Monday, March 30, 2009

More Thoughts on GM and Chapter 11

So, the government forces GM Chairman Wagoner to resign, ostensibly because they found GM's latest "plan" and loan requests unacceptable. What is REALLY going on here is the government knows that the only way GM can become viable is to file a Chapter 11, and Wagoner could not and would not do it. One might think that at SOME point, all the parties (unions, bondholders, banks, suppliers, management) would make sufficient concessions to prevent this bus from going over the cliff.

Unfortunately, it can't happen that way. A Chapter 11 reorganization will bring the hammer down on ALL the parties, painfully. However, the entire process is designed to do this as FAIRLY as possible, with all the parties participating. The reason a proceeding is necessary is that NONE of the parties can agree to the depth of concession necessary, even as it clearly IS necessary. A union head could not agree to a massive restructuring of health and retirement benefits, it's just not was he was elected to do. It's practically a breach of his fiduciary responsibility to do such a thing. Similarly, the Board Chairman can't propose to the shareholders that they agree to file a Chapter 11 and wipe out their equity. He'd be breaching his responsibilities if he did such a thing.

The Obama administration has looked at it, and has surely concluded that not only are the key players not able to voluntarily make the drastic cuts that are the only hope, they have also concluded that on the present path, the company CANNOT make it. Any Republicans who think Obama wants to "nationalize" the auto industry, or have the government take it over, are not paying attention. I don't know if GM will survive a Chapter 11 reorganization, but it will be worth the effort. It will be worthwhile for the government to back the effort. It will make way more sense than throwing money at GM without accountability, and without a REAL re-structuring.

Am I the only one who thinks that the "gap" between GM and the foreign competitors has narrowed? I wanted to be open minded and patriotic a few years ago, so I tried a Saturn Vue as our family car. I have never regretted it. When the lease is up, I hope to get another one. I want to be part of GM's emergence from the Chapter 11 I know is coming.

I think when the whole country actually sees how the Chapter 11 reorganization works, and they see that the pain is being spread fairly, and openly, Americans will buy American in droves. If GM survives, I expect they will emerge with a competitive edge, and they will use it to get on the cutting edge of the newest in automobile technology. These ideas are driving Obama toward the right move, orchestrating GM into Chapter 11 reorganization. Hmmm, competitive edge, capitalism, sounds almost Republican. Pay attention Republicans, you might learn something!

Monday, March 23, 2009

Top 10 Things I Should Blog About

Sometimes I have a bunch of blog ideas kicking around, and I can't decide which ones to actually DO. You might think this is a good thing, since I would have "a lot a material" to sustain my blogging over the coming weeks. The problem is, sometimes if you don't nail a good blog idea right away, it either becomes old news OR so much is written by others that there's nothing left to say.

A little amateur writer honesty is also in order.....sometimes it's easier to have a bunch of ideas than to actually write the pieces. This comes under the heading of "things that look easier than they are, until you try to do them". Like golf, fishing, and yoga. I'd feel worse about having blog ideas, without the blog pieces written, if I were a full time writer. Sometimes I wonder.....if I were a full time writer, and not a "lawyer doing my writing on the side", wouldn't it be easy to turn all the ideas into fully written pieces?

Actually, I do know better. It would NOT be easy. And my virtual hat is off to all REAL writers. Until I try it full time, I will always wonder if I could take writing to a higher level than I have at golf, fishing and yoga......things I have liked, tried, and sucked at. And yes, I do realize that one should not say they "suck" at yoga, that you "are where you are and you do what you can and that is OK", but it is also true that "when you do and you do and you are how you were", you suck.

Here are the top 10 things I should blog about:

10. The over-use of antibiotics is the main reason so many people are sick all the time.

9. The issue of the "shameful" bonuses is a bogus issue that has zero to do with the economic recovery. For Congress to pass laws imposing a 90% tax is the ultimate hypocrisy, and the type of ex-post facto law the founding fathers banned for the States, right in the Constitution. Today's Wall Street Journal editorial made this exact point. The 90% tax is purely grandstanding to distract folks from the irresponsible way the "economic stimulus" packages have been rushed and botched.

8. I have written that GM will soon be in Chapter 11, but the better story is that AIG should already BE in Chapter 11.

7. I am amazed how often intelligent, unmarried older people, with a LOT of money, die without a Will. The result of this is distant relatives inheriting their money. Did they really think they were going to live forever? Did they even CONSIDER making a Will and leaving their money to charity? Were they too cheap to pay for a proper Will?

6. The first and most important thing to do when thinking about a website for your business is: make believe you are the ideal customer/client for your business, and then Google every possible search term you can think of. Check the results and look at all the sites on all the page ones. That's your guide. It doesn't cost anything to do this, so if you are thinking about a website, do this right away.

