Today's General Counsel, April/May 2024

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4 Editor’s Desk

8 What General Counsel Should Know About Kiosk Fraud Prevention

By Bobby Williams and Phil Ogan

In today’s digital landscape, where credit cards are swiped virtually everywhere, bad actors can exploit sensitive information.

14 How Legal Departments Can Conduct Effective Cyber Vulnerability Testing

By Beth Burgin Waller and Patrick J. Austin

In-house legal departments play an integral role in cybercrime prevention, and testing is a prime place for them to take the lead.

COMPLIANCE

11 How Aspiring GCs Are Mapping A Career Path to General Counsel

By Steve Bell

Learn how aspiring GCs are mapping a career path to general counsel.

COLUMN/THE ANTITRUST LITIGATOR 22 It’s Time to End Baseball’s Antitrust Exemption

By Jeffery M. Cross Competition often results in improvements to the minor league baseball experience.

16 Examining New Workplace Accommodation Laws on Pregnancy, Religion, and Disability

By Lara C. de Leon and Jessica A. Maynard

Employers should carefully review and update their policies, procedures, forms, and training to ensure compliance.

LEGAL OPERATIONS

18 Boeing’s PR Debacle Delivers A Lesson in Crisis Management By Seth Darmstadter

Proactive planning, legal counsel, and teamwork are crucial for preserving a company’s reputation.

20 Breaking the Groundhog Day Cycle: A Fresh Approach to Contracts

By Gabriel Buigas

End the repetitive challenges of contract lifecycle management with tailored resources and expert support through Contracts-as-a-Service (CAS).

LITIGATION

24 AI and Copyright: Preparing Your Business for the Next Wave of Litigation

By Susan Jackson

Copyright infringement will be the next big wave of intellectual property (IP) litigation over the coming years.

26 “Litigate or Arbitrate” Is a False Dichotomy

By Shane Mulrooney

GCs can either litigate or arbitrate depending on the situation, but they must beware of arbitration fallacies.

EDITOR’S DESK

Spring is a time of renewal and rebirth. It’s an opportune moment for reflecting on one’s career path.

If you are working at an in-house legal department and attempting to make your way to the general counsel seat, our cover story can be part of your playbook. “The career path to general counsel can be bewildering for in-house legal professionals who aspire to achieve this coveted role,” Steve Bell of BarkerGilmore writes about the firm’s 2024 Aspiring General Counsel Report. “There is no one singular route to GC, and many individuals are actively pursuing the position in unique ways.”

The legal executive search firm analyzed data from senior counsel and managing counsel nationwide who hope to achieve the GC role. The survey also includes insights about lawyers who have already been identified as GC successors. One key takeaway: the value of executive coaching. In-house counsel who have received executive coaching (35%) are more likely to be identified as a successor than their counterparts without executive coaching (26%).

Once you have identified the next steps you should be taking at work to secure your big promotion, you might want to switch gears and think a little about baseball season. Jeffery Cross, who pens The Antitrust Litigator column for us, makes a case for lifting Major League Baseball’s antitrust exemption as Congress considers acting on the matter.

Cross was part of a legal team that filed an amicus brief in the Supreme Court involving MLB’s efforts to restructure its relationship with minor league teams. We are happy to have him share his perspective and experience with our readers on this topic as baseball season kicks into high gear.

Other thought leadership articles in this issue delve into topics such as new workplace accommodation laws, Boeing’s pr debacle, cyber vulnerability testing and the benefits of of alternative dispute resolution (ADR).

We strive to deliver an engaging mix of stories in each issue. But it’s important to remember that this edition of the magazine represents a relatively small selection of the content we are publishing every day on our site. Be sure to check our site regularly and follow us on LinkedIn and X for the latest updates.

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CONTRIBUTING EDITORS AND WRITERS

Patrick J. Austin

Steve Bell

Gabriel Buigas

Jeffery M. Cross

Seth Darmstadter

Susan Jackson

Lara C. de Leon

Jessica A. Maynard

Shane Mulrooney

Phil Ogan

Beth Burgin Waller

Bobby Williams

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What General Counsel Should Know About Kiosk Fraud Prevention

By BOBBY WILLIAMS AND PHIL OGAN

Who wants to endure tedious airport lines for a boarding pass when a kiosk offers an effortless process?

Self-service kiosks have become ubiquitous in modern society, from gas station pumps to healthcare self-check-in systems. While these devices deliver undeniable efficiency and convenience, their widespread use underscores the need for sound kiosk fraud prevention.

General counsel need to remember that kiosks collect a plethora of sensitive data, including credit card information, healthcare records, and personal identification details. There is a pressing need for companies to address kiosk fraud and theft. Consumers often utilize these services without being fully aware of potential security risks.

UNDERSTANDING KIOSK FRAUD

Kiosk fraud takes various forms, with skimming devices being a prevalent threat. These devices covertly capture credit card data, often leaving consumers unaware of the compromise. Additionally, hackers exploit vulnerabilities in over-the-air (OTA) software and firmware updates to gain unauthorized access to networks, posing significant risks to data privacy and security.

In today’s digital landscape, where credit cards are swiped virtually everywhere, bad actors can exploit sensitive information to access account numbers, PIN codes, passwords, and other private data for identity theft or fraud.

