time, the significance, autonomy, and influence of the NSC have varied depending on the presidential administration. For instance, Eisenhower used it for key foreign policy decisions, while Nixon and Kissinger transformed it into an active negotiation and decision-implementing organization.

The act also birthed the CIA, which became the primary civilian intelligence-gathering entity, evolving from World War II's Office of Strategic Services and other small post-war intelligence organizations. Following this, the Defense Intelligence Agency emerged as the main military intelligence body. In a major reshuffling, the act merged the War Department and Navy Department into a unified Department of Defense, introducing the Department of the Air Force and placing all under the Secretary of Defense. However, individual service secretaries were retained for each military branch. The act was later amended in 1949, granting the Secretary of Defense greater control over individual services and their respective secretaries.

As the complexity of compliance and regulatory requirements increases, public companies are increasingly seeking lawyers for their boards. This trend, dubbed the "golden age" for lawyers seeking board seats, arises due to the value of legal expertise in risk analysis and communication in a rapidly evolving regulatory environment. The introduction of lawyers to boardrooms is viewed as a significant asset, given the potential business opportunities and less concern about conflicts impacting current operations. Examples include former Homeland Security Department Chief Jeh Johnson, who serves on several corporate boards while also working as a partner at a law firm.

The demand for legal expertise has been driven by market-changing events such as the pandemic, the rise of artificial intelligence, cybersecurity challenges, geopolitical concerns, and debates over environmental, social, and governance issues. Approximately 1,500 board seats open each year, offering lucrative compensation packages. However, the involvement of lawyers in corporate boards also brings potential conflicts of interest that require careful management, especially when companies have ongoing relationships with the lawyers' firms.

Moreover, including lawyers as potential candidates for director roles has also assisted companies in responding to calls for greater boardroom diversity in terms of age, ethnicity, gender, and professional perspective. Despite the benefits, it is generally accepted that a lawyer can hold a maximum of three directorships in public companies due to potential conflict of interest. Overall, this shift towards legal expertise in the boardroom represents a significant transformation from previous perspectives, which viewed lawyers as having a too narrow or risk-oriented focus.

It’s the ‘Golden Age’ for Lawyers Seeking Corporate Board Seats

Elon Musk's recent decision to rename Twitter as X could face significant legal complications due to pre-existing trademarks owned by companies such as Meta and Microsoft. The letter X is widely used and cited in trademarks across various industries, making it prone to legal challenges. Josh Gerben, a trademark attorney, has identified almost 900 active U.S. trademark registrations that include the letter X. Trademark owners have the right to claim infringement if another brand's usage could lead to consumer confusion. Microsoft has held a trademark for the letter X in relation to its Xbox communication since 2003, while Meta owns a trademark for a blue and white letter X for software and social media usage. However, these companies would likely only pursue legal action if they believe Twitter's use of X threatens their own brand equity. If Musk succeeds in rebranding Twitter, others could still potentially claim 'X' for their own uses.

Meta, Microsoft, hundreds more own trademarks to new Twitter name | Reuters

U.S. law firm Quinn Emanuel Urquhart & Sullivan disclosed that one of its electronic discovery vendors fell victim to a cyber attack last year, potentially exposing client information. The firm clarified that the attack affected only "a small portion of our clients and matters" and did not impact its own network infrastructure. Fewer than 2,000 individuals were notified about the incident. The data breach occurred in a data center's network used by the firm for document management. Despite being unclear about the specifics of the personal data impacted, the firm has engaged cyber and forensic experts to better understand the extent of the breach and is collaborating with law enforcement authorities to prevent further breaches. This breach is another example of the cybersecurity challenges faced by law firms and other entities managing sensitive and confidential data.

Quinn Emanuel reports cyber attack involving 'limited' client data | Reuters

The U.S. Justice Department has filed a lawsuit against Texas over floating barriers installed by the state in the Rio Grande river to prevent migrants from Mexico. The barriers were installed as part of Texas Republican Governor Greg Abbott's Operation Lone Star initiative. They work as large incumbrances in the water, difficult to climb over and dangerous to swim under. If that sounds inhumane, as it is implicitly threatening migrants with death if they choose to try to make a crossing, that’s because it is. 

The federal government alleges that Texas violated federal law by not obtaining necessary federal authorization to install the barrier, claiming it poses risks to navigation, public safety, and humanitarian concerns. The lawsuit, filed in the U.S. District Court in the Western District of Texas, seeks to remove all obstructions, including the barrier and its related infrastructure. In response to the lawsuit, Governor Abbott accused the Biden administration of failing to enforce immigration laws. Abbott pledged to take the case to the Supreme Court if necessary. The initiative has also drawn criticism from Mexico, which claims the barrier violates a water treaty and may encroach on Mexican territory.

US sues Texas over floating border barriers | Reuters

In this week's column I urge the IRS to enforce the limits of 501(c)(3) status, which prohibits charities and religious organizations from engaging in political campaign activity. I point to the recent example of a Las Vegas pastor who hosted a campaign rally for Donald Trump at his church. There is increasing cause for concern over the blurred line between advocacy and political involvement, as more non-profit organizations, including churches and policy think tanks, typically right wing churches and policy think tanks, engage in contentious political issues. 

The policy rationale behind not taxing religious organizations is the avoidance of government entanglement in religion. Religious organizations are categorized with charitable organizations stemming from the perception that they both provide secular benefits to their communities. The exemption from tax, then, is a kind of end-around for the government to encourage their works without overt sponsorship.

It’s worth noting there’s one point of separation between charitable organizations and some religious organizations. Religious organizations that are deemed “churches” get an additional benefit that even charities don’t enjoy: They don’t need to file a yearly information return, known as Form 990. For instance, the Muslim Public Affairs Council is a religious organization, tax-exempt under 501(c)(3), but it’s not designated as a church. It must file yearly financial reports detailing revenue, assets, expenses, and liabilities, among other things.

Church status removes the public reporting requirement and obfuscates what sorts of revenue the organization is raising and where that revenue is being spent. In conjunction with unchecked involvement in the political process, this provides a uniquely dangerous inroad for dark money into politics. In sum, the “church” designation is particularly vulnerable to this kind of abuse, but the IRS needs to revamp its approach to all 501(c)(3) entities and crack down on violations of the restrictions on political intervention. 

IRS Must Enforce 501(c)(3) Limits for Religious Groups, Charities

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