Saturday, September 01, 2007

What's Hot

What's Hot
What's Ahead for the Stock Market -- and Quant Funds

After weeks of skittishness and fear, investors showed signs on Tuesday of settling down. "Yesterday was one of the dullest days in the market that we've had in a while, and that's good in many ways," says Wharton finance professor Jeremy Siegel. Investors have been reeling from widespread problems in the subprime sector, stocks have fallen, yields on Treasury securities have dropped and some companies are finding it hard to borrow money -- all of which spurred the Federal Reserve last week to announce a cut in interest rates. Meanwhile, the upheaval has shown that quant funds, despite their computer power, aren't immune to mistakes and market downturns. So what can we expect in the weeks ahead?


Finance and Investment
(Podcast with Transcript)
Looking for a Company to Run? Search Funds Could Be the Answer

For those entrepreneurs who want to run a company but prefer to skip the start-up stage, search funds offer a possible alternative. A specialized form of private equity first launched in the mid-1980s, search funds are becoming increasingly popular -- and their supporters claim they can offer investors attractive returns and business owners a compelling exit strategy. What does this trend in private equity mean for investors, and for small businesses that might be acquisition targets for these funds? Robert Befidi, Jr., and Mark Sinatra, managing directors of Gordian Capital in New York City, spoke to Knowledge@Wharton about the pros and cons of search funds.

Law and Public Policy
Trouble in Toyland: New Challenges for Mattel -- and 'Made in China'

Mattel's recall of more than 10 million toys in the U.S. over the past three weeks has done more than focus attention on the company's wide array of products, which include such household names as Elmo, Ernie, Big Bird, Barbie and Batman. It has also further raised public awareness of quality control problems in China and the relentless push to cut costs along every step of the supply chain. Knowledge@Wharton looks at Mattel's response to the crisis, its potential liability and the consequences for China.

Managing Technology
Rivals Set Their Sights on Microsoft Office: Can They Topple the Giant?

It's open season on Microsoft Office. Google is distributing Sun Microsystems' StarOffice and also has its own web-based productivity suite. Apple has a new spreadsheet called Numbers to compete with Microsoft's Excel. Open source suite OpenOffice, along with several web-based products, are attacking as well. All these challengers emerge at a time when Microsoft's dominance in productivity software -- Microsoft Word, PowerPoint and Excel -- remains strong. So why try to overthrow the leader? And how vulnerable is Microsoft to this assault?

'If Brands Are Built Over Years, Why Are They Managed Over Quarters?'

Wharton marketing professor Leonard Lodish admits he is somewhat to blame for the erosion in brand pricing power that has hit many consumer-goods companies -- but not entirely to blame. In 1993, as store-level scanning data started to become widely available, Lodish coauthored an article outlining its power to gauge the effect of price promotions on revenue. But he also warned that these tools were not the only determinant of brand power. In a new paper, Lodish and co-author Carl F. Mela show how widespread adoption of easy-to-harness, short-term measures has altered consumer behavior and made it harder for brand managers to compete.

Finance and Investment
The Art and Science of Measuring CEO Performance

The long-term performance of a company's stock may be the ultimate test of a CEO's talents. But that's not the only measurement used by boards of directors to gauge how well the boss is doing. Experts at Wharton and elsewhere say that companies use many different metrics -- all of which can be fine-tuned to fit a company's circumstances.

Leadership and Change
Talking with the Receptionist, Pausing When You Speak and Other Secrets of Leadership Success

Several years ago, while visiting a regional branch of Lee Hecht Harrison, a global career management services company, then-president Stephen Harrison was stopped short by "Ray," his COO. "You didn't greet the receptionist," said Ray, who went on to explain that "a receptionist is a corporate concierge. They will talk to more important people in a day -- suppliers, customers, even CEOs -- than you will talk to all year." Harrison, speaking at the recent 11th annual Wharton Leadership Conference, contends that small acts like this are part of what makes for an ethical corporate culture. He was joined at the conference by public speaking coach Richard Greene, author of Words that Shook the World: 100 Years of Unforgettable Speeches and Events.