NAVIGATING THE LEGAL LANDSCAPE

In the aftermath of a kiosk breach, organizations face multifaceted challenges, including investigating

the incident, identifying responsible parties, and addressing legal implications. Questions of liability arise, including whether adequate measures were taken to safeguard kiosks and prevent unauthorized access. For example, did a third-party kiosk operator (i.e., gas station owner) take appropriate measures to protect the machine? Did an OTA update get corrupted? IT administrators can only do so much to prevent

In

the aftermath of a kiosk breach, organizations face multifaceted challenges, including investigating the incident, identifying responsible parties, and addressing legal implications.

kiosk fraud, while manual administration of all kiosks is unrealistic. Therefore, technological solutions to mitigate breaches become a necessity.

LEVERAGING TECHNOLOGY FOR PROTECTION

Technology plays a pivotal role in combating kiosk fraud and theft. Automated monitoring systems can detect suspicious activities in real time, enabling swift responses to potential breaches. Encryption technologies secure data transmission, safeguarding sensitive information from malicious interception. Furthermore, advancements in AI and machine learning empower organizations to predict and protect against future attacks proactively.

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It is critically important to protect customer data. Companies should seek out cybersecurity services that offer rapid response capabilities, enabling organizations to swiftly prevent and respond to kiosk compromises. Leveraging expertdriven risk mitigation strategies can strengthen security posture and safeguard against potential threats. Self-service kiosks are designed to enhance convenience without sacrificing the security of customer data. By actively implementing technology-driven solutions and collaborating with cybersecurity experts, it is possible to effectively safeguard sensitive information and uphold consumer trust. As we embrace modern conveniences, it’s crucial to prioritize technological advancements that ensure security in our digital interactions.

Bobby Williams is a Director at consulting firm IDS who manages project lifecycles that include IT consultation, forensic data collections, analysis, system assessments, comprehensive reporting, and expert testimony. Before joining iDS, Williams spent over 12 years supporting attorneys and law enforcement in eDiscovery matters.

Philip Ogan is a Managing Consultant at consulting firm IDS with an extensive background in e-Discovery. Ogan has more than 25 years of managing consultant experience and over 20 years of leadership/supervisory experience. He possesses an in-depth understanding of litigation lifecycle and EDRM models.

How Aspiring GCs Are Mapping A Career Path to General Counsel

By STEVE BELL

The career path to general counsel can be bewildering for in-house legal professionals who aspire to achieve this coveted role. There is no one singular route to GC, and many individuals are actively pursuing the position in unique ways.

In the  2024 Aspiring General Counsel Report , BarkerGilmore analyzed data from senior counsel and managing counsel (including regional GCs, assistant GCs, division GCs, associate GCs, and deputy GCs) nationwide who hope to achieve the GC role and, for some, who have been identified as a GC successor.

CRITICAL CHARACTERISTICS OF ASPIRING GCS

An aspiring GC within this context typically refers to legal professionals who hope to work their way up and attain the position of general counsel. These individuals are likely to be currently employed as in-house counsel, with a significant portion having held their current roles for two years or less (38% of managing counsel, 49% of senior counsel).

Aspiring GCs are actively working toward advancing their careers, gaining experience, and acquiring the necessary skills and expertise to

eventually assume the responsibilities of a general counsel, which often include overseeing all legal matters within the organization, providing strategic legal advice, managing legal risks, and representing the organization in legal proceedings. The modern general counsel is business-focused and can view certain risks as an opportunity; developing relationships with the business, stakeholders, and senior leadership is pertinent to earning the reputation and skills needed to run a legal program.

The ways senior counsel and managing counsel secured their current positions show the importance of networking and strategic career moves. Senior counsel were most likely to find their current role through a job posting (38%), but managing counsel were recruited directly (22%), contacted by a friend or colleague (21%), or contacted by an executive recruiter (20%).  Managing counsel tend to exhibit a proactive stance in expressing their interest in ascending to the GC role, with a higher percentage informing management of their aspirations than senior counsel (72% of managing partners vs. 61% of senior counsel).

Among the identified successors surveyed, the vast majority (58%) hold the title of deputy general counsel.

Have you notified management of your desire to become a general counsel?

PROFESSIONAL DEVELOPMENT

Professional development is a common denominator among aspiring GCs, with most engaging in executive coaching. Thirty-seven percent of managing counsel and 20% of senior counsel have worked with an executive coach in their current position. The coach was likely to be an external service provider for managing counsel (91%) and senior counsel (74%). Managing counsel (71%) and senior counsel (73%) found the coaching valuable or extremely valuable.

Has management identified you as a potential successor to the general counsel?

Outside of executive coaching, management-identified successors receive professional development at higher rates overall. The top four types of professional development for all groups were expanded scope of responsibility, increased board exposure, leadership training, and stretch assignments.

For those seeking the GC role but have yet to identify as a successor, it is worth speaking with a manager about taking on more responsibilities and stretch assignments to highlight the skills needed to be a GC. Becoming known to the business and executives as an optimistic, energetic team player is the most important proactive step one can take on their own.

MANAGEMENT IDENTIFICATION

In a distant second place, just 12% of identified successors hold the title of associate general counsel. It’s only logical that the next step for managing counsel and senior counsel is to pursue the role of deputy general counsel as a stepping stone to

general counsel. This is when strong internal relationships become influential, and if growth is unavailable, the opportunity to consider a strategic professional move is the most advantageous risk an aspiring GC can make.

