SCO's Lawyers Analyzed

byteCoder writes "Today's Wall Street Journal has an article (subscription required) which highlights the arrangement disclosed by this freely available SEC filing made between SCO and its law firm (run by lawyer David Boies) giving the law firm of Boies, Schiller & Flexner LLP 20% of the proceeds from the settlement or of "a sale of SCO during the pendancy of litigation." (Search down for "Arrangement with Counsel".) Apparently, if SCO is taken over while litigation is pending, Mr. Boies' law firm could stand to earn 20% of yesterday's market cap of $247M = $49.4M plus the premium associated with the increase in stock price due to the takeover. Of course, if SCO is successful in getting any part of their requested $3Bn in damages from IBM, the payday to the lawyers would be much greater."

Ew, gross

For a minute there I thought it said "SCO's lawyers anal-ized"

Contingency

This is simply known as working on a contingency basis, and there is nothing unusual about it. It essentially means that the lawyer fronts the money during the trial and collects a percentage at the end. This can be very expensive for a law firm, since there is a lot of discovery (depositions are insanely expensive due to transcription costs), they pay for expert testimony which is also very expensive, and have to deplete their own working capital during the trial, in the *hopes* that they win. If they don't, the firm is out a fair chunk of change.
A lot of civil trials do work like this, and I'm not quite sure why this is frontpage worthy.

Re:Contingency

But it is extremely interesting that the lawyers get 20% of an acquisition cost. That speaks a lot towards motives in bringing the lawsuit.

Re:Contingency

Poster wrote:

Letting them buy the rights to Unix would only further their monoploy.

Let's try again. Despite what SCO says, SCO does not own the rights to UNIX. The term UNIX is trademark The Open Group. UNIX OS certification is available to any vendor who can make a UNIX variant and pays the bucks to get it certified UNIX-compliant.

Hell, even SCO's variant is not certifiable as a modern UNIX.

So, let's confuse the issue even more by saying we're running Linux - the first and only post-UNIX operating system (it's all about positioning and branding. We make it quite clear that Linux is not a modified version of UNIX, but was written from the ground up, AND we make it equally clear that a POS like SCO is ancient history).

Re:Contingency

No, their case is NOT based on having the right to license the code. Their case is a simple contract dispute between themselves and IBM.

The counter-suits, on the other hand, ARE based upon the fact that SCO does NOT control UNIX, does NOT have the right to issue licenses for linux (which is what they had threatened to do), and that, if there was in fact any SCO code in linux (an assertion that they have failed miserably at every time they tried to "prove" it), it's already covered under their gpl-ed release of Linux.

As for the so-called code, code is not patentable, just copyrightable. Since SCO waited too long between the initial writing of the code and filing for a copyright, their maximum damages are set by statute at $150,000.00. But the suit isn't about that. It's a contract dispute with IBM over terminating Project Monterey.

The GPL specifically forbids SCO or anyone else from encumbering gpl-ed software with additional licenses, so SCO does not have the right to issue licenses for the kernel. As for the GPL's validity in court, the courts have decided in its' favor. see bottom of text: MySQL vs NuSphere [mdlug.org]

Re:Contingency

Normally, MS cannot get into the unix business due to an agreement they signed when they spun off Xenix to a different company (They agreed that they would not compete against the product line they were selling off to someone else, and thus they would not get involved in the unix market again.) But - here's the interesting thing - what's the company they signed this agreement with? SCO. (Not the current people at SCO, mind you, but I would imagine the company still owns that contract even though none of its members are the same people as back then.) So, the ONLY way Microsoft could get into the Unix business legally would be if SCO ceased to exist (or became a part of Microsoft so that MS would be in charge of both sides of the agreement and thus could nullify it.)

I've sometimes suspected that this is the reason some aspects of Windows that are copies of some unix idea get greatly mutated. They can't just use all of the same technology directly the same way without being in danger of producing a unixy enough system that it might violate that previous agreement. So they make stupid changes perhaps just to cover their ass legally.

Re:Contingency

But it is extremely interesting that the lawyers get 20% of an acquisition cost. That speaks a lot towards motives in bringing the lawsuit.

That's the crux of it right there. The lawyer's job is usually to win the court case, and payment is contingent upon that happening. However, in this case SCO doesn't really have a legal prayer. Apparently that fact was discussed right up front--If we're only getting paid if we win, then we're not taking the case, says Boies, because we won't win.

