E-Everything Going Dark

For those last 2 remaining readers left after all this time, E-Everything is going dark, fini, no mas. Even though these dark economic times should be the golden days of the modern bankruptcy era, the only thing that can truly counted on these days is change.

I am not really certain what the procedure should be to close out a "blawg", but most of the established blawgs I read are all done by lawyers who are partners or owners of their respective practices. I am neither, and am leaving the nest for bigger and better things. While I hope to stay active in the bankruptcy courts, I have joined forces with a dear friend from law school who is the founding member of the Burris Law Firm in Eagle Pass, Texas. There, I will be joining Brian Burris in doing God's work to bring justice to the oppressed and relief to those in need. While that move opens many doors, it also closes a few, and this blawg happens to be one of them. With no heir apparent, E-Everything will be left, preserved in its current state until some e-archaeologist or some future summer intern with the American Bankruptcy Institute finds my posts in the hubris of the Internet, and sadly marvels at the blasphemies of a young lawyer whose ideas were "before their time."

I estimate that I have well over 200 early morning and late evening hours invested in this project, mostly for naught. Along the way, I did get to meet some fascinating people including John Sirman with the Texas Bar, fellow blogger and miscreant Brian Cuban, Tom Mighell in Dallas, Texas' own Craig Ball, and even a few furtive emails with Dennis Kennedy. Vital to the short-lived success of this experiment was Steve Jakubowski, a true scholar and gentleman in the modern legal practice. My deepest gratitude goes to Jack Seward who provided some kind-handed corrections, and some phenomenal opportunities. Most importantly, Jack has become a good friend for which I am eternally grateful.

What, you might be asking, will I be doing with all that free time and energy that were formerly committed to commuting (I am working from home now in the Metropelx area) and blawging? Aside from realizing the dream of practicing with my good friend Brian, I am also working towards the realization of another long held dream - of becoming a published author. I am currently working on an irreverent, self-help work for young lawyers and law students tentatively titled "7 Steps to Destroying Your Legal Career in 7 Years". I am also at the mid-point in a manuscript for a novel tentatively titled "Barge Pilot", focusing on the last day in the life of a former lawyer who lost his family and his law practice to the dual ravages of an all-consuming legal career and multiple sclerosis. Finally, I have in development a thriller tentatively titled "Counsel for the Debtor", finding a first year BigLaw bankruptcy attorney grappling with the unexpected Chapter 11 of a major oil company in the midst of corporate corruption and international intrigue.

Anyone looking to chat, buy a book, hire a lawyer, or drink a beer, drop me a line at lbarrett@burrisfirm.com or infinitegtr@gmail.com Boutique bankruptcy firms need not apply.

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Federal Rule of Evidence 502 and the Bankruptcy Lawyer

At long last, proposed Federal Rule of Evidence 502 has been introduced to the Senate as S.2450. In a nutshell, FRE 502 is intended to reduce the likelihood of waiver of attorney-client privilege and work product in an age where even simple litigation can involve thousands of "pages" of documents, meta-data and data-enabled doughnuts.

Over the summer, I had an article published by the Bankruptcy Section of the State Bar of Texas concerning the proposed rule called: Bankruptcy Secrets and the Proposed Federal Rule of Evidence 502. Some of the highlighted concerns originally covered in that article are alive and well in S.2450.

Without reproducing the article (the link above should be good), the overriding purpose of the proposed rule is purportedly the protection of the attorney-client privilege while controlling the spiralling costs of litigation due to electronic review necessary to protect privilege. Without naming names, there are those outside of the profession (and perhaps inside the profession) that view the bill as an Omnibus Lawyer Malpractice Shield... and Consumer Protection Act. For the foreseeable future though, it is likely that the Rule's cost savings in document review is likely to be eaten up by the cost of litigating (again) if waiver was intentional or disclosure was inadvertent.

As my article also notes, there is cause for concern as to what exactly the Rule will protect for a disclosure "made in a Federal proceeding or to a Federal office or agency...". Will this include disclosures made to creditor's committees? What about PACER filings that the transmitting counsel believes is redacted, only to find that 12 year-olds have stopped fixing blinking VCR clocks and have moved on to bigger and better things?