The critical role of management identification in the GC succession process is evident, with a substantial percentage of managing counsel (42%) and a noteworthy but smaller fraction of senior counsel (11%) identified as potential successors by leadership

Executive coaching is a pivotal factor, contributing to a higher likelihood of being recognized as a

successor. In-house counsel who have received executive coaching (35%) are more likely to be identified as a successor than their counterparts without executive coaching (26%). Those who have received executive coaching tend to be more visible to management as potential leaders.

Women are more likely than men to be identified as GC successors (53% vs. 47%). This is especially true at non-profits (60% women vs. 40% male) and private companies (59% women vs. 41% male) and in the consumer (75%), industrial/ manufacturing (60%), and financial industries (56%).

However, as was uncovered in BarkerGilmore’s  2023 General Counsel Succession Report, women were more likely than men to find out about their successor status a year or less before moving into the new position (66% vs. 53%).

GC PIPELINE LACKS RACIAL DIVERSITY

Despite recent strides toward diversity and inclusion, underrepresented

minority groups, including Black, Hispanic, and Indigenous individuals, continue to be significantly underrepresented in high-ranking roles such as associate general counsel, deputy general counsel, successors, and chief legal officers. This underrepresentation of minorities in legal leadership roles stems from various factors ranging from implicit bias in hiring, to lack of access to networking and talent opportunities (both for the hiring company and candidate), to lack of succession planning and employee development.

Among the identified GC successors surveyed, 77% identify as white or Caucasian. Of the remaining sample, 10% identify as Asian or Asian American, 7% identify as Black or African American and 5% identify as Hispanic or Latino.

Addressing racial disparities in legal positions requires concerted efforts to dismantle systemic barriers and promote equity within the legal profession. This includes implementing diversity initiatives, reforming hiring and promotion practices, providing mentorship and

Has being identified as a potential successor kept you from pursuing opportunities outside your company?

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professional development opportunities, and fostering a culture of inclusion within legal organizations and networking groups.

BarkerGilmore is focused on DEI and the representation of women and underrepresented minority groups and is proud to help facilitate the conversation surrounding best hiring practices and how to develop the next generation of modern general counsel. Over the last three years, 72% of our placements have been a woman or underrepresented minority, and we look forward to continuing this trend.

CHARTING A COURSE TO GC

In navigating a career path to general counsel, legal professionals are encouraged to embrace a multifaceted approach, combining proactive communication with management, strategic networking, and a commitment to continuous professional development.

Steve Bell is a Managing Director at BarkerGilmore and Chair of the Industrial and Manufacturing Search Practice. He specializes in identifying and recruiting senior legal and compliance executives. Bell assesses talent not only from a skills perspective, but measures cultural fit, judgment, and what is not on the resume. He can be reached at sbell@barkergilmore.com

How Legal Departments Can Conduct Effective Cyber Vulnerability Testing

By BETH BURGIN WALLER AND PATRICK J. AUSTIN

In recent months, the Federal Communications Commission expanded its data breach notification rules while the U.S. Securities and Exchange Commission’s “incident disclosure” rule went into effect, requiring public companies to disclose “material” cybersecurity incidents within four business days. These actions reflect a heightened interest by regulatory authorities in how organizations address cyber

vulnerabilities and what procedures are in place to respond to a cyber incident. In-house legal departments play an integral role in cybercrime prevention, and testing is a prime place for them to take the lead.    Here are seven steps to conduct effective testing at your company:

1Identify, Classify, and Categorize Your Data: One of the best ways to get a proverbial grip on your

organization’s data is to develop a data map. For context, data mapping is the creation of an inventory of an organization’s data that describes (i) the type of data that exists in the organization; (ii) where that data is stored; (iii) who the responsible party is for that data; and (iv) when the data is eligible to be archived or deleted. When your organization’s data is properly identified, classified, and categorized, it will go a long way in

developing and strengthening your organization’s overall cybersecurity strategy, enhancing your ability to respond to a cyber incident.

2 Review Third-Party Service Contracts : A notable risk to cybersecurity is not within the organization itself but with thirdparty service providers. This is why legal departments should review all contracts with third-party vendors to ensure sufficient cybersecurity measures are in place. All contracts should include provisions addressing data protection, confidentiality, data ownership, security incident reporting, and liability (in case of a data breach). In addition, vendors’ cybersecurity measures must be actively monitored to ensure they meet applicable rules and regulations and adhere to your department’s policies.

When legal departments proactively conduct cyber vulnerability testing, it strengthens their ability to identify and assess potential cybersecurity risks effectively.

3 Regularly Update Network Security: The security of your organization’s network – including firewalls, encryption, secure Virtual Private Networks (VPN), and intrusion detection systems – should be tested and regularly updated to

ensure they are working harmoniously and are the most up-to-date versions.

4

Establish Stringent Password Policies: It is critically important to enforce a strong password policy. This means employees must set up a complex password that must be changed regularly. In addition, multi-factor authentication (MFA) should be implemented. MFA will help strengthen your security posture by requiring users to identify themselves by more than just a username and self-generated password.