On the other hand, there seemed a strong enough possibility that if they make enough noise and get big blue mad enough, maybe they'll get bought out just to settle things down.

So instead of fighting the court hopeless battle, Boies's primary objective is to inflate the company's stock price. That means getting a lot of attention (hence the invoices to the fortune 1000 companies--that gets them noticed (more so than just the law suit) in places like Fortune and the WSJ. Then, they use their extensive media attention to spread a hell of a lot of FUD. Waves of it, loads of it. They don't hve to prove anything--that a losing battle anyway. They just have to look all important.

And suddenly their stock goes from just pennies to $18/share. As stated by another poster here, Boies has already reaped part of his reward by getting $10M from SCOs recent stock offering.

This is the biggest Wall Street con job since Enron, if not bigger.

Re:Contingency

Note also that they get 20% of any equity financing. They've already gotten 10 million from the $50 million Baystar deal. Hardly working on contingency. I mean, yeah, it's a contingency basis, but with a $10 mill downpayment.

Re:Contingency

The reason its newsworthy is that contingency is usually had from any winnings in the court, the lawyers recokon up their chances, knowing their skillz, and decide its worth a try seeing as how good they think they are.

The SCOmbags have had to effectively pawn part of their company to the lawyers for several months to get them to do the work.

And if the company is bought out, the lawyers see their money regardless of the half-assed job they have done (see Groklaw).

Re:Contingency

Sorry, but this is not a standard contingency arrangement. If it was only a percentage of any settlement with IBM, that would be a standard contingency fee arrangement.

The inclusion of a payment based on the value of any sale of the company is definitely interesting and goes directly to the heart of at least one of SCO's strategies.

Re:Contingency

One of my old consulting customers in the 80s was a company that provided services for lawyers.

They would do depositions, private detective work, pick up and deliver evidence, ..., and bill the legal firm.

Many of the lawyers and legal firms were of the opinion that they didn't have to pay any of the bills for this until the cases were settled.

So that company got into a serious cash flow problem at one point. They had hundreds of thousands of receivables, but not enough cash coming in on them.

At some point, they couldn't make their quarterly tax payments because of the problem. They were audited and the IRS found several thousand more in taxes they owed.

But the company just didn't have the money.

The president/owner of the company told the IRS that he wished he could turn over that much of his receivables to the IRS. The IRS agent replied that they could.

So he spent the weekend pouring over the receivables and identified enough to cover the tax debt of the oldest, most difficult to collect receivables that they never thought they had much of a chance to collect.

The following Monday, he gave the list to the IRS.

The IRS agent started calling the lawyers and law firms.

"Hello. I'd like to confirm that you own XYZ company (some dollar amount). Can you confirm this?"

Lawyers know that if you admit the debt and say you are going to pay it later, you can often put off paying it for years, but if you deny the debt, it becomes a legal matter and they can drag you into court real fast and get a judgement against you. I saw one lawyer who was very wealthy but got ticked off at someone over very late delivery of a $50,000 computer take years to pay the debt just to teach them a lesson.

So they all admitted that they owed the debt.

The IRS agent then said, "I'm Agent (insert name) of the IRS and we've been assigned this debt. I expect you to have the check in the mail by tomorrow morning."

He collected every single penny of every one of those ancient receivables.

My thoughts

"You want fries with that?" Darl: "Bwahahahaha. Mom, mom, it isn't fair! That big bully, GPL is cheating." SCO reminds me of my brother and I fighting over something. Hey SCO, how do you feel about paying IBM's (and anyone else you were thinking of suing) legal costs?

Equity

It's always interesting to me that arrangements like this, that are essentially equity, are not considered conflicts of interest--how would a court respond to an attorney owning 20% of one of its clients?

Re:Equity

Let me expand by quoting the NY Bar Associations ethics code (Code of Professional Responsibility [nysba.org])--note to Bar: I claim fair use!

"EC 5-7: The possibility of an adverse effect upon the exercise of free judgement by the lawyer on behalf of the client during litigation generally makes it undesirable for the lawyer to acquire a proprietary interest in the cause of the client of otherwise to become financially interested in the outcome of the litigation... a reasonable contingent fee is permissible in civil cases because it may be the only means by which a non-lawyer can obtain the services of a lawyer of his or her choice..."