5. AIG (yes, again!) is being treated different than any other company, and for good reason. They were the lynch pin in the giant Ponzi scheme that WAS the American mortgage system. The thumbnail version is that the mortgages could not have been grouped into bonds and sold, unless there was insurance. Big banks and government bought the bonds based on their value being "insured" by AIG. But AIG, and the banks who relied on their insurance, should have considered the following analogy........if I went to a sports book in a casino, and ALL the action was on one team, and the point spread was never adjusted, in fact, the point spread (interest rates, hehe) was adjusted to bring even MORE action on one team, and the bookie was not laying off it's bets, in fact it was continuing to take even more action on the same team, I would conclude that THE BOOKIE WAS GAMBLING!!!!! And so they were, and the other team won. And we are bailing out the bookie and all the bettors.

4. I learned how to play mah-jongg, and I really enjoy it. Whew, I admitted it.

3. The single most under-rated lawyering skill is writing good letters. It's the first thing I teach any new person in my office. I have a foolproof system for writing great business letters. Three parts to it: One: Identify yourself, and other pertinent parties. Two: Tell the story (this is the hard part, but telling the story well is what MAKES the letter) Three: Conclude by stating your position or asking for something. That's all there is to it.

2. A contested estate matter is like a contested matrimonial case, except there are more players, AND the one person who could possibly keep things under control is dead. Lovely way to spend one's time.

1. I can't imagine staying in law practice for the rest of my working life, yet I can't imagine not doing it.

Guess I'll be keeping my day job.

Tuesday, March 17, 2009

GM and Chapter 11

I want to get back to my "building a law practice" stuff, but this GM and Chapter 11 thing is really bugging me. I read today that the GM chairman strongly believes the company cannot go into a Chapter 11 because the public will not buy cars from a company in reorganization, and they will end up in liquidation.

Pardon my ignorance, but wtf is this guy talking about?

I don't need graphs and charts to see where GM is going as we speak.....on a straight line to liquidation. No bailout, no loan, no stimulus, no miracle is going to stop that. It's a competitive world, they are not competitive, they will go out of business. I've heard it said "they are too big to be allowed to fail". Isn't it obvious that they are "too big to succeed"? Being too big to succeed is the hallmark of un-competitiveness. They are weighted down with bad contracts, a bad dealer system, and product lines that have been behind the times and probably can't catch up. Certainly they can't catch up with all the excess baggage.

The brass at GM can keep referring to Chapter 11 as "bankruptcy", as if saying that will scare the country into endlessly bailing them out. Chapter 11 is NOT bankruptcy per-se, it is re-organization. If the reorganization does not work, THEN you go into liquidation (bankruptcy).

A Chapter 11 filing is a very powerful thing. It immediately stops the bleeding by putting a stay on your creditors. It compels the filing of a re-organization plan. It enables a company to renegotiate almost any problem on their agenda. Oh, and it enables the filing company to obtain fresh financing, as CHAPTER 11 FINANCING IS PREFERRED OVER ALL OTHER CREDITORS!!!! That's right, while a company is re-organizing, lenders who assist jump ahead of all other creditors, even secured creditors. The way the government should "bail out" GM is to either provide the Chapter 11 financing, or guarantee the financial institutions who will give the financing. Personally, I think this is what President Obama has had in mind all along.

I am struggling to understand why the GM leadership is so opposed to a Chapter 11 filing. I can understand why the unions are against it, the best parts of their contracts will be history, unprofitable plants will be closed (as they should be), and the company will be made leaner and more competitive. You would almost think that if it's so bad for the unions, management would embrace it. So why don't they?

Well, another party who takes a beating in a Chapter 11 is the stockholders. Hey, aren't most of the executives also big stockholders? How about executive jobs, and executive pay? Guess those would come under fire in a re-organization too. GM had some cash reserves that would have been nice to use as a cushion in a reorganization. But I guess it seemed better to deplete that, bleed the taxpayers of some useless bailout money, and then face the inevitable. Resisting the filing, and waiting until the company really should be in liquidation, may just doom the Chapter 11 to exactly what the executives claim they want to avoid.

Bankruptcy (reorganization or liquidation) are fascinating tactical cards, played in various ways at all levels of business. I've been involved in cases where the mere realistic brandishing of the bankruptcy sword totally changed a negotiation and settled an unresolvable situation.

The problem with GM is the brandishing and talk about a Chapter 11 hasn't convinced them to DO it. As is often true in bankruptcy cases, there has to be a catalyst, something that forces a companies hand. I can understand why President Obama did not force the filing in his first week in office. Had it been any other time, forcing a "pre-packaged" Chapter 11 was clearly the right way to go.

Watch for this......when they get to the brink, and it won't be long, President Obama will orchestrate GM into Chapter 11. It's the only way. Hopefully it's not too late for a reorganization to actually work.

Wednesday, March 11, 2009

Yahrzeit Tribute to Mom

Although I've been on a law/business related blogging streak, I'm taking a day to blog about something personal. Today is my Mom's eleventh Yahrzeit (anniversary of passing). Two years ago I posted "Eulogy for Mom" a printed version of the eulogy I read at her funeral. I wonder how eleven years of thinking about someone every day changes perspective. Although I think about her every day, I pick up the phone to call her less often. I am on my own now, imparting words, doing deeds and demonstrating values to all the people in my life. Eleven years later it finally dawns on me, I have a lot to give because I learned from someone who gave me her all. And so, in honor of Mom......