5 Team Training: Human error is one of the leading causes of data breaches. A joint study by Stanford University and security firm Tessian discovered that employee mistakes cause a staggering 88% of data breach incidents. Similar research by IBM Security puts that number even higher: 95%. Excellent training demonstrates to team members that they have cybersecurity and legal obligations. It helps them understand data protection, how to safely and effectively use technology, and sound cybersecurity practices overall.

6

Identify Gaps Through Testing:

A key component to effective cyber vulnerability testing is actually testing the plans and procedures in place. In effect, organizations should stress test their cybersecurity and incident response plans. Examples of effective testing strategies include penetration testing and tabletop exercises. Regular testing will identify vulnerabilities and weak spots, enabling the legal department to institute mitigation and remediation measures to address these issues.

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7

Prioritize Actions: An effective cyber vulnerability test will likely identify issues and security vulnerabilities that must be addressed. Once identified, your action plan must prioritize the steps that will be taken. Remember, not all problems are equally critical. An assessment of each risk’s potential impact on your organization must be conducted. For example, addressing a vulnerability in protecting sensitive client data will likely take precedence over updating employee training materials.

When legal departments proactively conduct cyber vulnerability testing, it strengthens their ability to identify and assess potential cybersecurity risks effectively. Once identified, the legal department can outline strategies to mitigate risks and implement compensating controls, providing strategic counsel and a critical contribution to the organization.

Beth Burgin Waller is a principal and chair of the Cybersecurity & Data Privacy practice at Woods Rogers Vandeventer Black in Virginia, and Patrick J. Austin is of counsel. They advise clients in a variety of industries on cybersecurity planning and in the days and weeks following incidents. They may be reached at beth.waller@wrvblaw.com and patrick.austin@wrvblaw.com.

Examining New Workplace Accommodation Laws on Pregnancy, Religion, and Disability

By LARA C. DE LEON AND JESSICA A. MAYNARD

Last year saw several changes to workplace accommodation laws, case law, and regulations. Three areas were front and center: Pregnancy, religion, and disability. Workplace laws constantly evolve, and claims challenging employers’ workplace accommodations (or lack thereof) are becoming increasingly common. Employers should carefully review and update their policies, procedures, forms, and training to ensure compliance.

PREGNANCY

The Pregnant Workers Fairness Act (PWFA) became effective on June

27, 2023. It amends Title VII of the Civil Rights Act of 1964 to require employers covered by Title VII to provide reasonable accommodations for known physical and mental limitations related to pregnancy, childbirth, or a related medical condition, unless it creates an undue hardship.

Employers must engage in an interactive process with employees to assess whether a requested accommodation is reasonable.

The terms “qualified individual,” “reasonable accommodation,” “interactive process,” and “undue hardship” are borrowed from the Americans

with Disabilities Act (ADA), but they are defined differently under the PWFA, which can add to the complexity of compliance.

The Equal Employment Opportunity Commission has proposed regulations to implement the PWFA. The Equal Employment Opportunity Commission (EEOC) received over 100,000 comments and planned to issue final regulations in December 2023, but no final regulations have been issued as of this publication. Under proposed regulations, the EEOC provided a “non-exhaustive list” of conditions to be covered if related to pregnancy. The list includes:

• Guidance on an expanded definition of “Qualified Individual.”

Employees temporarily unable to perform the “essential functions” of their job for a period not to exceed 40 weeks are included.

• A requirement that employers consider participation in a preexisting light duty program.

• A list of “Predictable Assessments:” These are accommodations that will almost always be found to be reasonable and do not need documentation, including extra breaks, sitting/standing, and having water on hand.

Additionally, the Providing Urgent Maternal Protections for Nursing Mothers Act (the PUMP Act) became effective in December 2022. It expands lactation accommodation provisions in the 2010 Nursing Mothers Act, and requires employers covered by the Fair Labor Standards Act to provide reasonable breaks and a private space for pumping. The following are clarified as part of the Act:

• Break time is allowed every time the employee needs to pump. Non-exempt employee’s break time is unpaid unless the employee is not completely relieved of duty.

• Exempt employees are legally entitled to a lactation accommodation and must be paid their entire weekly salary, regardless of any pumping breaks.

• Employers have ten days to correct compliance failures.

• Damages are available for noncompliance.

To ensure complete compliance employers should check state laws, which may provide additional requirements. Be sure to have a compliance plan to mitigate risks, because lactation discrimination can result in claims of pregnancy or gender discrimination.

RELIGION

In 2023, the U.S. Supreme Court changed the legal standard required by employers to show an undue hardship created by a requested accommodation based on an employee’s sincerely held religious belief. The Court ruled that employers must show that a religious accommodation would cause an undue hardship that substantially increased

costs related to the conduct of its operation.

This is a significant departure from previous Court precedent, which indicated an employer could reject an accommodation if it created a de minimis burden (a “very small or trifling” hardship).

In Groff v. DeJoy, an Evangelical Christian U.S. Postal Service employee requested not to work on Sundays. USPS denied the accommodation, saying it was not reasonable and created an undue hardship by diminishing employee morale and creating scheduling issues. The employee was disciplined for refusing to deliver packages on Sundays, and ultimately resigned.

USPS denied the accommodation under the “more than de minimis” standard, but the Court’s ruling established the new “substantial burden” standard.