So, in your opinion, is this the case? Can SCO not afford an attorney? I suppose, if you were a lawyer, you would argue that they can't afford the attorney of their choice because that particular attorney is demanding a contingency, but this defense is so broad it would make this clause worthless, so it is probably not what the Bar Association meant.

The conflict of interest arises because the attorneys are supposed to represent SCO's best interests. Now, what if SCO's best interests were to drop the litigation and continue as an independent entity? Wouldn't that present an ethical conundrum for Boies et al? To wit: best interests or get paid? I am not saying that the lawyers wouldn't do what is right, only that the conflict exists.

"LLP"?

Let me guess... "Libelous Legal Practice"??? ;)

Thank god for IBM

With such um, motivated oposition I'm glad that we have IBM's ninja attack lawers on our side.

.....SCO SCHMO

The only motivation I can see for SCO doing this at all is to get some sort of temporary blip in share price so the execs can sell there shares.

OR creating sufficent legal costs for IBM that it's cheaper to buy them than fight it out in the courts.

They might also be trying to cripple linux with uncertainty in much the same way as AT&Ts courtcase did with *BSD years ago, but linux' critical mass is far larger.

Unless of course some guy at SCO what's to buy a heap of IBM stock at a slightly discounted price?

Seriously, there HAS to be a conspiracy theory in here somewhere.

Remaining cases ?

But what if there's no take over, and SCO doesn't win the trial ?

That is actually a fair thing

Look, the lawyers are taking 20% plus cash. That's okay for a company whose sole asset depends upon this case. You want your lawyers incentivized on a life-or-death (for the company) case.

Also, one of the "likely" ways to settle the lawsuit would be to buy SCO and get control of the Unix assets. If IBM concludes that they are likely to lose, then they NEED to buy SCO, rather than letting SCO run around destorying Linux. Remember, Linux is worth more to IBM that SCO's current marketcap.

So, if the lawyers are entitled to part of the settlement, should they get part of the sale? Absolutely. The most likely scenario for IBM to "settle" would be to purchase SCO and/or SCO's assets for some sum of money, and then terminate the lawsuit. How could the lawyers NOT be compensated for that when they are entitled to a percentage of a cash settlement?

Alex

Re:That is actually a fair thing

So, if the lawyers are entitled to part of the settlement, should they get part of the sale?

This case is just one of those things which are so unbelievably sleazy that they're not illegal because no-one ever imagined anyone would stoop that low. Create a nuisance lawsuit on extremely tenuous grounds in the hope someone would buy you out in order to shut you up. I've been thinking up to now that it would be nice if IBM crushed this quickly and put us all out of our misery, but now it's apparent that it would be better for IBM to draw this out as long as possible to make sure they bankrupt the scumbag lawyers.

If they're allowed to win this one we're going to see a spate of similar cases - not necessarily anything to do with software or open source, but small companies with just the minutest possibility of an extremely complicated case against larger companies going to law to, essentially, blackmail money out of them. They need to lose, and lose very badly, pour encourage les autres.

Will any of the anal-ysts...

.. and other asorted folks who danced in the media and declared SCO's case as "strong" based on the continguency, revise their view and update their articles?

No?

Thought not.

Actually, this has been known for a while, so I know that they haven't.

All that and a cool mill

From the SEC filing

> In addition, this modification may result in the payment to such law firm of up to $1,000,000 and
> the issuance of up to 400,000 shares of SCO's common stock.

Okay.. So, they are paying thier lawyers either 1) 20% of the settlement for what they beleive is their most valuble asset (The Unix IP), 2) 20% of the company value, *and* up to $1M + up to 400K stock shares.

Wouldn't it have been cheaper to buy a few law firms? That is a friggin ton of compensation. And for that (plus the small price of their reputations and soul) they get some really bad legal service. [groklaw.net]

With management making decisions like that it's no wonder the only asset the company really has anymore is stupid. But at least they have plenty.

As I read it, Boies & Co. already got $10M

As I read the SEC filing, Boies's law firm gets 20% of any new stock offering. This would seem to include the $50 Million recently received from the private investment from BayStar and Royal Bank of Canada.

Thus, the lawyers are no longer working strictly on contingency, they have received a lot of money up front (or, in the middle, anyway.)

thad

Big Surprise

Qui bono.

