A CORPORATE INSURANCE STUMP
Carl Blumenstein, a partner with Nossaman Guthner Knox & Elliott in San Francisco, joked last week that he couldn’t believe so many people had shown up to hear him and a colleague speak � in an event he described as “two white guys talking about insurance.” But their two seminars, which addressed how corporate counsel can get the most out of their companies’ policies, were well attended in both Palo Alto on Wednesday and San Francisco on Thursday.
While the subject might not quicken the pulse of most people, many corporate attorneys wrestle with insurance questions all the time. One poorly negotiated clause in a policy could leave a company vulnerable to extremely costly litigation, Blumenstein said.
It’s also a timely topic given the number of companies facing shareholder lawsuits, civil penalties or criminal charges against their directors and officers, he added.
One of the points Blumenstein and his colleague, Nossaman partner Thomas Long, emphasized in the seminars was that corporate counsel should feel empowered to negotiate any aspect of their policies, even if the company has a history of filing claims. That’s especially important because the insurance market these days is “soft,” they said.
When insurers write company policies and set premiums, “the soft market will have just as big an effect as your claims history,” Blumenstein said at the San Francisco seminar.
The Nossaman partners took the audience through a variety of hypothetical scenarios where problems could arise, and the questions were many: If multiple directors and officers are sued, should you use several different law firms? Answer: Yes. Does the insurance company have access to all your company’s files about the litigation that the insurer is covering? Answer: Yes.
The corporate insurance world continues to evolve, as evidenced by one audience question that stumped Blumenstein and Long. Are there any policies that will pay out when a company accidentally loses a bunch of personal customer information?
Long said he wasn’t familiar with any policies specifically designed to cover that contingency, but had seen the scenario marked as an exclusion � or something that’s explicitly not covered � in some existing corporate policies. That’s a good indication, he said, that coverage for such a scenario would probably be very expensive.
The seminars were organized by the San Francisco Bay Area Chapter of the Association of Corporate Counsel.
� Jessie Seyfer
LAWYERING IN A BUBBLEbr>
Some of Manatt, Phelps & Phillips’ lawyers recently took a novel approach to entertainment and music law: negotiating a Band in the Bubble deal.
The concept involves a band spending a period of time in a “bubble,” during which they write and record an album � all while Internet and TV users watch.
The most recent incarnation of the bubble concept was this year when a band called Cartel set up shop in Hudson River Park in New York City, in a rigid enclosure made of steel and fiberglass. A window of the bubble burst via heavy winds in early June, but the band stayed until June 12. Then, they exited and performed the new album live.
Manatt got involved on behalf of its client Cadbury Schweppes, the owner of Dr. Pepper, which sponsored the event. Cadbury awarded the firm the additional work in part because of its music law practice, said Eric Custer, a Los Angeles entertainment counsel with the firm.
The work was complicated because his team had to figure out rights for a continuous Internet stream and occasional MTV features. The players involved in those negotiations included not only the band but their production companies and record label.
But the Manatt team’s music expertise really came into play when the original band fell through � largely a result of sticking points in the negotiations.
“There are artists who don’t want to be affiliated with advertising and branding and others that don’t care,” Custer said. “We needed to make sure the band was 100 percent on board that they were going to be involved in a branded project.”
Custer helped Dr. Pepper identify several other bands that would work in what he calls “a crazy timeline,” just a week or two away from the deadline.
“There were long conversations involving us, clients and the agencies about what band would be amenable to being involved in advertising,” he said. “It’s hard to get a band like Radiohead. You needed someone that wasn’t completely unknown, but this, to them, would be a break.”
They also need the right label.
“If someone wasn’t as experienced in music, they might think all we need to do is sign up a band, but the recording company and the publishing company all need to be dealt with,” he said.
Negotiations also involved how the footage of the bubble period could be used. The band was on the Internet the entire time they were in the bubble, and the footage was cut down to a few showings on MTV.
After a long conference call on a Friday afternoon, they agreed on Cartel, an American punk band, and rushed to finalize the agreements.
Music lawyers tend to do a lot of standard record deals, and this was an innovative project, something that’s likely a harbinger of what’s to come in the music industry, Custer said: “With the growth of the Internet and file sharing � the big question is how do you break new artists without spending a fortune?”
Although only time will tell how successful the band’s bubble recording will be, the event itself was a success, Custer said. “There was a fair amount of talk about it in the music industry. Certainly they got exposure.”
� Kellie Schmitt