The new standard is heightened but falls somewhere between the “de minimis” standard and the ADA’s undue hardship standard. Continued litigation will clarify this standard further.

Employers can anticipate an influx of religious accommodation requests. Additionally, the holding brings into question the analysis employers used in granting and denying accommodation requests during the COVID-19 pandemic. The EEOC is still acting on these changes, so employers may still be impacted by decisions made during the pandemic under the previous standard.

DISABILITY

Lawsuits continued to address disability accommodations in the workplace in 2023. The EEOC brought lawsuits challenging workplace accommodations and disability

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discrimination. These lawsuits dealt with issues like termination due to lifting restrictions or requesting to periodically sit, and failure to provide communications accommodations.

Court rulings regarding telework as a disability accommodation increased from the pre-pandemic period (2017–2019) to the post-pandemic period (2021–2023). So did the percentage of rulings that were pro-employee. This shift indicates that employers need to carefully consider work-from-home accommodations.

Lara C. de Leon is an experienced trial lawyer and client advocate at Constangy, Brooks, Smith & Prophete. She represents companies in all aspects of employment law.

Jessica A. Maynard’s practice at Constangy, Brooks, Smith & Prophete includes crafting and implementing policies that enhance workplace culture. She also provides litigation support and representation.

Boeing’s PR Debacle Delivers A Lesson in Crisis Management

By SETH DARMSTADTER

In January 2024, a door plug panel blew off an Alaska Airlines Boeing 737 MAX 9 in mid-flight, causing rapid depressurization, and an emergency landing. Investigations pointed to missing bolts meant to secure the door plug. The incident was in the headlines for days, raising significant questions about Boeing’s quality control.

Outsourced maintenance personnel at a Boeing facility failed to reinstall the bolts after maintenance- a revelation that has become

a public relations nightmare for the airplane manufacturer. Even worse, it follows the tragic crashes of two 737 MAX 8 jets in 2018 and 2019. Boeing’s reputation, and its trust by the public and aviation authorities, have been significantly damaged. It doesn’t have to be that way. Imagine a crisis striking your organization, but your crisis management teams jump smoothly into action. They are ready because a business that is committed to compliance, a workplace where employees are

urged to admit mistakes before they become disasters and leadership that admits failures and rectifies them, has their back.

That is what a nimble company, its legal department, and its C-suite needs to look like in today’s postBoeing crisis environment.

Stakeholders, from regulators to consumers, demand a modern general counsel who not only anticipates crises, but has plans and a team in place to tackle them. Boeing’s recent problems underscore the fact that

reactionary crisis management is not sufficient. Successful crisis management must be anticipatory and embedded in the corporate culture.

Calamities are not unique to Boeing. Data breaches, corporate fraud, shareholder disputes, partnership breakups, restructurings, product recalls, employment issues, and controversial COVID-related policies are all potential crises, and every business is susceptible.

Therefore, advanced crisis management planning, stress testing, and strategy are crucial for any entity, regardless of scale. The tone from the top must reinforce the highest standards and the most stringent commitment to a corporate compliance culture.

DON’T WAIT

More often than not, crisis management is initiated after disaster strikes. However, a crisis management team that is familiar with the

reactively. While internal inquiries are completed the company passively absorbs bad press and public outrage. By the time the investigation is complete, the damage to the business’s reputation, workforce morale and revenue is done. Post-crisis investigations are often effective and necessary, but they should be just part of a comprehensive strategy.

BEST FACE FORWARD

Small PR issues like supply chain disruptions and employee turnover can be dealt with through board oversight and C-suite intervention. More serious challenges — cyberattacks, environmental disasters, product recalls, executive controversies, social media backlash, mid-air door plug failures— require a crisis management team.

Ideally, the team includes lawyers, communications experts, PR specialists, and financial advisors. Crisis

Stakeholders, from regulators to consumers, demand a general counsel who not only anticipates crises, but has plans and a team in place to tackle them.

company’s business, its customers and partners, and its strengths, and weaknesses, should be assembled long before action is necessary. Waiting until a problem is discovered, or worse, made public, only makes the crisis worse.

A team of professionals ready to manage crisis response needs to be prepared to act rather than react. Proper preparation mitigates potential damage.

Many companies initiate investigations during crises, but they do so

management planning must heavily involve attorneys because legal liability often accompanies corporate crises. Independent legal counsel trusted by internal stakeholders make ideal leaders.

Together, these professionals can anticipate situations that could disrupt a company, and devise response and risk mitigation strategies to preserve its goodwill, reputation, and revenue, while minimizing legal exposure.

In the event of a crisis, a properly

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constituted crisis management team executes a prepared playbook, having anticipated the scope of the challenge.

Only by addressing crisis management proactively with legal, communications, PR, and financial professionals, can management focus on running the business effectively despite anything that comes its way.

Seth Darmstadter is the Managing Partner of the Chicago office of Michelman & Robinson, LLP and the firm’s nationwide Class Action & Complex Litigation Practice Leader. He can be reached at: sdarmstadter@mrllp.com

Breaking the Groundhog Day Cycle: A Fresh Approach to Contracts

By GABRIEL BUIGAS

Albert Einstein observed that doing the same thing repeatedly while expecting different results is the definition of madness. He had science in mind, but he could have been talking about contract lifecycle management systems (CLMs).