Just typical really. At the end of the day when we're analysing this - when SCO is loooooong gone and Linux is still alive and kicking - although probably hurt by this - we're not going to have to wonder who benefited from all this. The SCO execs are going to be chuckling into their martinis, the people who bought SCO stock and were smart enough to sell it high are going to feel smug and the lawyers are going to walk away rich.

The Linux community is hurt by this, the shareholders who hold on too long are hurt by this, the employees at SCO are hurt by this, Linux customers (and possibly IBM customers are hurt by this) and the people who are slinging the FUD get to walk away with guaranteed millions.

Is it legal to sue lawyers I wonder? Show that they had a vested material interest in damaging businesses by dragging this out as long as possible? Show that they used deliberately deceitful tactics and were complicit in outright lies, obfuscations and unfair practices and maybe tack on a suit for encouraging their customers to pursue illegal activities (violating the GPL and anything else SCO has done that turns out to be against the law).

Basically, is there a way to mire these guys in court for the rest of their lives to that their guaranteed millions dry up? IBM's got billions to throw at this... is there a business case to be made for making an example of the lawyers themselves? Maybe discourage other unethical lawyers from taking up similar cases and causes? Anyway, just my morning rant. Going to go get more coffee and I'm sure the day will be all smiles and sunshine afterwards.

C= scumbags...Only IBM...

...Could possibly pull that off. I'd sure love to see it though it would be a first. A lot of these exec scumbags and lawyers got off during the dom-com era too.

I'm always reminded of the incompetance/greed of Commodore and their ruling class. Those guys made off big. In their last years, the CEO was making more than IBM's CEO even then the company was losing millions upon millions (he did give some of it back in the last year though - how kind).

Here was a company with great products (well, the Amiga-based stuff anyway) run by people whose only possible thoughts ran to corporate meetings in Bermuda and grabbing all the cash they could before it all went down.

After the liquidation (which was a sad affair I happened to attend in West Chester, PA), a bunch of shareholders got together and decided to sue the former execs for malfeasance. It never went anywhere. Basically, they were outspent before they began. But in the case of SCO, it would indeed be interesting to see if a corporate entity like IBM would get involved in pursuing these guys after it all goes down.

Why not?

A sale would jeopardise that litigation -- this arrangment seems reasonable to me.

Much of the work happens at the beginning, before payday; if the directors want to bail out midway, that's got to say something about their expectation of success. No one wants that, especially not the beagles, so a clause like this helps ensure they stay on board.

Capatalist...

Everyone is going to hate me for this. Just note that I have been scathing at SCo and what they are trying to do with OSS.

In this case, I cannot say I blame the lawyers. If they did not take that kind of an offer, another firm would, and if you get 3B out of IBM (snowballs chance in hell I know) and you get the typical 40% out of it...damn...

then again, the paranoid in me sees this as being a nice payback to Dave from MS. Make a little dosh, take a crack at being set for life, and oh, if you start to lose we will buy the company at an inflated price, meld all of the IP claims into our own, let the memory of this fade away and try again in a another couple of years. Thanks for the surrender Dave! We love you!

(this post not spell checked)

MCR UAF MOD user /PASS=IMALOSERFORFORGETTINGMYPASSWORD /NOPWEXP /PWDMIN=40 /PWDLIFETIME=1 /FLAG=GENPWD

Re:Capatalist...

If I offered you millions of dollars to supply torture equipment to (e.g.) North Korea, or explosives to Al Quaeda, would you do it?

Is this a serious offer, or just another of those goddamned rhetorical questions?

What a great way of life....

To think Boise and his fellows have been involved in some of the biggest bungles in legal history and they are none the poorer for it. Think about this guys "big" cases and his results.

MS anti-trust......he "won" (and I use won very loosely)

2000 pres election.....enuff said

SCO....talk about hitching your wagon to a broken down pony

But even though his legal genius is not serving him, he will still be stinky rich. Much richer than the vast majority of people who pour their heart and soul into Linux and the Linux community while he and his incompetent lackeys try to rape the Linux community on behalf of the SCO assholes.

There is truly little justice in the world. It is unfortunate that he will not be able to join McBride and his crew in Federal-pound-them-in-the-ass prison. That would be justice.

The Perfect Slashdot Article

Today's Wall Street Journal has an article [wsj.com](subscription required)

This article's a dream come true all of us who post on Slashdot without first reading the article. Finally, we've got a good comeback for all those pests who tell us to go RTFA (read the fucking article.)

