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Is Google Responsible for Delivering Accurate – And Truthful – Search Results?
Category: Press | Tuesday, October 28th, 2014 | Comments Off on Is Google Responsible for Delivering Accurate – And Truthful – Search Results?
Bryan Sullivan appeared in Robert McGarvey’s Main Street article “Is Google Responsible for Delivering Accurate – And Truthful – Search Results?”
Sophia Lau Comments on Apple and Facebook Employee Benefits
Category: News, Press | Wednesday, October 22nd, 2014 | Comments Off on Sophia Lau Comments on Apple and Facebook Employee Benefits
Sophia Lau was quoted in Erika Morphy’s eCommerce Times article “Debate Simmers Over Facebook, Apple Egg-Freezing Benefit,” which discusses Apple’s and Facebook’s new employee benefits.
The full article can be found here.
Stephen Ma Quoted in Law360 Article on SEC’s ‘Broken Windows’
Category: Press | Friday, September 12th, 2014 | Comments Off on Stephen Ma Quoted in Law360 Article on SEC’s ‘Broken Windows’
Stephen Ma was quoted in Stephanie Russell-Kraft’s Law360 article “SEC’s ‘Broken Windows Gambit Leaves No Room For Error.” The full article can be found below.
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Law360, New York (September 10, 2014, 3:20 PM ET) — Nearly a year after U.S. Securities and Exchange Commission Chair Mary Jo White said she had adopted a “broken windows” strategy of enforcement, defense attorneys and registered entities are becoming weary of the agency’s “tough cop” approach, frustrated by the feeling that they’re considered targets before even doing anything wrong.
The SEC’s broken windows policy, which is based on the premise that no securities law violation is too small to prosecute and that minor enforcement actions lead to greater overall compliance, has been met with growing skepticism as the agency continues to push for press attention over even the most minimal infractions.
In July, the SEC issued a press release detailing charges in a $11,776 insider trading case, and in August, the agency announced an enforcement action against a defunct company, both moves many former staff attorneys saw as a departure from the agency’s past practices.
“You see press releases now touting enforcement actions that involve either no or negligible investor harm, low dollar amounts for insider trading, and these are cases that the SEC a couple of years ago certainly would not have touted in a press release,” said Joseph Dever of Cozen O’Connor, who thinks the agency’s standard for issuing press releases has been lowered since his time at the SEC’s Enforcement Division. Dever, who joined the SEC in 2003, left in 2012 after becoming an assistant regional director.
Under the broken windows agenda, the SEC’s Enforcement Division has sent the message it may be sacrificing quality for quantity, Dever said.
The policy has also been responsible for changing attitudes across the industry, according to Stephen Ma of Early Sullivan Wright Gizer & McRae LLP. Ma, who represents individuals in enforcement actions brought by the SEC, said he recently corrected a firm’s outside counsel’s long-standing assumption that the agency would not pursue a small case as vigorously as a large one.
“I had to sit everybody down and say, ‘If you think that just because you as an individual had alleged profits of less than $100,000, that dollar amount is not a material issue for them not to go after fraud,'” Ma said. “The dynamic of the conversation changed immediately.”
Over the past several years, smaller companies and individuals have started to pay closer attention to the SEC’s enforcement policies, according to Ma, who noted that the SEC places value on every case with the potential to increase the enforcement numbers it reports once a year.
As a result, registered entities have become frustrated by the perception that the agency doesn’t appreciate the true cost of reputational harm, treating small, technical violations of securities laws the same as fraud, Dever said.
“There is concern among a lot of registered entities and the defense bar that every time the SEC finds a violation, they’re subject to enforcement or a penalty and it’s for conduct related to an oversight or a misinterpretation of a statutory provision,” he said.
While many registrants are happy to make changes in order to comply with various rule provisions, they are discouraged by the agency’s insistence on publicly disclosing even the slightest violations, according to Dever.The broken windows policy has also undermined the SEC’s other attempts to root out wrongdoing through cooperation with registered entities, according to Amy Greer, a litigation partner at Morgan Lewis & Bockius LLP.
“It’s not like people are breaking down the door to tell them things,” Greer said. “People have the sense that no matter what you do, it’s not enough.”