Finance and Investment
A Fish Tale on a Macro Scale: How Sushi Has Changed Globalization (and the World)

Over the past two decades, sushi -- a familiar, accessible and immensely desirable food that can be found in supermarket aisles and fast food outlets as well as high-end restaurants -- has become a staple of cultures around the globe. Indeed, far from signaling the snobbery of those who eat it, sushi today belongs to the masses. Yet sushi also says something important about how wealth, taste and markets interact, according to Sasha Issenberg. In his new book, The Sushi Economy: Globalization and the Making of a Modern Delicacy, Issenberg argues that sushi reveals the "complex dynamics of globalization" and shows, against all odds, that "a virtuous global commerce and food culture can exist."
Articles From Around the Network

India Knowledge@Wharton
Responding to the Rising Rupee: Why Indian Firms Must Rethink Their Business Models

In recent weeks, many Indian companies and industry organizations -- especially those that are export-oriented -- have been complaining about the strong rupee's negative effects on their operations. Some have urged the Reserve Bank of India to intervene. Jitendra V. Singh of Wharton's management department -- who takes over as dean of Singapore's Nanyang Business School on September 1 -- has a different view. In this opinion piece, Singh argues that Indian firms should use the rupee's strength to their advantage by adapting their business models in innovative ways, much as Japan's automakers did during the 1980s.

China Knowledge@Wharton
Despite Good Intentions, China's New Labor Law Leaves as Many Issues Unresolved as It Addresses

The passage of a sweeping new labor law in late June by the Standing Committee of the National People's Congress (NPC) followed public outcry over the brick kiln slavery scandal in northern China's Shanxi Province. The new law aims to provide more protection for lower-level, unskilled workers by emphasizing written contracts, equal pay and long-term job security. Yet businesses operating on thin margins worry about increasing labor costs, and some multinationals fear they might be at a disadvantage when they observe the law while local competitors flaunt it. Although the two-year legislation process has been noted for its balanced inclusion of different views, labor law experts still hotly debate the validity, applicability and enforceability of the new law.

Customer Versus Supplier Expectations: Bringing in Value Beyond Just the Widgets

In a highly competitive world where the customer expects to be king, why are so many firms unhappy with the products they purchase, sales staff who over-promise and don't deliver, and less than optimal after-sales service? In a recent paper published in the Journal of Marketing, Singapore Management University marketing professor Kapil R. Tuli and Emory University professors Ajay K. Kohli and Sundar G. Bhardwaj shed light on what appears to be a fundamental mismatch between customer expectations and what suppliers think their customers want.

Articles and Links from Knowledge@Wharton Sponsors

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Rodrigo González Fernández
Renato Sánchez 3586
telefono: 5839786
Escribanos, consúltenos, opine

Legal Blog Watch

Legal Blog Watch

Lawyers Could See Record Payday

An Iowa court is expected to rule today on whether to approve two attorneys' request for $75 million in fees and costs for a class action lawsuit they brought against Microsoft Corp. According to an Associated Press report, the award, if approved, would be a record for the state. The fee request comes from lawyers Roxanne Conlin of Des Moines and Richard M. Hagstrom of Minneapolis, who settled the case in April for $179.95 million, but not before three trips to the Iowa Supreme Court and some seven years of litigation. In their motion asking to the court to approve the fees, the lawyers say they are warranted by  "the complexity and difficulty of the case and the excellent result obtained."

According to AP, eight Iowans have filed letters with the court opposing the fee request. "How in the name of all that is sacred can you even imagine that to be equitable?" one wrote. Another called the request "an obscene amount of money to pay to Roxanne Conlin for bothering the court with this witch hunt." Conlin points out that the request includes $8 million the attorneys have spent in costs and more than 117,000 hours of work over seven years.

Meanwhile, Conlin and attorneys from Hagstrom's firm Zelle, Hofmann, Voelbel, Mason & Gette have already won approval of $48 million in attorney fees for a similar class action in Minnesota. And Hagstrom is asking for another $24 million in fees in a related lawsuit against Microsoft in Wisconsin.

Posted by Robert J. Ambrogi on August 31, 2007 at 03:23 PM | Permalink | Comments (0)

Honoring Lifetimes of Achievement

For the fourth year running, I have failed to win one of The American Lawyer magazine's lifetime achievement awards. But that's OK: I've still got a few years left in me, and the magazine's editors have managed to find eight high-achieving lawyers who actually deserve the award. As announced yesterday, recipients of Am Law's fourth annual lifetime achievement awards are:

