Posts about lawyers

USAA is a social fool

I love stories of kneejerk (emphasis on the second syllable) lawyers mucking with a company’s image and relationships with their stupid cease-and-desist letters. Here’s a good one.

My sonorously named friend Rikki Tahta, founder of Covestor, invested in a company called Amplicate sent me an email about such a letter. (Disclosure: I invested in the former company, gave advice to the latter, and am a customer of the company I’m about to mention, USAA).

Amplicate gathers mentions about companies and organizes them according to sentiment, creating a “sucks” and “rocks” page for each brand. It has more than 16 million opinions from 5 million people on 100k topics. Now Rikki tells the tale:

Yesterday Amplicate received a bullying email from the corporate legal department of USAA – the insurance and financial services company. In short the letter was packed full of legalese that was incomprehensible but clearly implied that Amplicate were not allowed to publish a web page that said USAA sucked and they would take legal action against if they continued.

The outrageous thing is they are clearly bullying. Amplicate has a First Amendment right to say what it wants, and besides it merely re-posts all the tweets of individuals who also have a right to free speech. Regardless it is outrageous to try and stifle criticism by suggesting legal action particularly when you know its baseless. The guys running Amplicate were concerned they had broken some law, until we told them it was nonsense. But for all I know USAA may have been successful elsewhere.

But the really funny thing is: the USAA corporation is completely missing the point of social media and are trying to shoot themselves in the foot. Like all topics at Amplicate there is a USAA Sucks page and a USAA Rocks page. Most banks have considerable more negative opinions than positive. USAA is actually one of the most popular financial institutions with 93% of people expressing strong opinions being favourable. The average bank hovers around 30-40%. Search for USAA opinions and you’ll find that out pretty quickly.

Under the terms of their legal complaint they wouldn’t want us mentioning USAA at all and we’d have to remove the USAA Rocks page too! Its amazingly crude to expect people should only publish nice things about you, and its ineffective, the positive comments are all the more credible precisely because there is an equal opportunity for negative comment.

Wacky, self-destructive, jerky, eh?

The legal argument USAA’s pit bull puts forward is as hard to understand as its social-media strategy. Their threatening letter says about Amplicate’s pages:

These actions on your part are clearly designed to cause confusion, deception, and mistake. Furthermore, the use of USAA’s name and marks in connection with this website, and deceptive web search tactics, violates USAA’s rights and constitutes trademark infringement and unfair competition under the Lanham Act. In addition, your site incorporates USAA’s mark(s), uses the same channel of commerce (the Internet) used by USAA, and describes services identical to those covered by USAA’s mark(s).

So let me get this straight: If I say “USAA” on the internet thingie I’ve violated your trademark and confused all your customer? They then try to order around the startup:

We trust this letter is sufficient to convince you to immediately cease and desist from all use of the USAA name and marks, including within the content of your website, URL strings and extensions, and metatags, metadata, banner ads, texts ads, and links, now and forever hereafter. In addition, you must transfer to USAA any and all domain names you own or control that include USAA, or any other marks of USAA, within the next fifteen (15) days.

So then USAA should come after me because somewhere in the URL above, I say USAA? And here I use the letters USAA a lot. Come and get me. On its site (which I dare to link to), USAA says it “not a publicly traded company, so we don’t answer to stockholders — we answer to our members.” Well, I’m a member so answer me this, USAA: How can you be so foolish? And if you get rid of the legal department that wastes money doing this foolishness, will you lower my rates?

Oh, and by the way, USAA, since I’m talking about you, I remain enraged that you turned down my life insurance because I received a heart condition as a result of being at the World Trade Center on 9/11 — is this how you treat emergency personnel there and soldiers in war? I’d say that sucks.

First, stop the lawyers

There’s some dangerously wrong-headed lobbying from media lawyers in today’s Washington Post arguing for new laws to protect old media from new technology. Bruce Sanford and Bruce Brown of Baker Hostetler argue that Congress should:

* Change copyright law so that “the taking of entire Web pages by search engines, which is what powers their search functions, is not fair use but infringement.” This would be downright suicide for not only the media companies that I assume are their clients but for every business that wants to be discovered on the web. Not being able to analyze an entire page would mean that search engines could not reliably send searchers (aka customers) to relevant pages and that would mean that the owners of those pages would not be discovered. It would tear about the very essence of the web. This is so dangerously ignorant of the architecture of our new world and how it operates as to be stunning. It also is ignorant of the new link economy of the web. Why the hell do they think that companies hire SEO firms – so that Google will do a better job of analyzing all their content. (Who hires these people?)