GROUNDHOG DAY

Corporate legal teams have been trapped in a kind of Groundhog Day when it comes to CLM deployment. There are three big hurdles for a business implementing a CLM:

1. The procurement, information security, and interconnectivity issues involved in rolling out a CLM within an existing corporate IT environment.

2. Change management driving adoption and new ways of working, absorbing valuable time that the practitioners would rather spend on core legal advisory work.

3. The tendency to over-engineer the initial implementation to cover every potential use case, customization, and integration.

Many in-house teams struggle to overcome these obstacles. Not because they lack competence but because of bandwidth, funding, and organizational challenges. CLM tools are meant to drive efficiency, productivity, and continuous improvement in how the legal function supports a company’s contracting needs. Yet, there has been extensive reporting on the perceived failure rate of CLM deployments.

Failure comes at a price — diversion of the team from core activities, job dissatisfaction, and increased

attrition rates as workloads become unmanageable. And something else nobody talks about. The sheer effort and distraction of the effort can sometimes inhibit the ability of the legal team to innovate within their core function. There is just so much change an organization can handle.

When the implementation of the CLM stalls or fails to meet expectations, many stakeholders blame the tool itself.  Time passes and, eventually, a new CLM selection process

Here are the specific advantages of CAS:

1. Reducing the complexity and delay of an IT procurement process, replacing it with a master service agreement (MSA) for an integrated solution that avoids complex internal IT infrastructure environments and integrations.

2. Transferring the principal change management and ongoing support risks to the service provider,

When the implementation of the CLM stalls or fails to meet expectations, many stakeholders blame the tool itself.

is launched. This time around the hopes are high that the system will avoid the problems of the last one, but the underlying causes of the previous failure remain. Meanwhile, the legal department is now drowning in routine contracting workloads while morale sinks.

A PATH FORWARD

If you look closely, you will see that CLM implementation challenges can largely be grouped as problems of resourcing and expertise. One solution is to buy contractsas-a-service (CAS), delivering both the CLM system and the required resourcing and change management capabilities.

CAS delivers the technology while assuming responsibility for continuous process support and evolution. The CAS provider takes on the review, negotiation, and closure of the routine contract workloads that are being processed through the CLM cost-effectively and under specific service-level agreements (SLAs).

who will operate under mandatory SLAs and reporting metrics.

3. Freeing up the in-house team’s bandwidth to focus on higher-value work and core functional innovation.

4. Driving the transformation of routine legal workloads, since a CAS solution is designed to reduce negotiation churn on lower value/risk matters.

5. Deploying generative AI (GenAI) use cases, as a well-structured CAS offering will allow in-house teams to directly access GenAI capabilities in advanced CLM tools so they can learn how to deploy them for additional use cases.

6. Portability, with CAS allowing the CLM software-as-a-service (SaaS) product to be taken back in-house through direct licensing if the client wants to re-insource.

It is time for in-house legal teams to escape the industry Groundhog Day of implementing a CLM on underresourced and over-engineered

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foundations. CAS can be just as relevant for agile, high-growth businesses as for enterprise and large commercial companies.

How many times have we seen the high-growth dynamos going on hiring binges that produce inflated teams of professionals handling too much routine work? How many in-house teams have spent millions on a CLM implementation that hardly makes a dent in their productivity and innovation statistics? Is it just Einstein’s observation, or is there a bit of madness here?

Gabriel Buigas brings more than 25 years of experience to the legal industry, holding roles as an Executive Vice President and leader of the Legal and Compliance Solutions business unit at Integreon, a leading alternative legal services provider (ALSP). His depth of experience in legal services offers clients invaluable real-world insights and best practices.

It’s Time to End Baseball’s Antitrust Exemption

By JEFFERY M. CROSS

In October, I was part of a legal team that filed an amicus brief in the Supreme Court supporting a petition for certiorari seeking to overturn baseball’s antitrust exemption. The case, in which a minor league team lost its affiliation with a major league team as the result of an alleged horizontal conspiracy among the 30 major league teams, appeared to be the best opportunity to overturn the exemption.

Major League Baseball must have

thought so too, because it settled the case, rendering our brief academic. Now Congress is considering overturning the exemption by legislation. Consequently, it would be valuable to examine the exemption, and some of the arguments against it.

Baseball’s antitrust exemption was created by the Supreme Court and upheld in two subsequent decisions. In 1922, in opinion by Associate Justice Oliver Wendell Holmes Jr., it held that baseball was an intrastate

business and therefore not subject to the Sherman Act. In 1953, the Court ruled that Congress did not want baseball to be subject to the antitrust laws, although Congress had not spoken. Finally, the Court held in 1972 that stare decisis prevented the Court from overturning the exemption.

Those decisions dealt with the so-called “reserve clause,” which prohibited a player from negotiating a contract with a new team without

permission from his old team. However, MLB has since dropped the reserve clause.

THE CASE FOR OVERTURNING THE EXEMPTION

The case in which we filed our amicus brief involved MLB’s efforts to restructure its relationship with minor league teams. In 1960, Major League Baseball and an organization of minor league teams entered into an agreement under which each MLB

business, civic, and economic development alliance for Rensselaer County, New York. Rensselaer County is home to one of the teams that lost its affiliation with a major league team, the Tri-City ValleyCats.

