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The Business Lawyer
The Business Lawyer -- May 2009, Volume 64, Issue 3 ARTICLES Prescriptions for Compliance with the Foreign Corrupt Practices Act: Identifying Bribery Risks and Implementing Anti-Bribery Controls in Pharmaceutical and Life Sciences Companies Roger M. Witten, Kimberly A. Parker, Jay Holtmeier, and Thomas J. Koffer, 64(3): 691-738 (May 2009) The U.S. Foreign Corrupt Practices Act has become a focal point of enforcement efforts of the U.S. Department of Justice and U.S. Securities and Exchange Commission, as witnessed by the surge in the number of companies and individuals currently under investigation for, or that recently have settled charges of, bribing foreign government officials to secure business advantages. This heightened level of law enforcement activity has particularly affected pharmaceutical and life sciences companies. For example, enforcement authorities currently are conducting an investigation involving payments made by the six leading manufacturers of orthopedic implants to physicians employed by government-owned hospitals outside the United States, while several well-known pharmaceutical companies are also targets of similar investigations. This Article examines from a practitioner's perspective the specific types and levels of risks that pharmaceutical and life sciences companies confront under the Foreign Corrupt Practices Act that, in some instances, have led to enforcement proceedings. The Article then addresses the elements of an effective Foreign Corrupt Practices Act compliance program to control the bribery risks that arise from the complex and varied ways in which such companies interact with government regulators and customers. The Article provides practical advice on the compliance programs that should be considered by pharmaceutical and life sciences companies to control company- and country-specific bribery risks, particularly in light of the current enforcement environment. While these companies confront a number of unique risks, many of the insights and recommendations in the Article are relevant to companies in other industries that operate in a global environment. Litigating in LLCs Larry E. Ribstein, 64(3): 739-756 (May 2009) One of the most important issues involving limited liability companies is the appropriate way to characterize and handle disputes among members. Courts and legislatures borrowed the derivative suit remedy from corporations and limited partnerships and applied it to LLCs without adequately considering whether this application was appropriate. In fact, this remedy is not suited to the typical business associations for which LLC statutes are designed--that is, closely held firms in which members generally participate directly in management. In this setting, the derivative remedy creates costs and complications that are unnecessary because more appropriate remedies are available, including member-authorized suits on behalf of the entity, direct suits by the injured parties, and contractual arbitration. Accordingly, the derivative suit should not be a default remedy for LLCs. More generally, this analysis provides an example of the potential risks of borrowing LLC rules from other types of business associations. Liquidated Damages in Commercial Leases of Personalty--The Proper Analysis Ian Shrank and Samuel Yim, 64(3): 757-782 (May 2009) Most commercial leases of personalty use liquidated damages of some sort in the event of a lessee default and consequent termination of the lease. UCC Article 2A provides a simple formula for determining when such liquidated damages are enforceable (and do not constitute an unenforceable penalty): the liquidated amount must be a reasonable pre-estimate of the harm anticipated by the lessor. This Article briefly reviews the role of liquidated damages in leases and then summarizes the Article 2A caselaw on liquidated damages. In the authors' view, a number of courts have not properly applied the Article 2A formula. Finally, this Article provides a methodology for how a liquidated damage clause in a lease should be analyzed under Article 2A. This proposed solution will be both more consistent with the intent of Article 2A and more conducive to a vibrant and efficient leasing industry. The Role of Lead Counsel in Syndicated Lending Transactions Reade H. Ryan, Jr., 64(3): 783-800 (May 2009) Lawyers and law firms have been acting as lead counsel in syndicated lending transactions for many years, but without much guidance, written or unwritten, concerning the duties and responsibilities of being lead counsel. In this Article, the author sets forth his understanding, based on his own experience and his own opinions, of those duties and responsibilities. The author responds to the following questions related to lead counsel's duties and responsibilities: Which lenders does the lead counsel represent? How does the lead counsel handle the differing interests and views of the various lenders? What legal opinions, if any, does the lead counsel render? What action does the lead counsel take if a legal problem arises? To which lenders is the lead counsel liable for malpractice? In the author's view, many, if not all, of these questions can be resolved if the lead counsel prepares, and has the appropriate lenders execute, a representation letter that sets forth the basis on which the lead counsel will act. An example of such letter is attached as Annex A. REPORT Additional Report By the Joint Task Force on Deposit Account Control Agreements, ABA Section of Business Law 64(3): 801-832 (May 2009) SURVEY--FEDERAL REGULATION OF SECURITIES 64(3): 833-974 (May 2009) Annual Review of Federal Securities Regulation Subcommittee on Annual Review, Committee on Federal Regulation of Securities, ABA Section of Business Law Section I - Significant 2008 Accounting Developments Section II - Significant 2008 Regulatory Developments Section III - Significant 2008 Caselaw Developments
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