Another interesting, though perhaps academic, point is FRE 502(d) regarding court orders and protection of privilege. The rule specifies that a court can order that "privilege... is not waived by disclosure connected with the litigation pending before the court...". In my single failed attempt publish a law review article regarding bankruptcy shortly after the Seminole Tribe opinion was handed down, I reviewed numerous opinions, articles, and bathroom wall graffiti parsing out the true nature of a bankruptcy proceeding as anything other than litigation.

There are also some interesting issues regarding the Rule's interplay between state and federal "proceedings", but those we can leave for another day.

What ought not be left unsaid is what effect the rule may have in terms of the time and attention attorneys give to meeting their ethical obligations to protect and hold dear the secrets of their clients. Just because the new rule may may provide some added protections for the attorney-client privilege, does not necessarily mean that the fundamental relationship between the attorney, the client and the client's secrets has changed. Assuming the rule is elevated to the status of more than just a bill, it ought never become a crutch in taking adequate measures to protect the client's secrets.

Friendly Reminder about Bankruptcy Rule 9037...

Now that December 1 has come and gone, and another set of amendments of the Federal Rules of Civil Procedure has become effective, time for a belated reminder that Bankruptcy Rule 9037 has been adopted. For those of you who, like me, have been too busy filing amended pleadings to replace outdated Official Forms and creating notice pleadings for small business case financial disclosures, it is time to turn your attention to 9037.
Rule 9037 mirrors many federal court local rules, and existing statutory law in many states, regarding the filing of record or other disclosure of individual identifying information such as social security numbers, year of birth, account numbers of financial accounts, and the names of minors. The reasons for the rule are obvious, but the the long-term implication for lawyers, commercial clients, and any user of "data-enabled" forms should not be overlooked, as the story below makes clear.

Have a Happy Friday.

The Mitchell Report: Moral Bankruptcy and MLB

To my surprise, the release of the Mitchell report is clearly pulling readers away from this site. Here is the link to the report.

As a matter of geeky interest, there are at least three instances where electronic documents are referred to. Apparently the investigators received 20,000 electronic documents from the Commissioner and from offices of the individual ball clubs. The Player's Association is reported to have declined to produce any documents, digital or otherwise. DLA Piper and FTI Consulting were hired to handle the electronic document review. Lucky Bastards.

In related news, my beloved Rangers (only slightly scarred in the report), still don't have any pitchers.