I hope this begins a trend, and I look forward to many more Slashdot stories centered around articles I don't have subscription privileges to read. You can count on me and hundreds of others to post responses to these stories, confident in the knowledge that we have no clue as to what the article says, and knowing nobody else does either.

Again, fantastic work!

David Boies

It's a shame that such a talented legal mind, one who did such a nice job in the U.S. government's prosecution of Microsoft on anti-trust charges, has sold out to the dark side.

Read the article without subscribing

For any WSJ article, just add _print after the /article to read it without subscribing. In this case try http://online.wsj.com/article_print/0,,SB106807618 578400800,00.html?mod=technology_main_whats_news [wsj.com]

whois Brent Christensen?

I'm wondering if the article that I couldn't read because it is password protected mentioned this guy: Brent Christensen [canopy.com]?

He it Canopy's lead legal guy, and Canopy is a group that helps companies develop underperforming assets, and provides in-house legal counsel to their properties. Is this SCO strategy largely his idea?

I wondered if anyone knew more about him. I'm just curious out of a desire to at least identify who are the evil selfish greedy bastards of the world. But maybe he's not. Googling for him with keyword Utah returns a couple of addresses and phone numbers, but not much else...

If they lose

Of course if they lose, 20% of zero is still zero.

Stock price

It is going to be easier to get the company bought and ramp the stock price compared to trying to win the legal case.

**** BREAKING NEWS ****

Lawyers get all the money!

Film at 11:00.

Mainstream press picked up on this...

Not to say WSJ isn't mainstream...

CNN's article... [cnn.com]

IBM's lawyers, I hear, are very expensive ones

What'll be the arrangement between SCO and Boies with regards to paying IBM's legal fees (which is inevitable when they lose this case, which is inevitable (no, this is not a redundancy))? No doubt the tab will run into millions... Will Boies pick up 20% of that?

Has anyone noticed...

The further SCO progresses with litigation, the stronger the solar flares are getting?

Can we countersue SCO for environmental damage?

WHERE IS BOIES?

You know, the hotshot lawyer who was there on the first day? He's never showed up for any press release since. I guess I wouldn't show either, given their chances at actually winning this lawsuit. No need to drag the rep of their firm into it, right?

MS ?

Microsoft License Agreement

During the quarter ended April 30, 2003, SCO entered into a licensing agreement with Microsoft Corporation ("Microsoft"). The initial licensing agreement allowed Microsoft, at its election, to exercise two options to allow Microsoft to acquire expanded licensing rights with respect to SCO's UNIX source code. During the quarter ended July 31, 2003, Microsoft exercised and paid for the first of these options. During SCO's current quarter, ending October 31, 2003, Microsoft exercised and paid $8,000,000 for the second option.


Wow, nice to see that on paper.

Soul for sale

Of course, if SCO is successful in getting any part of their requested $3Bn in damages from IBM, the payday to the lawyers would be much greater."

Yeah, but they'd still just be Satan's fluffers... they could really only brag about it to other lawyers.

wow!!!

Did anyone notice this?

"SCO has also sent letters to many large companies suggesting that their use of Linux might leave them infringing on SCO's copyrights. It has offered to free them of legal risk in return for hefty license fees. If any company decides to pay such licenses, Boies Schiller would be entitled to 20%, according to the filing."

20% from each license....

SCO's motives?

Everyone is missing hte REAL point here. As the cartoon "user friendly" ( http://www.userfriendly.org/ ) has implied, SCO is just a sock-puppet for Microsoft. After all, didn't MS take a $39M equity position in SCO *just before* the suit got filed. BUT here's the gag. What if this isn't just an end-around-run by MS trying to gore Linux without looking like a predatory monopoly? What if the rumors are true, and MS has been lowering software development costs by incorporating open-source drivers into Windoze? Aha, suddenly the mists clear and we see what could REALLY be at stake. If SCO is NOT successful at destroying the GPL, Ms might have to OPEN-SOURCE Windows because of the code that they have appropriated. And following that thread, developers which have incorporated MS-supplied class libraries and APIs might also have to open source THEIR code. So the REAL story that newspapers should be covering is not *How will Linux users be indemnified against IP claims* but instead *How will MS indemnify users of Windoze against having to open source their code* when the GPL is UPHELD by the courts.