The allegation made by the ValleyCats, both in the Supreme Court and the courts below, was that the 2020 agreement was a horizontal conspiracy among the 30 major league teams to reduce the “output” of the minor league teams.

Competition often results in improvements to the minor league baseball experience, up to and including the construction and renovation of stadiums. It benefits fans, stadium vendors, and other interested parties.

team would contract directly with minor league teams.

The key provision was that each MLB team was free to affiliate with minor league teams of its choosing. The result was competition among both the MLB teams and the minor league teams for affiliations. By 2020 there were 160 minor league teams affiliated with major league teams.

In 2020, the MLB agreed to restrict the number of minor league teams each major league team could affiliate with. This resulted in 40 minor league teams losing their affiliations. Moreover, the agreement effectively prohibited the major league teams from considering those teams for future affiliations.

THE VALLEYCATS CASE: A CLOSER LOOK

Our amicus brief was filed on behalf of the Rensselaer County Regional Chamber of Commerce, the principal

Output is a term used in antitrust to mean consumers have fewer choices.

Although a single major league team can independently decide who to deal with, the allegation is that they cannot collude and impose on each other a limitation on how many minor league teams they can affiliate with.

THE IMPORTANCE OF COMPETITION

Our amicus brief focused on the fact that the restraint eliminated competition among minor league teams to affiliate with major league teams. Competition-for-the-contract is a form of competition that the antitrust laws protect. It keeps the parties innovating and creating efficiencies to win an affiliation contract in the future, benefitting both teams and consumers.

It is well established that a minor league team’s affiliation with a major

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league team has a significant positive effect on local per capita income. But perhaps most importantly, teams and their communities would compete for affiliations. Competition often results in improvements to the minor league baseball experience, up to and including the construction and renovation of stadiums. It benefits fans, stadium vendors, and other interested parties.

The Tri-City ValleyCats team is a good example. The ValleyCats built a new 4,500 seat stadium. They invested in a new scoreboard, concession equipment, video equipment, a pavilion, picnic areas, and a video board. Before the ValleyCats team was stripped of its affiliation, it planned to spend an additional $1.8 million for other capital expenditures. This is competition-for-the-contract, and clearly benefits consumers.

Major League Baseball’s antitrust exemption has had a long run, but it keeps bumping into bedrock antitrust principle, then settling cases to avoid a Supreme Court decision. It is time for Congress to act.

Jeffery M. Cross is a columnist for Today’s General Counsel and a member of the Editorial Advisory Board. He is a partner in the Litigation Practice Group of Smith, Gambrell & Russell, LLP and a member of the firm’s Antitrust and Trade Regulation Group.

AI and Copyright: Preparing Your Business for the Next Wave of Litigation

By SUSAN JACKSON

With the growth of artificial intelligence (AI), copyright registration is more important than ever. Copyright infringement will be the next big wave of intellectual property (IP) litigation over the coming years. Businesses need to prepare now to protect their IP rights in the future. Most businesses have some form of copyrightable content that provides a competitive advantage and is worthy of protection. Copyright

protectable works of authorship include, for example, literary, dramatic, musical and artistic works. Many copyrightable works are present online, such as on a company’s website, in published online articles, on social media platforms and in the form of computer software.

AI poses a threat to original works of authorship by using machine learning algorithms and data extraction methods to pull

data and content from websites. Artificial intelligence takes traditional methods of screen scraping to a new level of sophistication. As AI becomes more prevalent, easy to use and accessible than other known web scraping methods, the risk of infringement of copyrightable works is heightened. AI can web scrape text, still images and videos from a company’s online publication and marketing materials.

Currently, there are a number of

recently filed copyright infringement lawsuits alleging the use of copyrighted works to train AI technologies, including a lawsuit brought by The New York Times against OpenAI and Microsoft. In this December 2023 case, the New York Times alleges that the defendants used their content without permission to develop their AI models and tools.

THE IMPORTANCE OF COPYRIGHT REGISTRATION

An owner of a copyrighted work cannot sue for copyright infringement in a U.S. federal court without first having a federal copyright registration. In March 2019, the U.S. Supreme Court held in Fourth Estate Public Benefit Corp. v. Wall-Street. com, LLC et al. , that a copyright claimant may commence a copyright infringement suit when the U.S. Copyright Office registers a copyright, as opposed to when an applicant files a copyright application. Thus, a time lag exists between filing a copyright application and obtaining a registration certificate. It can be significantly more expensive if you need to file a request to expedite the examination of a copyright application at the U.S. Copyright Office in order to file a federal lawsuit. As an example, the current U.S. Copyright Office government fee for special handling to expedite registration of a copyright claim in an original work of authorship is approximately 12 times the standard government fee for filing an application electronically and must be paid

in addition to the standard government copyright application filing fee.  Steps companies can take to prevent copyright infringement include:

• Take inventory of your copyrightable works — software, videos, literary works, artwork and/or photographs.

• Determine what content of your business provides a competitive advantage and what content is most commercially valuable.

• Identify whether your business has license agreements in place such that copying the licensed content could result in the loss of a royalty stream or give rise to an enforcement obligation in a contract.

• Ask yourself what content draws consumers to your products and services and is most closely identified with your business such that you would not want a customer to be drawn to another source or website.