Trustee "Smart Form" May Become Data-Miner's Smart Bomb

I have been sitting on this one a while, but when ALM and ABI picked up the story, decided it was worth a few electrons in this forum.
In at least the last 2 years, the Administrative Office of the U.S. Courts and the United States Trustee has been working on an initiative to develop and implement standards for the use of "smart forms" or "data enabled" forms for the use in debtor bankruptcy filings. According to a Request for Comments dated June 3, 2005 and submitted by the AOUSC and USTP, a data enabled or smart form is a .pdf document that is filled out on-line, and then "saved as a PDF file containing data tags that are not visible to the user, but which 'mark' each piece of data entered into the individual fields on the form with a tag."
What this really all means is that the information captured in a petition, schedules and presumably statement of financial affairs allows anyone with the right electronic toys to assemble and aggregate the information entered into each of the active fields in the smart form into a data base or other repository without having to re-type or manually re-process the information.
The ability to rapidly access and assemble this data can be invaluable to the courts, trustees, administrative personnel, and creditors. The concern is that the ability to rapidly access and assemble this data can be invaluable to otherwise disinterested third parties who may find other, potentially nefarious uses, of the information.
This initiative, originally set to kick in on October 17, 2005, has been subject to fits and starts without really gaining much momentum. The primary barrier seems to be the reluctance of vendors to dive into this project without the use of the "smart forms" made uniformly mandatory throughout bankruptcy courts. A September 23, 2005 Memorandum to bankruptcy petition preparation software companies included a sample "data enabled" petition, also lovingly referred to as Official Form B1.
Software providers were assured that CM/ECF "as-is" would accept data-enabled forms. Providers were also informed that the foundation for this project would be something called Adobe Acroform filed and value (F/V) tags. In the June 2005 call for comments, the AOUSC and the USTP noted that the PDF/A, the interim filing format in place for CM/ECF was supported by PDF v. 1.4, but that it did not follow the "current industry trend towards XML tags", which is supported in "PDF/A version 1.5 or higher". The gubment cites its desire to move in the opposite direction of the rest of the world in order to "ensure all CM/ECF PDFs are compatible with the long term archival of digital records." I don't know what this means either, but remember this because it adds to a later plot twist. From a vendor standpoint though, it sure sounds like the software vendors don't have the desire to expend time and resources to develop a software tool based on standards and a format that only a small segment of its customers will be using, that are not used by any other end-user, for a profession notorious for changing nothing until and unless forced to do so. Sort of the equivalent of making GM produce a car that runs on eggshell fuel, at a time when the government has not yet required chickens to lay eggs with shells on them.
An undated posting on the website of the AO's office regarding the proposal seems to confirm these suspicions. A significant case is made by the author of the posting, for an XMP - metadata approach; and by attribution to Marty Mohr of E-Z Filing, that an XML-type standard be adopted.
Clifford J. White III, who must have a largely thankless job, has championed the benefits of fast-forwarding the use of smart forms. In an April 26, 2006 statement to the House, White explained that the "data-enabled" function would assist the US Trustee in conducting studies mandated by BAPCPA. White explained that implementing the program would allow the Trustee to use the data or analyzing the means test, selecting cases for targeted debtor audits, conducting the aforementioned studies, reporting to Congress and processing cases more efficiently. White also stated that the use of data tags in the smart form could be saved into the "industry standard Portable Document Format", so that the resulting document has search able data. The April 2006 statement is silent as to the PDF/A v. XML issue.
In September 2006, the Advisory Committee on Bankruptcy Rules met to consider, among many other things, White's suggestion that the use of the smart forms be made mandatory. The minutes reflect that White provided copies of a letter to James Duff, Director of the Administrative Office indicating that the technical standards were "set", but that the software vendors weren't likely to get on board unless the use of the forms was made mandatory. At that time, the minutes reflect that only one of the vendors had indicated a willingness or ability to implement the forms. Peter G. McCabe, billed as secretary of the Standing Committee, got a golden star for the session by pointing out, according to the minutes, that the smart form is better viewed as a long-term solution for the data-gathering requirements, and further indicated his belief that there were still some unspecified problems with the technical standards. Eventually, the committee passed a "sense of the committee" motion that all necessary steps be taken to advance the cause of data enabled forms. (I think I will screen print and sell some catchy t-shirts advocating for the "cause of data enabled forms... order now to beat the Christmas rush).
In December 2006, and in relation to BAPCPA, White told a Senate sub-committee that the use of smart forms was necessary to process "a large number of cases with the same efficiency in the future as we have over these past 12 months." This ability is threatened by "the fact that the courts have not yet mandated" the use of the smart forms. That individual courts have not mandated the use of smart forms is a legitimate concern, given that they apparently have the authority to do so under federal bankruptcy rule 5005.
In July 17, 2007, White broached the issue again in relation to a House sub-committee hearing on working families, medical debt and bankruptcy. White pointed out, correctly, that the use of smart forms would allow "researchers and others" to identify cases involving high medical debts, domestic support issues and would allow debtors to know sooner rather than later whether the UST would sling down the cursed "presumed abuse" lightning bolt. Bigger picture, according to White, the smart forms will provide more information as to the effectiveness of the system as a whole.
More recently, on October 2, 2007, White told a House sub-committee in an oversight hearing that the UST has developed or enhanced automated systems but stressed the continued need for the mandatory use of smart forms. To his credit (although this is the first public mention I can find of this issue), White did indicate that the mandatory use of such forms ought to be subject to "appropriate privacy and access concerns." Although I didn't pony up the the $15 for access to the ALM online article, it is the privacy issue that is of great concern to those watching this process. It is precisely these undefined privacy and access issues that need to be sorted out for the protection of individual debtors, their families and the attorneys they employ.
Many readers may recall the debacle that ensued after attorneys for a Roman Catholic church diocese filed "redacted" electronic filings that a clever reporter was able to work around and discover information that was supposed to have been kept under lock and key by debtor's counsel. The smart form may be the second generation of this type of problem for all bankruptcy lawyers. By and large, we already don't understand the electronic processes that guide us and surround us (just like the Force). Filing .pdf documents through PACER is currently something of an innocuous process now, but all bets are off once we start uploading data that can be mined, sifted, soiled, bundled, packaged, and re-sold. With the exception of the smattering of lawyers that truly understand metadata, no one that I know of has really voiced any opinion on the potential ethical issues and related dilemmas that will surely follow the implementation of smart forms. While there is no question that White and the good folks at the UST have it right that the smart forms ought to implemented, the "when" of the implementation is the real question; and "now" is probably not the correct answer.