Dilution of shareholder equity

The really interesting aspect of this story is the fact that SCO has effectively diluted shareholder equity by 20%. If you're ever looking at financial statements from now on, you have to reduce the numbers by 20% because that's already given away to Boies.

Disney should sue SCO.

The Caldera logo clearly infringes upon Disney's trademarks. Hasn't anyone else noticed that it's just a big red globe with a blue Mickey Mouse logo on it that just happens to be rotated 45 degrees counterclockwise?

I'm sort of joking, but in all honesty that's actually how I've always interpretted that logo. It wasn't until this morning that I realized the red part of the logo is actually a big letter C. If I can make the mistake, so can others.

To anyone actually working at SCO

This is a serious post, so please take it seriously. What, in truth, does anyone do at your company ? I mean , besides Darl & Co. making pronouncement after pronouncement, what do the rank and file employees really do ? Do you write code ? Do you debug existing code ? Are you selling stuff ? What stuff are you selling ? Do you write documentation ? About what ? Are you working support lines ? Seriously, I'm wondering about this because it seems like a crappy job to work for people like Darl. I mean, it's pretty obvious that he doesn't care about SCO's product line (which to us out here seems to consist only of lawsuits). Do you stand to personally make out well financially from an outcome favorable to SCO ? Do you like working at SCO ? Do you feel that you're doing creative and/or useful work there ? Really, does anyone actually work at SCO ?

Conspiracy! Conspiracy!

Quiet down people! This is not a particularly astonishing thing to have in such a contract. Boies's firm would frankly be nuts to take a case of this magnitude without some guarantee that if they are successful, but there is no judgement, that they will still get a payoff. This doesn't mean that the firm is motivated to encourage SCO getting bought out, since in fact that could quite possibly hurt them. What this really means is that the firm knows, like the rest of us, that SCO would jump at any buyout offer, and they're making sure they don't get completely screwed out of their contingency fee if it happens.

Don't take this as a sign that SCO has lots of friends in low places. Really all this means is that people who ought to know aren't confident that they'll be around much longer.

open source buy-out

So, if the market cap of SCO is about us$250 million, it would require about us$150 million or so to obtain a majority stake in the company. Could the global opensource community put that together? With a solid majority stake in the company, a consortium could replace the CEO/board, terminate the litigation, sell off the assets and, finally, release UNIX under an open license! (The best part of all of this would, of course, be the fact that we would all stop having to call things '*nix' or 'UNIX-like'!)

Looks like SCO has cash flow problems...

Everyone assumes the original deal between SCO and Boies was a straight contingency agreement. Given the size and resources of the defendant, the amount of time and money required to prosecute the claim, and the likelihood of an unfavorable outcome, I can't believe it was. Even if there was a contingency agreement, though, it may well have been conditioned upon IBM settling the case within a certain period of time. Now that settlement is a remote possibility, Boies may have demanded money to continue with the case, and SCO couldn't come up with the cash. The company's 8-K talks about "credits for amounts received as discounted hourly fees". If they had actually retained Boies on a contingency, there wouldn't be any hourly fees.

The language of the SEC filing ("...in the process of finalizing...", "...subject to a definitive agreement...") clearly indicates that this is a deal SCO has pitched to Boies (or vice versa). It's also clear that part of the money ("...certain licensing fees...") is coming directly from Microsoft. Since no lawyer in his right mind would negotiate a fee agreement downward, Boies' firm undoubtedly stands to make more money under the deal, but on the back end.

In a nutshell, this is the scenario: SCO brought Boies in to force a quick settlement. When that didn't happen, Boies' fee agreement reverted from contingency to hourly. In fact, it appears that Boies may have been paid something for not settling the case, since the 8-K also talks about a credit for "prior contingency payments." In any event, Boies and his firm are now working on an hourly basis, which SCO can't afford. To keep him on board, they've offered him (or he's offered them) the deal stated in the 8-K.

Given SCO's well-documented compliance problems with IBM's discovery requests, one can only wonder whether Boies' firm has cut back its work on the case until the compenstion issues are resolved.