Top 10 things I learned from my mother:

10. Reading and writing are gifts, appreciate them.

9. Forgiving is better than holding a grudge.

8. If you are interested in something, don't dabble, GO FOR IT!

7. The best way to make friends is to BE a friend.

6. Payback is irrelevant when it comes to helping. Help because you can.

5. You don't have to be "religious" to be spiritual.

4. There are many ways to support someone, not everyone needs the same kind of support.

3. When people ask for advice, give it. Accept that whether they follow it is their decision.

2. Fight for what you believe, but always see reality.

1. Be discreet in your speech, but if something needs to be said, SAY IT.

Mom - it needed to be said, so I said it.

Wednesday, March 4, 2009

How to Get Good Cases for YOU

It was easy to list "27 things" you could do to get any kind of legal business. I could list 27 more, if I thought it would benefit anyone. A more challenging list is the things to do AFTER you figure out your "calling". After actually THINKING about what your successful practice would look and feel like.

After getting uninhibited in a most quiet way. Not knowing what the plan is, yet. And not caring. Spending the time and effort BEFORE making the actual plans, so that if the plans work, you will really have something.

Most lawyers starting a practice think....."I want to get my practice started". And you know what? They all succeed.....they get a practice started. And then the stated goal is often, "I want to keep it going and do better". And some effort is made towards that meekly stated goal, and what is achieved is exactly what was stated.

What a luxury, what a blessing it is, to be able to re-invent. To start out with an open slate, to think of what you really want for yourself, and take steps in THAT direction.

Recently a client suggested that I work with "less Zen, more alligator". The case called for "fox", so we compromised on a "Zen-fox-alligator" continuum as a long term strategy for the case.

For one starting in practice, or growing a practice, I hope I've showed where the Zen up front is needed. Now here's some serious "fox"..... 9 solid things to get good cases for YOU:

1. Prepare a direct mail campaign to a targeted list of attorneys. For my money, in law practice, nothing gives you better conversion value (advertising that turns into actual paying business) than direct mail. Some work DOES go into this, but that's one reason it works. What is a "targeted" list? These are attorneys and law firms who are in a position to make referrals for what YOU do. That's why you have to know what you want. So you have something, so you can be one who really knows, so you can be enthusiastic, and so you can send that letter making yourself known for what YOU DO. Who do you target? This takes some thinking, but don't let thinking stop you....THINK!!! Some things just go together. When I started my Queens per diem practice, I targeted attorneys who had cases coming up in Queens.

I knew someone who really knew how to do "wrongful death compromises", a very specific matter in Surrogates Court, which happens at the conclusion of a wrongful death case. Personal injury firms hate doing them because it's a lot of work, not really what they do, and it is needed to finish a case and get paid. She targeted personal injury firms with a great mailing, and became well known as the expert in this type of case.

What else would go together? Almost any specialized legal service is sought by general practitioners. Know what they want? For you to really know your stuff, do a great job, and pay them a referral fee in accordance with ethical rules. There, I said it, THEY WANT TO BE PAID, because general practice is really difficult, and referral fees are very important. Oh, and they don't want you to steal their clients, which you won't do because you do what you do, and they can have all the rest. I received a great mailing from a lawyer who specializes in real estate litigation, particularly "partition actions". His mailing arrived when I had just consulted with someone about such a situation, and if you've ever done one, they are nasty, but sometimes the only way to go. When I spoke with him I knew right away that he LOVED partition cases. I'm not sure why, but I could tell he did. I could also tell he couldn't wait to have my client retain him so HE could start working and pay me. I kept hoping I would get more partition calls so I could refer them to him.

A few more good potential matches for a targeted mailing.

Landlord firms by collection firms.
Plaintiff PI firms by comp or disability firms.
Elder law firms by estate administration firms
matrimonial lawyers by tax, or estate planning lawyers
immigration lawyers by any other specialty.
real estate transaction lawyers by real estate litigators

the combos are endless.....if you THINK for YOU.

What goes in the mailing? Two things, sometimes three.

First, the best letter possible. The one which is reviewed and edited and rewritten until it's perfect. The one that describes what you do, why you do it, and when and why they should call you. It can fit on one page, and it will be great. Put some work into it and email it to me, we'll optimize it.

Second - a specialized rolodex card, with your specialty on the flap. I know, rolodex cards are "old school", but here's my thinking. If you send a business card, people generally extract the information and put it in their "system". If they are interested, they'll do this with a rolodex card too, and if they have a rolodex (and many do) it will be filed under your specialty, so they don't have to remember your name, they will find you when they are looking for what YOU do.....which is way better. How do you like THIS rolodex card?

It's in Rolodexes in about 2000 law offices, filed under "Queens".

The third thing you can include in the mailing is a fee schedule, but only where appropriate.

We may end up with Zen, fox AND alligator.

Tomorrow.....item 2, creating a quality website.