Since there is no clearly quantifiable benefit from self-reporting, many entities have simply chosen to stay quiet, according to Phil Bezanson of Bracewell & Giuliani LLP, who said cooperation is “at the very best” a “hard, complicated decision.” ”
At its worst, the promise of benefits is fairly faint compared with the potential costs of coming forward when you don’t know what’s going to happen next,” Bezanson said.
Among those most worried about the agency’s enforcement policies are gatekeepers like compliance officers, who fear they will face punishment no matter what, according to Greer.
“There’s this feeling that they are targets even when they are doing a good job and acting in good faith,” she said. “I’m not so sure that was the intention.”
–Editing by Katherine Rautenberg and Philip Shea. All Content © 2003-2014, Portfolio Media, Inc.
Bryan Sullivan Quoted in Law360 Article on “Poor Door”
Category: News, Press | Monday, August 4th, 2014 | Comments Off on Bryan Sullivan Quoted in Law360 Article on “Poor Door”
Bryan Sullivan was quoted in Kaitlin Ugolik’s Law360 article “‘Poor Door’ A Symptom Of Tough Balancing Act In Housing.” The full article can be found below.
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‘Poor Door’ A Symptom Of Tough Balancing Act In Housing
By Kaitlin Ugolik
Law360, New York (July 30, 2014, 6:54 PM ET) — Extell Development Co.’s so-called “poor door” — a separate entrance for affordable housing tenants at a development on Riverside Drive — made headlines last week after receiving official approval, but experts say the controversy clouds the reality of balancing private and public housing interests in a city like New York.
The building and its “poor door” first caught the world’s attention last year, when the developer released renderings for the project that showed separate doors for condominium buyers and affordable rental tenants.
It wasn’t the first setup of its kind, particularly not in New York City, but with news of growing inequality around the country and especially in large urban areas, many criticized the separate door as classist and suggested that affordable housing tenants were being treated as “second- class citizens.”
The controversy erupted again last week when the Department of Housing Preservation and Development confirmed that it had approved Extell’s application for the department’s inclusionary housing program, which gives the developer access to certain incentives in exchange for adding to the city’s affordable housing inventory.
Many have argued that the trade-off may not be worth it: If developers that qualify for such programs end up relegating lower-income tenants to a separate entrance, are those tenants benefiting fully from the city’s efforts to house them? “
One reason that the ‘poor door’ issue touches a nerve is that real estate and class are so closely linked in New York City,” said David Reiss, a professor at Brooklyn Law School who focuses on real estate finance and community development. “Affordable housing units are seen as a great equalizer. The notion that someone living in an affordable housing unit must be constantly reminded of their status is repugnant to many.”
This has led to headlines around the world proclaiming Extell’s design and the city’s approval a “disgrace.” But experts say the question of what to do about such practices is not that simple.
Inclusionary housing has been a major tenet of Mayor Bill de Blasio’s plan to add or maintain 200,000 affordable housing units over the next decade. In a city with such high land prices and rents, it has become clear that developers need some kind of incentive to include affordable housing in their projects, and the mayor and city council have made a series of adjustments and concessions to get such housing into projects like the new Domino Sugar Factory development and under-construction buildings at Hudson Yards.
But just how affordable and market-rate housing should be built together in these developments has not been as closely considered, and experts say the “poor door” controversy may just be the first of many unanticipated issues in need of creative solutions.
To get around the issue of affordable units having different entrances or looking different and having different amenities from market-rate units, some have suggested making the units indistinguishable, but Reiss warns that this might cause additional problems.
“For instance, given a particular amount of funding for affordable housing, is it better to build fewer units of affordable housing that are indistinguishable from market-rate units in a Manhattan building, or is it better to build more units of affordable housing in an outer-borough — and therefore cheaper — building?” he said. “There is no right answer to that question. Each reflects a policy preference. But it is most important to realize that a trade-off between cost and number of units exists.”
Lawmakers in New York — and, thanks to the viral nature of the Extell story, around the world — are now grappling with that trade-off.
