Business Reality And The Law: Equal Issues For Experienced Counsel

Wednesday, February 22, 2012 - 16:58

The Editor interviews Eric Neyman, Partner, McCarter & English, LLP.

Editor: Please tell our readers about your background and experience.

Neyman: I attended Cornell University for undergraduate studies, then Boston University School of Law. I started my professional career in 1994 as an ADA at the Berkshire County District Attorney’s office, handling appeals, arguing every type of motion and learning from the some of the best attorneys in Massachusetts.

I then moved to the gang and appellate units at the Suffolk County DA’s office in Boston. Working in the gang unit revealed some of the realities they don’t teach in law school, such as handling belligerent witnesses and understanding the real perils of inner-city street dynamics. Prosecuting these complex cases with uncooperative and terrified victims provided an invaluable experience in learning to prove cases through circumstantial evidence. On the appellate side, I handled numerous cases, including several first-degree murder appeals before the Massachusetts Supreme Judicial Court.

In 1999, I joined the Executive Office of Public Safety and served as deputy general counsel -- an in-house job that included handling discrimination cases before the Massachusetts Commission Against Discrimination, drafting legislation and advising public safety agencies, while still allowing me to stay connected with criminal law. From there, I served as a deputy counsel in the governor’s office under Governor A. Paul Cellucci, which involved a myriad of high-pressure responsibilities, including reviewing and making recommendations on hundreds of bills, and assisting the chief legal counsel with executive–level due diligence and investigative matters.  

Editor: What insights have you gained from your experience representing government entities?

Neyman: In the governor’s and public safety offices, I handled various investigative issues. I am reminded of a quote from Harper Lee’s To Kill A Mockingbird: “You never really understand a person until you consider things from his point of view – until you climb into his skin and walk around in it.” I took that lesson from the public sector into the private sector.

When representing a client before the AG or a prosecutor, I always refer back to my own experience “in their shoes” in order to identify the essential issues right away. How can I give them what they need, while still representing my client’s interests? Naturally, this experience is an asset when handling internal investigations or representing clients during government investigations, and I use this same analysis for litigation matters. In today’s economic environment, for example, most prosecutors’ offices are understaffed and face overwhelming workloads; thus, a candid initial conversation really can benefit both sides.

In some instances, a prosecutor may have made assumptions and consider it a foregone conclusion that the company did something wrong – that someone must go to jail and/or the company must pay a big fine. Learning even bad news up front saves a lot of time because, at least, you know where you stand and can now focus on preparing to fight it. The real advantage for me is the ability to speak the prosecutor’s language.

Editor: What do you see on the legislative or regulatory agenda that may affect compliance programs and trigger investigations?

Neyman: From a global perspective, the U.S. economy is in its worst shape since the Depression and it hasn’t been getting better. We have an election coming up, and, while I always questioned politicians who proclaimed that theirs is the “most important election of our lifetime,” it doesn’t require any political affiliation to conclude that this year’s election will have lasting consequences.

One candidate will likely support increased regulation and its requisite enforcement, which can help to ensure fair play among businesses. However, there are also consequences because increased regulation makes it tougher to do business and to achieve strategic corporate goals, and it requires a lot more lawyering. The other candidate likely will support a free market with less regulation, which also has consequences when you consider all the recent issues with securities fraud and a lack of oversight. The Madoff scandal, for instance, raises important questions about how a person controlling billions of dollars can escape through any regulatory framework.

At a state level, Massachusetts just legalized casino gambling and is forming a gaming commission – a massive government structure – to oversee a multi-billion-dollar enterprise, which certainly will provide tax revenues for the Commonwealth but also will present issues and concerns that go hand-in-hand with gambling. The creation of a state wide bureaucracy to regulate gaming is a critical development, involving all aspects of the law. Presently, casino companies are trying to get their footprint in Massachusetts, which triggers a host of issues, including procurement, real estate, construction, corporate issues and criminal law enforcement.

Editor: Real-life experience can make a significant difference. How does your prior experience working with a wide variety of clients and on a broad array of legal issues enhance your practice as a whole?

Neyman: First, I am very fortunate to work at a firm with a wealth of diverse experience and talent because no one can be an expert in everything. Having the people and resources to work on sophisticated business disputes in all legal areas and jurisdictions is a great asset and a privilege. We have that here.

Any in-house attorney understands that the job requires wearing many different hats, learning quickly and knowing when to delegate, and those skills certainly have translated from my own experience over to private practice. The most compelling lesson, and a recurring theme from working in the DA's office, is that re-presenting even the exact same case, only in a different courtroom, can bring unpredictable results. 