AI poses an increasing threat of infringement to original works of authorship.

Additionally, businesses can proactively file federal copyright applications, as the duration of a federal copyright is relatively long compared to other forms of intellectual property. For works created after Jan. 1, 1978, copyright protection generally lasts for the life of the author plus an additional 70 years. For an anonymous work, pseudonymous work or work made for hire, the copyright has a term of 95 years from the year of its first publication or 120 years from the year of its creation, whichever expires first.

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So, there is generally minimal downside to filing a copyright application ahead of an actual infringement situation, as the cost of filing a U.S. copyright registration is relatively modest. Businesses should file copyright applications early and often.

In conclusion, a business should build its arsenal of copyright registrations now, as AI poses an increasing threat of infringement to original works of authorship having an online presence. To pursue enforcement of a copyrightable work in a federal court, copyright owners will need a federal copyright registration. Businesses are encouraged to prepare now, enabling them to respond expeditiously should a copyright infringement occur.

Susan Jackson is a partner at Nelson Mullins Riley & Scarborough LLP. She leads the firm’s Charlotte office and her practice focuses on patents, trademarks, copyrights and unfair competition, as well as counseling, licensing and opinion work.

“Litigate or Arbitrate” Is a False Dichotomy

By SHANE MULROONEY

In-house counsel who bring open minds to managing their companies’ dispute resolution processes can save their clients considerable time and money. Too often, I’ve heard lawyers wonder during contract drafting whether they should designate courts or arbitrators to referee legal fights with vendors, customers, employees, or other business partners. Fortunately,

the answer isn’t one or the other.  For existential problems, my experience shows that courts often are the best deciders. These are “bet-the-company” matters over, for example, critical intellectual property or huge sums of cash. Courts allow parties as many motions and as much discovery as the rules permit, followed by appeals. No legal stone goes unturned.

Lesser matters can be resolved more efficiently through alternative dispute resolution (ADR), usually arbitration. In-house counsel must remember that since contracts determine these designations, they can tailor the terms so that major disputes go to court and routine claims go to ADR. Reviewing contracts, whether after starting a new in-house position or engaging in the healthy habit of document maintenance, is an opportunity to make these critical choices that could limit the pain in upcoming, inevitable legal disputes.

ARBITRATION FALLACIES

Although courts vary by jurisdiction, arbitration providers can differ more broadly. Counsel should assess them carefully to see if they meet their needs. They also should be aware of the truth behind some fallacies about arbitration

A common perception about arbitration is that it can be just as onerous as court litigation, weighed down with protracted discovery and endless motion practice —all at a higher cost because parties pay hourly fees to the arbitrator or, even more expensive, a panel of arbitrators.

While it is true that some arbitration processes are nearly identical to courts, with the only difference being that the dispute remains private, this is not always the case. Because arbitration is contractual by nature, parties can generally agree to whatever rules they want to make the process more efficient (subject to a few limitations). Arbitration forums

likewise vary significantly in their willingness and ability to provide different, and at times streamlined, procedures. This is a reason counsel should assess providers before designating one as their go-to forum for a particular contract.

Similarly, while arbitration providers are paid fees from parties, counsel should research forums that have alternative arrangements to hourly fees. Some providers may be willing to engage in a flat fee system or even default to one that works better for a company and its business partners.

One of the underestimated benefits of contractual arbitration is that when parties agree to an arbitration forum or define a set of rules that address and conclude a dispute with expediency and pragmatism, relationships between the parties are far

First, most arbitrators and judges I know do their best to be fair and make legally correct decisions.

Secondly, arbitration is evolving from primarily localized businesses to a much grander, more diverse, and more sophisticated industry, employing video conferencing platforms and other technology to engage parties around the country and worldwide. This means they are under far less perceived pressure to keep everybody around them happy, and they do their jobs and make decisions effectively.

ARBITRATORS ON REPEAT

I’ve heard of lawyers complaining that they land before the same arbitrators too often. This could happen depending on the size of an arbitration provider’s bench or where arbitrator selection provided by a

Another mistaken belief about arbitrators is that they tend to just “split the baby” to avoid making tough decisions about which side in a case is right.

more likely to withstand the process. This helps a company, its vendors, customers, and business partners by limiting distractions and clearing the way to resume doing business together.

“SPLIT THE

BABY”

Another mistaken belief about arbitrators is that they tend to just “split the baby” to avoid making tough decisions about which side in a case is right. The argument is that arbitrators are accountable to the companies that pay their fees, so they don’t want to lose business by ruling against their customers.

forum is a black box. Again, in-house counsel and their business partners can research alternative forums that offer a broader range of arbitrators with differing backgrounds and experiences.

Further, insisting on a process that allows the parties to choose an arbitrator for a particular matter from a slate of several possible neutrals, with each party ranking and striking a specific number until a consensus candidate is found, ensures optionality and fairness.

To be sure, we can’t always pick our battles. Lawsuits can come from anywhere. But when drafting

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contracts — including with vendors, customers, employees, and business partners — parties can at least pick their battlefields.

Shane Mulrooney co-founded New Era ADR, where he serves as general counsel. Before that, he served as vice president and head of legal at Home Chef, a leading U.S. meal kit delivery company. He began his legal career in the Kirkland & Ellis LLP corporate tax group.

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