* Enact as law the “hot news” doctrine to protect against “taking the guts of the content.” Today, you can’t protect knowledge. The fact that, for example, GM has cut 1,100 dealers is just a fact and it is spread – all the more efficiently online – via conversation. You can’t sue me for learning that in a newspaper and repeating it. That is key to the functioning of a community, a market, and a democracy. But these guys are following an effort by the Associated Press to call on the so-called hot-news doctrine to argue this knowledge is somehow theirs. Once again, this exposes shocking ignorance of the speed of the knowledge economy. Bloomberg and Reuters understand this: If they can deliver knowledge faster to their clients so they can exploit that knowledge more quickly than others, then they have value. That is, indeed, hot news. But they are well aware that the unique value of that heat expires in moments – seconds – and once knowledge is known, it is a commodity. But these lawyers want to make business by getting Congress to extend copyright to enable publishers to sue for compensation of sites that practice what they call “linkspoitation” (that is, putting ads around links, which could be defined as every decent commercial page on the internet). How long, I’d ask them, is news hot? A minute? A day? A week? How long before others may repeat that knowledge? Incredible, eh?

* Use “tax policy” (that is, tax dollars – i.e., our money) to “promote the press.” Which press, gentlemen? The press you represent or the press we the people are creating? We out here don’t actually need such a subsidy because we’ve been smart enough to take advantage of the new, free press and we are not saddled with the costs of an old press. Why should we then have to subsidize the market failure and anti-strategic stubbornness of the owners of those old presses? “Congress,” they write, “could provide incentives for placing ads with content creators (not with Craigslist).” That’s just plain payola. They also want “allowances for immediate write-offs (rather than capitalization) for all expenses related to news production.” Except we in the new press don’t have capital expenses for presses and buildings and trucks. Can we write off our PJs?

* Give news companies antitrust exemption so they may collude and form cartels to wall off their content and fix prices together. “As noted in the Kerry hearing,” the lawyers write, “publishers need collective pricing policies for their Web sites to finally break out of the expectation of free content that is afflicting the industry. Antitrust immunity is necessary because most individual news sites can’t go it alone by walling off their content for fees — readers will simply jump to sites that are still free.” That’s called capitalism, gentlemen. The market. I’d rather protect that open market than the failed monopolists who are finally losing control of it.

* They also want to take off ownership restrictions on media companies. There, we don’t disagree. Let the dinosaurs huddle together against the cold wind of change if they want. Well, except such a strategy of consolidation hasn’t worked so well for Tribune Company or McClatchy or Clear Channel or Time Warner or The New York Times Company, has it? (Is anybody hiring this firm for business strategic advice?)

Add it all up and their lobbying is ignorant of the architecture and workings of the internet economy and, for short-term gain for dying companies, willfully destructive to fundamental principles of the law.

Somebody stop these guys.

* * *

In the comments under the Washington Post piece, Dale Harrison makes a great response, which I’ll quote almost in full (hoping he doesn’t sue me):

This is a shockingly misguided analysis and set of recommendations!

A lesson worth remembering is at the turn of the 20th century people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.

And one should note that the Ford didn’t arise out of the “Horse Industry Revitalization Act”.

I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.

Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.

It would have strangled the nascent auto industry at birth, postponing it’s inevitable rise while sheltering a dying industry, only postponing it’s inevitable demise…doing great damage to both. Newspapers need to be encouraged to adapt to the future, not retreat behind legislative walls hoping the future will go away.

The newspaper industry’s troubles go to the very core of their historical business model.

What’s historically given value to editorial content is the relative scarcity of distribution versus readers. Newspapers have historically enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplaces.

Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970′s).

The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being “too low” is inverted…the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media’s monopoly control of distribution and supply.

The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero… infinite supply pushes price levels to zero!

What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won’t allow the monopoly conditions to be re-constructed.

There are certainly ways to make online news profitable…and many of us are working to develop such approaches…but I can assure you they don’t involve inventing a “faster horse”…

* * *

In Twitter, Howard Weaver asks an excellent question: Wonder who hired them? If newspapers are lobbying Congress, that lobbying should be – must be – transparent.

A Googley lawyer?

In What Would Google Do?, I argue that lawyers can’t be Googley, mainly because they have to do what clients want and can’t be transparent. In Twitter, lawyer Kevin Thompson said he disagreed, so I tweeted back asking him to define a Googley lawyer and he taped his reply:

I do make the point in the book that lawyers, like their ungoogley brethren, PR people, can improve their business with Googlethink and with a flow of information afforded by the internet. But Thompson pretty much agrees with me that lawyers can’t hand over control as the internet demands.

