Daily Archives: April 12, 2006

Houston attorney indicted

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handcuffs2.jpgEllen Podgor lets us know that Michael J. Wing, an attorney who lives in Tyler but whose practice is apparently mostly in Houston, has been indicted in the Eastern District of Texas for allegedly running a Ponzi scheme promoting investments in phony companies.
Wing faces up to 20 years in prison and a fine of up to $250,000 for each of the eighteen counts alleged in the indictment, and the government is also seeking the forfeiture of $3.575 million traceable to the offenses alleged in the indictment.

Defending Mr. Skilling

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Skilling12.jpgAs I look forward to sitting in for a couple of hours this afternoon during the direct examination of former Enron CEO Jeff Skilling in Houston federal court, attorney Paul Fisher and former Amoco economist Jim Johnston provide this interesting Heartland Institute article (hat tip Professor Bainbridge) that defends Skilling and Enron, and hits on many of the same points that I have made over the past two years (here, here, here, here, and here, to cite just a few) about the misguided nature of the Enron-related prosecutions. Fisher and Johnston’s thoughtful piece concludes with the following observation:

The Enron story is reminiscent of an earlier political attack on an energy company during the Great Depression of the 1930s. New York Governor Franklin D. Roosevelt was making a political issue out of Samuel Insull, the CEO of Commonwealth Edison in Chicago. The matter helped get FDR elected president in 1932 but forced the ComEd holding company into bankruptcy, even though Insull and his associates were subsequently acquitted of all charges.
We hope the Enron jury will show the same wisdom as the jury in the Samuel Insull case and reject the politically inspired attack on energy risk management. Maybe in time efficient risk management will return to the natural gas and electricity industries. Energy consumers will be the prime beneficiaries.

Debating contingent fees

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contingent fees.jpgDon’t miss this entertaining featured discussion over at PointofLaw.com in which PofL’s Jim Copland and Alex Tabarrok of Marginal Revolution fame debate contingent legal fees. Jim is the director of the Center for Legal Policy at the Manhattan Institute and is a leading advocate for reform of Americaís civil justice system, while Alex is a member of George Mason University’s up-and-coming libertarian-oriented economics department. An earlier post on Alex’s research into contingent fees is here.
Although Jim does not advocate a prohibition on all contingency fee arrangements, he makes the following case for regulation:

[U]nder a contingency fee arrangement, plaintiffs’ lawyers accept not only cases that are likely to succeed but long-shot cases with high potential damage payouts. A risk-neutral plaintiffs’ lawyer with a diversified portfolio of cases is just as happy to take a case with a 1 percent chance of paying out $20 million as a case with an 80 percent chance of paying out $250,000.
But as a society, do we really want to be flooded with high-dollar, low-probability claims? The contingency fee creates a very real incentive to play the “lawsuit lottery”óa lottery with positive expected returns for the plaintiff and client, but substantial social costs. At a very basic level, the contingency cap, while a crude mechanism, ameliorates this problem. If a lawyer’s take in a case goes downó-especially for high-dollar cases-óthe incentive to take shoot-the-moon cases falls proportionately.

To which Alex replies:

If a lawyer and her client want to contract in Lira what business is it of the state to interfere? If the lawyer and client agree on an incentive plan, why should that be regulated? Do we want to regulate contingent fees in other areas? A money-back guarantee, for example, is a contingent fee – you pay only if the product is a winner. A tip is a contingent fee – you pay only if the service was good.
True, not all contracts should be respected – we don’t enforce contracts against the public interest – nevertheless, my spider-sense starts to tingle whenever reformers of any stripe try to abrogate private contracting.

Walter Olson also has more.

How Gates works

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Gates.jpgIn discussing the digital tools that he uses daily, Microsoft chairman Bill Gates in this CNN Money article provides an interesting glimpse into how he organizes his workday, particularly with regard to two constant problems — email and paper:

I get about 100 e-mails a day. We apply filtering to keep it to that levelóe-mail comes straight to me from anyone I’ve ever corresponded with, . . .and anyone I know. And I always see a write-up from my assistant of any other e-mail, from companies that aren’t on my permission list or individuals I don’t know. That way I know what people are praising us for, what they are complaining about, and what they are asking.
We’re at the point now where the challenge isn’t how to communicate effectively with e-mail, it’s ensuring that you spend your time on the e-mail that matters most. I use tools like “in-box rules” and search folders to mark and group messages based on their content and importance.

As you might expect, paper is not a big part of Gates’ experience:

Paper is no longer a big part of my day. I get 90% of my news online, and when I go to a meeting and want to jot things down, I bring my Tablet PC. It’s fully synchronized with my office machine so I have all the files I need. It also has a note-taking piece of software called OneNote, so all my notes are in digital form.

And his one low-tech piece of office equipment:

The one low-tech piece of equipment still in my office is my whiteboard. I always have nice color pens, and it’s great for brainstorming when I’m with other people, and even sometimes by myself.

But there is one overused low-tech aspect of management that even Gates cannot avoid:

Days are often filled with meetings. It’s a nice luxury to get some time to go write up my thoughts or follow up on meetings during the day. But sometimes that doesn’t happen.

Baseball salaries for 2006

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baseball swing.gifThis Maury Brown article over at Hardball Times provides a good analysis of Major League Baseball salaries for the 2006 season and, as usual, the results are interesting.
The league average team payroll for 2006 is $77,556,890, up $4,708,716 from 2005’s $72,848,173 league average. The Stros had a $15,772,503 increase from 2005 (a 20.54% change) to $92,551,503, which is eighth among MLB teams. 19 of the 30 MLB clubs are spending more money this season on player salaries than last and only the Marlins and the Rockies are spending considerably less among the clubs that are spending less on salaries this season than they did last season.
Although their payroll is down a bit, the Yankees at about $195 million are still spending almost $85 million more than their nearest competitor (the Red Sox) and are only $7 million short of the entire combined payrolls of the Marlins, Devil Rays, and Rockies. The median salary ó the point at which an equal amount of players fall above and below ó rose to a record high of $1 million from $850,000 in 2005, and the median salary on the Stros is $940,000.