For example, we defended a client and prevailed on a motion to dismiss a class action claim, only to subsequently receive virtually the same demand letter -- now filed in a different county. Because certain technicalities precluded invoking the doctrines of res judicata or collateral estoppel, we had to argue again. We presented our prior successful dismissal of the class action to the “motion judge,” and we posited that the second claim against our client amounted to forum shopping. The judge, however, denied the second motion, which reflects that even successful strategies rely upon uncontrollable circumstances – and it is always a good idea to consider various options and formulate backup plans. In this case, we did have a backup plan and were able to craft a very favorable settlement for our client as a result.

Editor: As a former trial and appellate prosecutor, discuss some recent developments in criminal enforcement in the corporate arena.

Neyman: There certainly is a difficult corporate environment today, though not as bad as it was. Consider that, between 2001 and 2008, the Enron scandal occurred, and there was a rush of cases under the Private Securities Litigation Reform Act. We saw a glut of massive litigation, stemming from the dot-com boom and from companies needing to justify their product with revenue, sometimes resorting to manufacturing this justification. At the same time, a creative plaintiffs’ bar seized upon prevailing emotions and was very successful at attacking companies that, perhaps admittedly, didn’t have the best practices but still were nothing like Enron. Their practices might have been acceptable up until that time and simply hadn’t caught up in the wake of Enron.

Today’s environment has improved, partly because of being tightened up with changes in the law but also because corporate clients are more sensitive to accounting practices and observance of corporate formalities. We are in a heavy regulatory environment, and clients want to avoid having to explain their conduct before the SEC or any regulatory board – such actions are costly, cause business interruption and carry the risk of negative publicity. In today’s media environment, one innocuous statement can create major issues and have a detrimental impact on business.

Editor: We understand you contributed an article to the Massachusetts Law Review discussing the novel 2 in the Hat, a Boston-based crime novel that captures the conflict between the “law as written” and the reality of criminal investigations. Compare your own experience with some of the issues raised in the novel.

Neyman: The author, Raffi Yessayan, was my colleague in the gang unit at the Suffolk County District Attorney’s Office. His book spins some of these experiences into fiction and, in the process, presents some of the ironies of reality versus “the law,” which caught my attention particularly. One example involves a great scene in which a long-time homicide detective is sitting in a restaurant and looking out the window. As he is deep in thought, trying to solve a murder case, numerous other crimes are taking place before his eyes: cars speeding, running red lights and nearly causing accidents. In my own experience, this irony very much reflects the real world.

Consider, for instance, how this kind of conflict can present itself in breach-of-contract cases, which often arise from a one party’s baseline assumption that the breach definitely occurred. Under the letter of the law, it sounds simple: the defendant breached the contract, so they must pay, and if they refuse, you can sue them . . . and then they will pay. However, we all know it’s not that easy.

In reality, other considerations are involved in deciding whether to proceed with a breach-of-contract claim. First, will there be a counter claim, or has my company also done something wrong in this relationship? Second, will the potential recovery be worth the legal fees and overall cost? Third, will bringing a lawsuit generate negative publicity? A large case might grab enough media attention to affect a company’s stock performance or disrupt business operations. Corporations have to assess these potential consequences before taking action on even the most clear-cut contractual matter.

The company’s fiduciary obligation requires a sober assessment of the availability and allocation of resources, even in cases involving obvious breach of contract. There are provisions in the Unfair and Deceptive Business Practices Statute, chapter 93A, that may help, as it provides the possibility of attorneys’ fees to the prevailing party. Occasionally, the contract itself may include a provision for attorneys’ fees to the prevailing party; however, in my experience, courts are reticent to impose such fees. Therefore, clients need to know at the outset that contractual provisions provide no guarantee, and courts usually favor the default rule that litigants pay their own legal fees.

Thus, conflict can arise between a written contract – “the law,” so to speak – and the reality of the courthouse, the danger of unintended consequences and the stark economic analysis involved in any decision to defend a company’s legitimate rights.

Editor: Do you have any final thoughts for our readers?

Neyman: Effective counsel always draws upon professional experience, and my practice is no exception. Having worked in the trenches of criminal law, in an in-house capacity and for government entities provides a unique skill set and a pragmatic point of view. The realities of doing business or managing investigations may prompt some clients to require a scorched-earth approach to our work – leaving no stone unturned – while other clients must take a surgical approach. Experience on both sides of the courtroom also helps when facing issues outside the technical scope of a matter, such as political imperatives in the case of prosecutors, which may affect an adversary’s strategy. Ultimately, the legal answer does not always optimize a client’s goals or best interests; therefore, understanding the players on both sides of an issue can help draw a matter away from litigation and toward business solutions. Such proactive risk management can help deliver better results.

Please email the interviewee at eneyman@mccarter.com with questions about this interview.