Manhattan Borough President Gale Brewer said at a city council meeting last week that having separate doors is “an affront to New Yorkers’ belief in fairness and diversity” and that with the backing of the mayor, she was looking for a way to block future “poor doors.”
De Blasio has said he wants to change the city’s housing laws to prevent developers from building this way in the future, although the New York Post pointed out this week that the mayor voted for the zoning resolution that made “poor doors” possible as a councilmember back in 2009.
Meanwhile, community groups and individual residents may take things into their own hands. Several petitions have been started, and while representatives for the American Civil Liberties Union have publicly stated that “poor doors” are not illegal under the Equal Protection Clause, some experts say they can see a precedent for some concerned parties taking the issue to court.
While discrimination based on income is not considered actionable, if nonprofit groups and residents argue that the net effect of a “poor door” is that people are discriminated against based on their race, they might have a strong case, said Bryan Sullivan of Early Sullivan Wright Gizer & McRae LLP.
“On its face, it doesn’t discriminate,” he said, “[but] the net effect of this would be to affect minorities the most, since they’re the most likely to be in an affordable housing unit. So there could be an argument that the effect of this policy and the intention of it is to discriminate against minorities.”
Those who represent condominium and cooperative owners say they can see both sides of the coin.
“One could certainly argue that the affordable housing folks are being treated as more like second-class citizens,” said Steven Sladkus, a partner with Wolf Haldenstein Adler Freeman & Herz LLP.
But at the same time, he says, he can understand the opposite view. “When you’re spending $10 million for an apartment, you should legitimately expect a grandiose entrance.”
–Editing by Kat Laskowski and Philip Shea. All Content © 2003-2014, Portfolio Media, Inc.
Stephen Ma Quoted in Karma Allen’s CNBC Piece on Crowdfunding
Category: Press | Monday, July 28th, 2014 | Comments Off on Stephen Ma Quoted in Karma Allen’s CNBC Piece on Crowdfunding
Stephen Ma was quoted in Karma Allen’s piece “How to crowdfund without losing your shirt,” which appeared on CNBC. The article discuss crowdfunding strategies and potential disasters waiting to happen. The full article can be found here.
Resolution of Randy James and Miles Levy Dispute Covered by Entertainment Trades
Category: News, Press | Friday, July 18th, 2014 | Comments Off on Resolution of Randy James and Miles Levy Dispute Covered by Entertainment Trades
The resolution of the dispute between James Franco’s former managers, Randy James and Miles Levy, was covered by several entertainment trades, including Deadline and The Wrap. The full Deadline article can be found here.
Stephen Ma Quoted in Alfred Lee’s Los Angeles Business Journal Piece on “Swagbucks”
Category: Press, Publications | Wednesday, July 2nd, 2014 | Comments Off on Stephen Ma Quoted in Alfred Lee’s Los Angeles Business Journal Piece on “Swagbucks”
Stephen Ma was quoted in Alfred Lee’s article titled “Link to Website Windfall Splits Lawyers,” which appeared in the Los Angeles Business Journal. The full article can be found below:
Few L.A. companies in recent years have grown as quickly as Swagbucks.
The El Segundo consumer rewards website saw revenues rocket more than 4,000 percent in five years, to $53 million last year – before taking on a single outside investor.
And its sudden rise hasn’t just benefited its founders. Enjoying an unexpected windfall is the company’s law firm, Davis Shapiro Lewit Grabel Leven Granderson & Blake.
While Swagbucks’ sales took off, its outside attorneys held on to a 10 percent stake in its parent company, Prodege. The stake was granted in exchange for legal services during its early days, when cash was tight. Ten percent wasn’t worth much then, but now could be valued at more than $12 million.
Taking equity instead of fees is a practice that has come into vogue in Los Angeles with the emergence of the tech sector. Pioneered by Silicon Valley law firms decades ago, equity as compensation has been attractive to firms here looking to find the next Apple or Google.
But it also has led to problems. Davis Shapiro’s increasingly lucrative stake in its client has been the subject of internal wrangling at the firm, leading to the ouster of its managing partner and years of fighting over which attorneys get to share in the profit.
Daniel Hayes, an L.A. attorney and former managing partner who departed the Beverly Hills office of the New York firm in 2012, claims he was the attorney who originally brought Swagbucks to the firm. Two years later, he remains locked in a fight over his claims that the 10 percent stake should be his.