  • James A. Baker III, Baker Botts, Houston. A former secretary of state and White House chief of staff, Baker's years of public service were bookended by stints as a partner at Am Law 100 firms. Despite his client commitments, he hasn't left the public sphere, most recently co-chairing the congressionally appointed Iraq Study Group.
  • Thomas A. Gottschalk, Kirkland & Ellis, Washington, D.C. Gottschalk left K&E 13 years ago to become general counsel at General Motors Corp., where he set the in-house standard for promoting diversity and pro bono. He returned to his former firm after retiring from GM last year.
  • Shirley M. Hufstedler, Morrison & Foerster, Los Angeles. A leader in the pioneer generation of women lawyers, she served as secretary of education under Jimmy Carter and for 11 years as a judge on the 9th U.S. Circuit Court of Appeals. She and her husband, Seth, headed an elite litigation boutique known for its high-quality work and its willingness to take on difficult public interest cases.
  • Nathaniel R. Jones, Blank Rome, Cincinnati. Jones was NAACP general counsel for a decade, beginning in 1969, taking several cases to the Supreme Court. President Carter named him to the 6th Circuit, where he served for 23 years.
  • Ira M. Millstein, Weil, Gotshal & Manges, New York. Even his friends say that Millstein, one of the partners who built a small Manhattan shop into a global powerhouse, didn't invent corporate governance; he just keeps being asked to perfect it. Throughout his career, Millstein has served as one of New York's leading private citizens, coming to the aid of projects as diverse as restoring Central Park and redeveloping lower Manhattan.
  • E. Barrett Prettyman Jr., Hogan & Hartson, Washington, D.C. A clerk to three Supreme Court justices and a leading appellate advocate in his own right, Prettyman also helped mentor a new generation of Supreme Court specialists, most notably John Roberts. Along the way, he was a pro bono stalwart, first president of the D.C. consolidated bar and a public servant, serving in the Kennedy Justice Department and as D.C.'s inspector general.
  • Jerold D. Solovy and Thomas P. Sullivan, Jenner & Block, Chicago. Partners for decades, Solovy and Sullivan are cornerstones of Jenner's formidable litigation department and the firm's extraordinary pro bono record. Both have been at the forefront of a variety of criminal justice issues, ranging from promoting counsel for the indigent to arguing pro bono appeals to the U.S. and Illinois Supreme Courts.

The honorees, said The American Lawyer editor-in-chief Aric Press, "have exemplified the legal profession's twin values of client service and public duty." They will be honored at an Oct. 24 dinner in New York City.

Posted by Robert J. Ambrogi on August 31, 2007 at 03:22 PM | Permalink | Comments (0)

Rowe Today, Gone Tomorrow

Today marks the last day of existence for the Chicago-based law firm Mayer, Brown, Rowe & Maw. Tomorrow it becomes just Mayer Brown. The reason for condensing its name, according to this Aug. 23 announcement: "To build a stronger and more defined brand in a fiercely competitive market."

The firm's current name, as Brenda Sapino Jeffreys reminds us at Tex Parte Blog, came to be in 2002, when the Windy City's Mayer, Brown & Platt merged with London's Rowe & Maw. With this move to a shorter and sweeter name, the firm joins a trend that is increasingly popular among law firms, as Martha Neil observes at the ABA Journal's Law News Now. And with the new name comes, of course, a new logo, in which a diamond, not an ampersand, separates Mayer and Brown. In that, Peter Lattman at the Wall St. Journal's Law Blog see a trend towards firms not only shortening their names but also adding typographical symbols.

Unfortunately for Mayer Brown, the name change will do nothing to change the $2 billion lawsuit it faces for allegedly helping to mislead creditors and investors of commodities and futures broker Refco Inc.

Posted by Robert J. Ambrogi on August 31, 2007 at 03:19 PM | Permalink | Comments (0)

6th Circuit Chides Lawyers on Law

The case before the 6th U.S. Circuit Court of Appeals questioned whether the state of Michigan could bar strippers from dancing bottomless. But in this Detroit Free Press report about the case, one sentence that stood out was this:

"The judges also chided state lawyers for misapplying legal theories, relying on outdated law and inadequately explaining how the ban furthered state interests."

That piqued my curiosity, so I pulled up the case, Hamilton's Bogarts Inc. v. Michigan, decided yesterday. As it turns out, that one paragraph from the Free Press sums up virtually the entire decision, which chastises the state's lawyers for the legal inadequacy of their case on three major points:

  • The state "appears to confuse the doctrines of res judicata and collateral estoppel." Even though the state's brief argued the former, the court "forgave" it and treated it as an argument for the latter, noting, "Latin is a dead language anyway."
  • The state "relies almost entirely" on a 21st Amendment legal argument that, while once considered viable, the Supreme Court expressly disavowed a decade ago. Given this, the state's primary legal argument "is no longer correct."
  • The state fails to address the most critical First Amendment issue, that of whether the regulations on nude dancing are content-based or content neutral. "We are left to guess about the governmental interest at stake ..., not to mention the critical question of which standard governs the case."

The case is not over. The appeal to the 6th Circuit addressed only the lower court's refusal to enjoin enforcement of the nude-dancing ban pending litigation. The circuit court said the injunction should be granted and remanded the case for further proceedings, adding, "Hopefully the case will be litigated differently after remand."

Posted by Robert J. Ambrogi on August 31, 2007 at 03:18 PM | Permalink | Comments (0)

Rodrigo González Fernández
Renato Sánchez 3586
telefono: 5839786
Escribanos, consúltenos, opine