Forget Sub-Prime: The Real Action in E-Bankruptcy may be the Struggling Adult Industry

A recent article in Conde' Nast Portfolio.com, written by Claire Hoffman details the financial struggles of the heavy-hitters in the adult industry, such as Vivid Entertainment, as a result of the growing phenomenon of free Internet pornography. According to the article, the adult industry, which hit its peak with the advent of the VCR and later the DVD, is now facing spiraling losses from sites such as YouPorn (the illicit cousin of YouTube), who are giving away what companies like Vivid are accustomed to selling.

One particular focus of the article, and lord knows you have all been reading this far just for the article, is the see-saw dilemma faced by content providers like Vivid faced by the "on-line freebies" of YouPorn type competition. On the one hand, free content sites can present a demonstrable threat to the bottom line of a more traditional content provider. To shore up these losses, or along the lines of an "if you can't beat them, join them" strategy, free content, user-generated content, and social networking sites have been gobbled up by the highest bidder. The real trick is figuring out how to monetize a site that users quickly become accustomed to as free. The Portfolio article indicates that YouPorn traffic was likely to pull in 15 million unique hits in the month of May, 2007 (surely E-Everything is just as provocative...?), resulting in a potential market that is just too damned big to ignore. Even as the current business model evaporates just as quickly as it developed, simply purchasing, or weathering the onslaught of the "free peeks" by YouPorn won't save the traditional content provider because there already exist other free sites that likely are growing almost as quickly as YouPorn; and in the E-Everything age, there is an entire generation of programmers sitting in their Mom's basement right now working on the next generation or application of technology likely to unsettle existing industry players.

While far less intriguing than the adult industry, technology is roiling media and content providers nearly across the board. One need only watch a Letterman re-run tonight, given the Hollywood Writer's strike (Power Brothers!) to see the effects.

Long time readers (thanks Mom) will recall that all I wanted for Christmas last year was the new Sony Reader, which is essentially an electronic platform for books old and new. Now that Harry Potter is married with children, speculation is running high that the publishing industry is coming out of remission and may be back on death's doorstep. If I can just get my novels finished and named as selections for Oprah's Book Club before she finally packs it in, life will be grand. In the mean time, the Sony Reader chugs along in a bit of obscurity. E-books are cheap and quickly downloaded, and more and more books are becoming available for free through Project Gutenberg. Given the prohibitive price of the Reader, and the relative ready access to e-books on the cheap, the publishing industry may indeed have something to fear. Why would I spend $6 for a cheap paperback classic at Barnes and Noble when I could have the same thing for free on my Blackberry?

The most dramatic battles may just be opening in the music industry. After years of falling CD sales (oddly, occurring in the same years that the music industry has produced a great deal of aural crap), the artists are starting to figure out for themselves how to cut out the middleman and go straight to their market, even employing market forces to set the value of the end product. The recent free release of Radiohead's latest album may produce the death knell for the music industry. For my own part, this is the same industry that, nearly from its inception, ripped of and exploited an entire generation of Blues musicians, so they won't find much sympathy in these quarters.

Cold weather is coming to North Texas. I believe I will hunker down with a tub of popcorn, download some free content, and ponder the solvency of the entertainment media...

Trouble at E-Trade Proves that Sub-Prime Woes Rankle E-Paradise

Recent conjecture that E-Trade may be forced to file bankruptcy as a result of the continuing sub-prime mortgage fiasco shows that even "e-commerce" is vulnerable to exposure. Outside of foreclosures and shocking re-adjustment of ARM's, this may be the first evidence of direct impact on individuals.