Peter Zeughauser, a Newport Beach law firm consultant, said that despite the practice’s rising popularity in Los Angeles, only a handful of firms have mastered the tricky art of making equity stakes pay off – and doling them out properly.
“A lot of the firms that have done them wouldn’t do them again if they were starting over,” he said. “These things are not so simple to administer. … The likelihood of success of having a startup exit strategy that pays out is small and there are a lot of spats over who should get how much.”
Prodege declined comment. Representatives of Hayes and Davis Shapiro did not provide comment.
Growing company
Prodege was co-founded in 2006 by entrepreneur Josef Gorowitz and concert photographer Scott Dudelson. The two met through mutual friends and launched a company that provided custom search engines for non-profit organizations, which could then raise money every time someone used the search engine.
“I had previously co-founded a honey export business out of Argentina and realized that while I was worrying about the movement of physical commodities from one location to another, companies like Google were making money simply on clicks,” Gorowitz told the Business Journal in 2011.
In 2008, Prodege launched Swagbucks. Users can collect reward points – known as swag bucks – for watching Internet videos or playing games, then redeem them for gift cards, prizes and discounts. Swagbucks earns a small referral fee when people use its site to search online, make a purchase or other actions. It also sells targeted advertising on its site.
Swagbucks generated $1.2 million in revenue in its first year, and has exploded since then. Revenue grew roughly tenfold in its first two years; executives have said that the company has been profitable since 2010. It has placed on the Business Journal’s annual ranking of fastest-growing private companies in Los Angeles in each of the last three years, peaking at third in 2011. Today, the company has about 110 employees in its El Segundo office.
Its success has drawn the attention of investors. Last month, Swagbucks announced a $60 million investment by Palo Alto’s Technology Crossover Ventures for a “significant minority stake.” Chuck Davis, a venture partner at Technology Crossover, replaced Gorowitz as chief executive. The deal valued the company at more than $120 million and marked the first time Gorowitz and Dudelson said they had taken an outside investment.
But quietly holding a stake all along was Davis Shapiro, then known as Davis Shapiro Lewit & Hayes. The New York entertainment boutique, founded by Fred Davis, son of music mogul Clive Davis, is known for representing startup clients including Spotify and MySpace Music. It has also occasionally taken equity stakes in clients, according to court documents.
The practice was popularized by Silicon Valley firms such as Cooley and Wilson Sonsini Goodrich & Rosati, which reaped big gains cashing out on stakes in clients including Google Inc. and VA Linux. Not everyone was a winner: Silicon Valley firm Brobeck Phleger & Harrison declared bankruptcy following the dot-com bust, which destroyed the value of the stakes it had taken in clients.
In Los Angeles, the practice has caught on amid the recent tech boom. Cooley opened a Santa Monica office in 2012 and invests in clients through partnerships that are formed annually by partners who choose to participate in a given year.
In general, firms have taken the lessons of the dot-com bust to heart and are less likely to do deals that are purely equity in lieu of fees. More common is a hybrid arrangement in which a firm might accept a small retainer fee or defer fees for the first year and take a smaller percentage of equity.
West L.A.’s Manatt Phelps & Phillips has gone as far as launching a digital ventures arm distinct from its law practice. The firm declined to comment, but told the Business Journal in April that it has made investments ranging from $25,000 to $500,000 in about 10 companies, including Encino YouTube network DanceOn and MovieLaLa, a social network for movie fans.
Dispute
Davis Shapiro’s stake in Prodege dates back to at least 2008. The firm received equity in lieu of fees, though it’s unclear whether it received other compensation. Hayes, then a partner in the firm’s Beverly Hills office, claims he brought the client in.
In 2008, a simple trip with the client bumped up the firm’s ownership by 5 percent.
“Thanks in large part to Peter (Lewit’s) offer to go to London with this client, we have increased our equity stake from 5 percent to 10 percent,” Hayes wrote in an email, included in court documents, to his partners that year. “They are really gaining momentum and we can help push it over the top.”