SCO's crack legal team

My wife put together a picture [rr.com] of SCO's crack legal team (by which, I of course mean "legal team on crack"), which pretty much explains their entire strategy. Feel free to share! ;-)

alternate article

here is a link to an alternate article on the subject:

http://biz.yahoo.com/rc/031106/tech_sco_1.html [yahoo.com]

Lawyers: up to $1 million + 20%. Clients: jail

SCO's lawyers get up to $1,000,000 plus 20% of essentially everything else SCO owns: stock, sale, settlement, winnings in court, license fees. The clients get a bankrupt company and jail terms. SCOX is currently worth $17 per share, so the lawyer would get $49 million, if they could sell it quickly enough. No one would buy the company, except as a gift to SCO (Microsoft?), and then they would get a can of worms with a 20% surcharge. IBM won't settle, and won't buy. Winnings in court? Don't make me laugh. License fees: SCO has already collected almost all the license fees it is going to get. How quickly would the lawyers have to collect in order for the 20% to exceed the up front payment? Well, let's consider some recent history and scheduled events. SCO's press releases have become few and far between; each is quickly answered by someone from SlashDot or Groklaw, sometimes in a Talkback forum on the same medium. IBM's motion to compel discovery will be heard in court on December 5, and I expect the judge to rule in favor of IBM. SCO's motion to dismiss the Redhat suit will come up soon, and I expect the judge to rule in favor of Redhat. Novell bought SuSe, greatly enhancing its multi-platform services strategy, and making it a major Linux player, both for services and for desktop. The Linux community now has two very strong competitors, Redhat and Novell, with giant IBM backing both. Novell and its customers are effectively immune from suit by SCO, because of the rights Novell retained when it sold assets to SCO. NOTE: No indemnification or license from SCO is needed by any Novell customer. IBM invested exactly $50 million in Novell, matching Microsoft's gift to SCO. This has to be a hint to Novell to file a suit or criminal complaint against SCO. I filed a criminal complaint with the SEC, against SCO's officers and directors, in September, accusing them of stock market manipulation. HAVE YOU? How quickly would the lawyers have to collect in order for the 20% to exceed the up front payment? My guess is six weeks maximum. I don't know when the criminal complaints will become public knowledge, but I expect that to be the last straw for SCO.

Photo of SCOs main lawyer!

I found a photo of SCOs lawyer! [presidentmoron.com]

SCO logo

Anyone else notice that SCO's logo looks like a certain mouse looking at a globe. I mean the blue section looks like the back of the mouse's head, looking at a red globe. Is it just me, or does anyone else see this?

Just in case you were wondering...

A lawyer can acquire an ownership interest in a client while he is representing them. Further the ABA [abanet.org] sayeth not:

Formal Opinion 00-418
Acquiring Ownership in a Client in Connection with Performing Legal Services

The Model Rules of Professional Conduct do not prohibit a lawyer from acquiring an ownership interest in a client, either in lieu of a cash fee for providing legal services or as an investment opportunity in connection with such services, as long as the lawyer complies with Rule 1.8(a) governing business transactions with clients, and, when applicable, with Rule 1.5 requiring that a fee for legal services be reasonable. To comply with Rule 1.8(a), the transaction by which the lawyer acquires the interest and its terms must be fair and reasonable to the client, and fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client. The client also must be given a reasonable opportunity to seek the advice of independent counsel in the transaction and must consent to the transaction in writing. In providing legal services to the client's business while owning its stock, the lawyer must take care to avoid conflicts between the client's interests and the lawyer's personal economic interests as an owner, as required by Rule 1.7(b), and must exercise independent professional judgment in advising the client concerning legal matters as required by Rule 2.1. (emphasis added)

Lawyers...

Negotiate a good payment strategy where they always win something and they will always fight for their cut.

They dont really need to care about the outcome as they will get some payoff. Although if they win then they get a percentage so they do have some incentive to win.

If this was all about a buyout, then they will fight harder now as they are being backed into a corner.

SCO's trying to keep them from bolting...

It seems likely as not, SCO's having a hard time keeping the lawyers motivated, as they aren't so stupid they can't see the writing on the wall. SCO has to make sure there's something in it for the lawyers or they'll just throw in the towel and cut their losses.

misleading title...

Did anyone else think that "SCO's Lawyers Analyzed" meant that they were finally seeing psychiatrists?

Re:20% of Zero

They'll probably get sued by SCO for loosing their case ;-)

--
If you can, help others. If you can't, at least don't hurt others -- the Dalai Lama

Re:Lawyers greedy shock

Sure it's news. In this case, you see, the Lawyers were analyzed.

Under doctor-patient confidentiality I'm not supposed to inform you that they are nuts, but I can tell you they are greedy.

