Most lawyers don’t keep a crystal ball in their office, but if pressed, some will take a crack at forecasting the future. We asked a selection of litigators to share their predictions about the legal and political issues that could have an impact on their practice areas over the next four years. Many suggested that the legal pendulum will swing away from eight years of policies broadly sympathetic to financial institutions, pharmaceutical companies, and the oil industry. Regardless of which side of the political aisle they stand on, our experts agreed that this year’s financial crisis is likely to lead to sweeping changes in bankruptcy and securities law, energy policy, and financial regulation.
But our litigators didn’t agree on everything. Securities and white-collar lawyers raised questions about who will take the lead in enforcement: state attorneys general, the U.S. Department of Justice, or the Securities and Exchange Commission. Employment lawyers debated whether organized labor will regain lost ground through passage of the Employee Free Choice Act. And antitrust litigators wondered if the Federal Trade Commission might suddenly clamp down on price-fixing.
Between the challenges of funding a budget and appeasing an electorate deeply divided over the use of taxpayer dollars for a multibillion-dollar financial bailout, one thing was clear from our experts’ predictions: The next presidential administration will inherit no easy tasks.
Some of the amendments to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 will be repealed, especially the ones that made Chapter 11 less of a safety net for companies. It has become in vogue in recent years to have quickie Chapter 11s. But as more companies are forced into Chapter 11, there will be more of a sentiment that bankruptcy protections are more important. BAPCPA took out the rights of Chapter 7, making it harder for individuals to hold onto nonexempt assets. But as we see more and more mortgage foreclosures, I think people will try to reform this law.
Bruce Zirinsky, Cadwalader, Wickersham & Taft, Bankruptcy
In football and basketball, college sports is a multibillion-dollar business. The questions of how rights fees are handled and how student athletes are treated may have national impact. This could end up being a congressional issue if the money keeps getting bigger. A class action was settled with students a year ago, and there’s a lot of political pressure to continue to reform this area.
Jeffrey Kessler, Dewey & LeBoeuf,
There has been a lot of debate about tax credits for renewable energy investments. Current credits are still set to expire in 2008. This has had a significant impact on deployment of renewable energy systems, with the solar industry in particular effectively put on hold by the fact that consumers are waiting to see if there will still be a tax credit in 2009. There is broad support for extending the credits, but in the current environment of financial instability and budget concerns, it is difficult to predict whether they will survive. Obama has strongly supported extension of the credits as part of a comprehensive energy independence plan; McCain has also generally stated his support, but has repeatedly missed votes that would extend them.
Steven Holtzman, Boies, Schiller & Flexner, Antitrust
What the new attorney general will have to decide is how aggressively to use criminal law to address business misconduct, which can also be addressed through regulatory or civil lawsuits. . . . Are we going to prosecute people for making bad judgments, or just fine them for breaking rules? There are questions of whether [these] resources are rightfully allocated for the [Justice Department], or whether these cases should be left to a regulator with a greater degree of knowledge and understanding of how the industry operates.
Steven Molo, Shearman & Sterling, White-Collar Criminal Defense
Whoever is in the White House will have an interest in seeking to ensure that the antitrust regulations in Asia develop in a way that is more supportive of innovation and growth than in the European Union. The next administration will also have to bring harmony between the antitrust division of the Department of Justice and the Federal Trade Commission. They have taken pretty different stances on monopoly issues.
Gregg Levy, Covington & Burling, Antitrust
Whether or not we will see significant change is based on the social and political priorities of the new administration. The question of federal safety regulations is up for debate. Resources are stretched at the Food and Drug Administration. Under [longtime FDA commissioner] David Kessler there were huge changes to health and welfare legislation, but the tort system was not prepared to handle that. The question is now: How well does the FDA need to be funded, and how powerful will the next administration allow the agency to be on social issues? Another question is whether the National Highway Traffic Safety Administration is well funded. The same goes for OSHA and the [Equal Employment Opportunity Commission]. Questions of fuel efficiency and alternative energy requirements may depend on funding of these agencies.
Emily Nicklin, Kirkland & Ellis, Product Liability
If history is any guide, the Democratic administration may end the FDA’s support of preemp-tion. . . . Pharmaceuticals have been under scrutiny and [have] received more publicity. All of that has created an atmosphere that is leading to more regulation, and is slowing the approval process of new medications.
Diane Sullivan, Dechert, Product Liability
There will likely be new legislation placing limitations on plaintiffs securities class action lawyers. The Securities Litigation Attorney Accountability and Transparency Act [which would mandate these changes] was introduced in the House earlier this year. But there’s no comparable Senate bill right now. This law could require more transparency between the plaintiffs and their lawyers, and would require plaintiffs class action lawyers to take a harder look at their cases before they are brought.
Jay Kasner, Skadden, Arps, Slate, Meagher & Flom, Securities
The pink elephant in the room is Native American gaming. It wasn’t something that was commonly accepted as okay when it started. But now gaming is more pervasive. The jurisdictional battles on this issue include to what degree tribal councils will have control of non-Indians on a reservation. Issues of taxation of tobacco and alcohol on Indian reservations have been kicking around for a while, [and] the issues of tribal sovereignty are unclear. Another big issue is the fight over scarce resources. Indian tribes have a stake in water, and with drought conditions across the West, there may be more litigation over who has control of bodies of water.