Davis left the firm in late 2009 to start an investment bank and Hayes took over as managing partner. But as the company grew, the relationship between Hayes and his partners frayed. In 2012, friction arose when a third party expressed interest in a potential acquisition of Prodege that valued the company at around $60 million, according to court documents.
“What appears to have fundamentally altered the relationship among these three partners was the prospect that a sale of Prodege might occur and that a 10 percent ownership interest could produce compensation dwarfing what any one of the partners had previously generated,” William F. Cavanaugh Jr., an arbitration judge who heard the case, wrote in a court filing.
Hayes’ former partners, Steven Shapiro and Peter Lewit, claim that a dispute broke out in 2012 when they asserted that the Prodege stake was a partnership stake and not Hayes’ alone, ultimately resulting in them terminating him as partner in November 2012.
In an affidavit, Hayes attributed the dispute instead to his refusal to issue advance payments to partners due to the firm’s dwindling finances, as revenues had dropped by more than half between 2008 and 2012; Shapiro and Lewit denied the claims.
The fight entered arbitration. In April, a panel ruled in favor of Davis Shapiro, granting the firm the 10 percent stake and ordering Hayes to pay his old firm $59,000 unrelated to the Swagbucks stake.
But the arbitration didn’t bring an end to the dispute. On May 30, Hayes wrote a letter again demanding rights to the Prodege interest, prompting Davis Shapiro to sue him in Los Angeles Superior Court this month. It is unclear if the stake was sold off or not in early May as part of the investment by Technology Crossover.
Stephen Ma, an attorney who reviewed the case for the Business Journal, said a 10 percent equity stake in a legal client is on the high side, as percentage stakes have been trending lower. Wilson Sonsini, for example, doesn’t take stakes larger than 1 percent these days. He added that he expected a settlement could be reached and that the case would hinge on the particulars of the contract.
“It’s ultimately a contract case. What does the contract say and how did the parties intend it?” he said.
Source: Los Angeles Business Journal
Eric Early Quoted in The Legal Description
Category: News, Press | Tuesday, June 10th, 2014 | Comments Off on Eric Early Quoted in The Legal Description
Eric Early was quoted in The Legal Description’s “Top Case Law of 2013” special report, which details significant cases decided during 2013 and the impact they will have moving forward.
The Legal Description is the most comprehensive legal resource specifically designed for title insurance and settlement services professionals.
Early Sullivan Lawyers Recognized by Thomson Reuters as Southern California Super Lawyers and Rising Stars
Category: Awards, News, Press | Friday, June 6th, 2014 | Comments Off on Early Sullivan Lawyers Recognized by Thomson Reuters as Southern California Super Lawyers and Rising Stars
Early Sullivan Wright Gizer & McRae LLP is proud to announce that attorneys from the firm’s Los Angeles office were selected by Thomson Reuters as 2014 Southern California Super Lawyers and Rising Stars. Partner Eric P. Early was named a Super Lawyer in the Business Litigation, Entertainment & Sports and Securities Litigation categories for the 10th year, while partner Stephen Y. Ma was recognized in the Business Litigation category. Partners Scott E. Gizer, Devin A. McRae, and Bryan M. Sullivan, and associate Peter Scott, were all named to the Rising Stars list.
The Super Lawyers distinction honors attorneys who attain a high degree of peer recognition and professional achievement as some of the region’s pre-eminent lawyers. Super Lawyers is a rating service of lawyers from more than 70 practice areas. The selection process includes independent research, peer nominations and peer evaluations, all of which result in a comprehensive and diverse listing of the top five percent of attorneys in each state.
The Rising Stars list is developed using the same selection process used for the Super Lawyers list except to be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger or in practice for 10 years or less. While up to 5 percent of the lawyers in a state are named to Super Lawyers, no more than 2.5 percent are named to Rising Stars.
Finally, ASG and Progressive settle Laufou fire case
Category: News, Press | Wednesday, April 30th, 2014 | Comments Off on Finally, ASG and Progressive settle Laufou fire case
Devin McRae was mentioned in an article regarding a multi-million dollar settlement obtained by the firm Devin McRae. The litigation ensued after a fire destroyed the old Laufou shopping center in American Samoa.