In honor of lawyers, here’s today’s 30 Days of WWGD? snippet from the section on law:

* * *

When I suggested on my blog that there were three industries immune from rehabilitation through Googlethink, my readers disagreed about one—insurance, which spawned an earlier chapter. But nobody disagreed about PR and law. I won’t turn this into a joke about flacks and lawyers—there are plenty of those already (go to Google, search for “lawyer jokes,” and enjoy). Instead, I’ll use this opportunity to examine a few of the key tenets and prerequisites of Googlification through the exceptions that prove the rules.

The problem for public relations people and lawyers is that they have clients. They must represent a position, right or wrong. As they are paid to do that, the motives behind anything they say are necessarily suspect. They cannot be transparent, for that might hurt their clients. They cannot be consistent, for they may represent a client with one stance today and the opposite tomorrow, and we’ll never know what they truly think. In a medium that treasures facts and data, they cannot always let facts win; they must spin facts to craft victory. They must negotiate to the death, which makes them bad at collaboration. It’s not their job to help anybody but their clients. They are middlemen. They won’t admit to making mistakes well; clients don’t pay for mistakes.

Having said that these folks can’t be reformed according to Google’s ways is not to say that they can’t use the tools we’ve reviewed to their own benefit. Some already do. Many lawyers blog (see a selection at Blawg?.com). Like venture capitalists, they find value in talking about their specialties, giving advice, attracting business, branding themselves, and sometimes lobbying for a point of view. Some can be counted on to cover legal stories with valuable experience, background, and perspective. Lawyers are a smart bunch who—surprise!—can write in English instead of legalese. Still, when a law blogger advises me to check my made-in-China tires for problems, I’m also aware that he’s on the prowl for class-action clients. Law is business.

Some lawyers have taken advantage of online networking capabilities to create virtual law firms, eliminating the cost of offices and reducing the overhead of office staff. According to the blog Lawdragon, Virtual Law Partners uses these savings to give its partners 85 percent of billing revenue vs. the usual 30–40 percent. Virtual PR and consulting firms also operate loosely, bringing in members of their networks as needed for clients and communicating and collaborating without offices. . . .

I’m sure lawyers and PR people—like real-estate agents—will be glad to tell me where I’m wrong and I welcome that discussion on my blog: Let’s have at it, and if there are ways to Googlify these trades, then congratulations. In the meantime, both fields need to watch out, for the tools of Google and the internet enable others to disintermediate, undercut, and expose them.

The law and its execution are aided by obfuscation. The internet can fix that. A small number of volunteers could, Wikipedia-like, publish simple, clear, and free explanations of laws and legal documents online. All it takes is one generous lawyer—not an oxymoron—to ruin the game for a thousand of them. I’ve seen a few such sites. They’re not very good yet—none worth recommending—but they’re a start.

Another trend that helps both lawyers and clients is the movement to open up laws and case law online, making them searchable and free. It is a scandal that the work of our own legislatures and courts is often hidden behind private pay walls. Westlaw and Lexis, the so-called Wexis duopoly, have turned our laws into their $6.5 billion industry. They add value by organizing the information, but others are now undercutting them. Forbes told the story of Fastcase, a start-up that uses algorithms instead of editors to index cases so it can reduce costs and lower fees to lawyers. Better yet, public.resource.org is fighting to get laws and regulations online for free. Patents are online now, and Google has made them searchable (go to google?.com/patents and, for entertainment, look up pooper scooper—aka “Apparatus for the sanitary gathering and retention of animal waste for disposal” or “perpetual motion machine” or Google itself). Laws, regulations, and government documents are prime meat for Google’s disintermediation.

Sometimes lawyers are employed merely to intimidate—but now the internet’s power to gather flash mobs enables those targeted by attorneys to return the intimidation. I’ve seen many cases of bloggers pleading openly for help against big organizations that are threatening or suing them. They received offers of pro bono representation from lawyers, often thanks to the Media Bloggers Association. The intimidators then received floods of bad PR. The internet doesn’t defang lawyers, but it can dull their teeth or bite them back.

I would like to see an open marketplace of legal representation—present your problem and take bids from lawyers who have handled similar cases, with data on their success rates. Legal representation can also be open-sourced. People who’ve been in cases can offer free advice and aid to others: Here’s how I dealt with my landlord and here are all the documents I used; feel free to copy and adapt them.
The goal is to free the law—our law—from the private stranglehold of the legal priesthood. Between putting laws and cases online and making them searchable, creating simplified legal documents anyone can use, holding weapons to fight legal intimidation, and creating a more transparent marketplace, we would not replace the legal profession with all its faults but we could create checks on its power.