Edward Lazarus, Akin Gump Strauss Hauer & Feld, Native American Rights, Appellate
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 changed the whole process of declaring bankruptcy by shortening the time frames for exclusivity in Chapter 11. Under BAPCPA there are specific timelines. As a result of that, and the time frame in which companies have to assume or reject leases, companies have learned that they can’t sit in Chapter 11 for three to five years. . . . Now we’ll be seeing bankruptcy reorganizations that take just a few months rather than a few years. Companies are looking at their problems sooner, negotiating deals earlier. Shorter cases mean lower fees, and further legislation could trim the chance of five-year bankruptcy cases with record fees. But some things in BAPCPA may need to be changed, like the provisions dealing with key employee retention plans.
Jay Goffman, Skadden, Arps, Slate, Meagher & Flom, Bankruptcy
The Employment Non-Discrimination Act [which prohibits discrimination against employees on the basis of sexual orientation] hasn’t been passed yet. The next administration will decide whether to add sexual orientation to the list of protected categories under Title VII, and whether to include transgender individuals. Sexual orientation is a key issue for the country now.
Eric Tate, Morrison & Foerster, Labor and Employment
Many in the business community would acknowledge that the Department of Labor under Bush has not been particularly aggressive in seeking changes and enforcement in employment law. What labor would say is that a hostile National Labor Relations Board has misapplied the National Labor Relations Act to thwart union organizing. It has been made quite clear by the Obama camp that labor and employment issues will be at the forefront of an Obama administration. First and foremost would be the Employee Free Choice Act, which will make it easier for unions to organize. [If Obama is elected] there will also be significant activity in terms of amendments to Title 7 that would likely seek to remove the caps on damages [and] eliminate or severely curtail the use of arbitration for resolving labor disputes; and amendments to the Occupational Safety and Health Act that would increase penalties under that statute.
Willis Goldsmith, Jones Day, Labor and Employment
One of the challenges [for the next administration] will be that every patent issued in the United States has implications in foreign countries, including in Asia. Wyeth and GlaxoSmithKline are building their newest and largest research facility in Shanghai. What will the IP protection be for things built in China but developed by an American company? IP, antitrust competition, and trade issues are all collapsing into one. The U.S. trade representative, the head of the [Federal Trade Commission], the Justice Department, the Patent and Trademark Office, and the president’s science adviser will all have something to say. And no matter [who] wins the presidency, the question of patent reform legislation [debated this term but not passed] is going to be revived.
William Lee, Wilmer Cutler Pickering Hale and Dorr, Intellectual Property
The next administration will have to contend with the continued globalization of markets and [with] cartel behavior. In multinational transactions, it will become a headache to enforce antitrust issues in mergers. The [Federal Trade Commission] and the antitrust division of the Department of Justice review [mergers], and these agencies historically were the decision makers about whether transactions would proceed. Now the U.S. enforcement agencies will be bumping up against global merger and fair trade agencies to determine what deals can proceed.
Kevin Arquit, Simpson Thacher & Bartlett, Antitrust
The next president could revamp the Food and Drug Administration in the model of David Kessler [who left the agency in 1997], possibly appointing Dr. Steven Nissen from the Cleveland Clinic. The next president will also have to put someone in charge of the [Environmental Protection Agency] who understands the idea of protecting the environment, who seeks to be a steward. There may be new appointments to federal courts away from people who already have strong ties to corporate interests. If changes aren’t made in the courts, the executive and legislative branches will be all that remains of our government.
W. Mark Lanier, The Lanier Law Firm, Product Liability
It is essential that the next administration put in a new chairman of the Securities and Exchange Commission who will establish oversight and rules to ensure that investors are not being abused or defrauded by Wall Street firms. Auction-backed securities and certain corporate bond funds were sold without appropriate risk disclosures. The Department of Justice needs to make it a priority to prosecute fraud wherever it is found, in Wall Street and in hedge funds.
Jacob Zamansky, Zamansky & Associates, Securities
The new administration will have to deal with increased enforcement by the state attorneys general, who are playing a more active role than they did traditionally. The administration will have to determine whether to work cooperatively with these agencies or to reassert the federal government’s dominance in these areas. One of the results of the increased competition among state agencies has been to cause the federal government to be more aggressive.
Barry Berke, Kramer Levin Naftalis & Frankel, White-Collar Criminal Defense
The U.S.’s amnesty whistle-blower program is in its awkward teen years right now. There is a perverse incentive for whistle-blower companies in price-fixing cartels to gild the truth. In the Stolt-Nielsen case, the promise of amnesty was breached [by the Department of Justice], and an appeals court found that this [conduct] amounted to a breach of due process. The next administration will be faced with restoring the protections of amnesty. The Department of Justice will also need to rethink the transparency of the program. It may be time for Congress to take a look at the amnesty law. You are turning in your competitors, [with] a chance to turn in the CEO of your biggest rival. Courts may need to make this process more transparent so there are checks on the system. But they will simultaneously need to strengthen attorney-client privilege.
J. Mark Gidley, White & Case, Antitrust