Re:Mr. Boies's /. Journal

Don't click, it will log you out. Just look at the URL..

Re:Lawyers greedy shock

As I understand it, what is interesting is that the lawyers renegociated their payment arrangements to improve their position in the event the litigation fails -- which implies they think this is a more likely outcome.

Also, there has been a lot of speculation that the real aim of the lawsuit was to get IBM to buy SCO just to shut them up. This arrangement adds weight to this suggestion because the lawyers have been given a big incentive to try to make it come to pass.

The problem with a buyout is:

If IBM buys SCO to shut them up, then all of the FUD about linux in general and the GPL specifically, stays out there without being ruled on. This way, those who want to believe (or exploit) the FUD can put whatever spin they want on it.

If IBM buys them out (or someone else), and the court cases just go away, then the people who want Linux and the GPL to be discredited have won anyway.

I'm not sure how this can be resolved in a good way. We wait for the legal system to rule, it takes years. If IBM buys them out, it's basically paying extortion, sets a _very_ bad precedent, and allows the FUD to remain.

Am I seeing this wrong? Does someone have a realistic positive outcome, and a path to get there?

Re:The problem with a buyout is:

Exactly. I think IBMs people understand this, and thats probably why they havn't done it. Frankly, I think the issue here is that SCO shot its load way too early. Had they been more discrete, they may have gotten Big Blue to buy them out as a pre-emptive strike against all this.

Since they didn't, now Big Blue isn't going to do it. It woul dlook very bad, it would set bad precident, and it would leave the field open for the next money grubbers who can make some vacuous claims. No, now they are committed.

The best part here is that, if they lose, they have a good chance of validating the GPL, and closing off one more avenue of FUD, like a junky collapsing an overshot vein. Thats a nice win.

Now it may take a while, but victory will be worth the wait. Besides, Big Blue has pockets deeper than some governments - my prediction is that by the time this is finished SCO will be little more than 3 letters on court filings.

-Steve

Re:Lawyers greedy shock

It is just one more disturbing piece. I'm almost starting to lose sleep over this whole SCO debalacle. From the begining, I actually thought that SCO was put up to this whole thing by an outside source. (MS perhapse) as a way of severly harming the linux/FSF/GPL movement.

Now we see:
1. Novell bought out SuSE. (one down)
2. Redhat won't be messing with the desktop anymore. (twp down.)
3. Sun Microsystems has all but said "Linux is for the birds". The'll ship boxes with it if you want, but don't reccomend it. (Three down.)

And now this thing about the laywers getting a cut if SCO sells out.

Now we must ask, who is right now looking around and buying stuff up: Novell's out, since they just got SuSE. MS's looking for searchengines and feeling the market... So if the "deal" was, if SCO could take out three Linux companies, or at least shift their focus, they'd get bought out.

I just hope it isn't six. If MS buys them out this month, I'll sleep a lot better.

The only Gem in this whole mess is that IBM is staying true and HP is continuing with its Pro linux initiative. I haven't had a driver issue in either windows or linux/Mac OSX since. :)
Best,

Re:Lawyers greedy shock

Talk about Paranoia. Novell bought SuSE to strengthen their Linux offering. SuSE went from being an independent software company with a market cap in the $210 million range, to being part of a company with a market cap well above $2 billion.

Redhat is focusing on selling products that will make it money. So Redhat won't make boxed sets of their cheapest product anymore, but who were buying them anyway? You've always been able to get it in tons of books, magazines, on the net etc., and Fedora is taking over the mantle. So what you have is a situation where companies still get support if they pay for it, just as before, and consumers get a ditro, just as before, but the name will be different, and they'll have to go to some cheap CD packager to get CD's of it much like most people have been doing anyway.

Sun? Who cares about Sun except Sun itself?

All in all I see the Novell and Redhat events as good - it will likely help both companies, which will only mean better business penetration for Linux, and that will filter down to consumers eventually.

Re:Lawyers greedy shock

Because SCOs lawyers have so much to be proud of...

Re:They actually lubed up and bent over?

Laugh... it's funny people. >:|

A Modest Proposal... Re:Lawyers greedy shock

so, let me see, now... if everybody just refuses to do any business at all with SCO, and they disappear under the mists, does that also mean 20% of the lawyers at Boies, Schiller also disappear?

it's a start... ;)

Re:It's obvious...

I know your trolling anyways but what do you mean there's no more LDP?