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SCO's Lawyers Analyzed 331

Posted by CmdrTaco from the selling-their-souls-for-a-tidy-profit dept.
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."
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SCO's Lawyers Analyzed More

SCO's Lawyers Analyzed

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  • Ew, gross (Score:4, Funny)

    by Anonymous Coward on Thursday November 06, 2003 @10:28AM (#7406585)
    For a minute there I thought it said "SCO's lawyers anal-ized"

  • Contingency (Score:5, Informative)

    by incompetent_bitch ( 519780 ) on Thursday November 06, 2003 @10:31AM (#7406603) Homepage
    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 (Score:5, Insightful)

      by stevesliva ( 648202 ) on Thursday November 06, 2003 @10:35AM (#7406647) Journal
      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 (Score:3, Interesting)

        by fshalor ( 133678 )
        Add to this the fact that most /. readers think the're full of crap, IBM thinks the're full of crap and everyone who's looked at the IP thinks there full of crap.

        There're banking on a buyout allright. But will IBM come to the rescue? I'm putting my centavos on MS. They would get to come in, be a hero to the Linux community and then have a player on the inside. (Possibly two, now with redhat's repsotioning.)
        • Regulators would never allow MS to come in and outright buy them. They have already proven that MS has a monoploy. Letting them buy the rights to Unix would only further their monoploy.

          • Re:Contingency (Score:4, Interesting)

            by tomhudson ( 43916 ) <barbara.hudson@b ... m ['son' in gap]> on Thursday November 06, 2003 @11:26AM (#7407122) Journal
            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 (Score:5, Interesting)

          by DunbarTheInept ( 764 ) on Thursday November 06, 2003 @11:38AM (#7407216) Homepage
          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 (Score:2, Interesting)

            by diersing ( 679767 )
            Is it impossible to think MS would buy SCO just to dismantle it? They wouldn't be competeing against UNIX, just eliminating it. Offering current customers a migration strategy to Windows 2000/3 in the process? For a company the size and wealth of MS, a quarter billion can prolly be found in Bill's couch and car ashtray.
            • It's a tech company - the reality is that there are only two sources of value in a tech company: intellectual property and people. I'll refrain from commenting on SCO's employees; their IP is what's at stake.

              Dismantling really doesn't mean much in that context.

      • That speaks a lot towards motives in bringing the lawsuit.

        Yes, and what motivates them to flail around, trying to appear as dangerous and destructive as possible.

        "We don't want to destroy Linux, but if it happens, tough luck".

        I sure hope their lawyers would end up in the same PMITA prison, but what are the odds of that happening?

      • Re:Contingency (Score:5, Insightful)

        by tyler_larson ( 558763 ) on Thursday November 06, 2003 @11:52AM (#7407340) Homepage
        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 (Score:5, Interesting)

      by killmenow ( 184444 ) on Thursday November 06, 2003 @10:38AM (#7406674)
      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.
    • Not the 20 % of sale part.
      This would be the normal contingary bases
      $3 billion case against IBM, Boies, Schiller & Flexner stand to gain 20% of the fee... or 20% of the etttlement.

      This only proves that one of the tactics of sco was to be bought by some 3 letter company to solve their cash problems.

    • Re:Contingency (Score:4, Redundant)

      by warmcat ( 3545 ) * on Thursday November 06, 2003 @10:38AM (#7406681)
      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 (Score:3, Insightful)

        by pavon ( 30274 )
        And if the company is bought out, the lawyers see their money regardless of the half-assed job they have done.

        Except why on earth would IBM buy SCO unless they thought they were going to loose the case? IBM has deeper pockets than SCO, and a vested interest in proving that their new business ventures are sound. Buying SCO because it is cheaper than defeating them would make it look like IBM has something to hide.

        So this clause is only a reasurance that if the lawyers are doing a good job, with much inv

        • Re:Contingency (Score:2, Insightful)

          by -brazil- ( 111867 )
          Except why on earth would IBM buy SCO unless they thought they were going to loose the case?


          Because the loss of faith in their product during a long trial would cost them more? Not an uncommon case at all.

        • Since when does the clause mention that IBM has to be the one doing the buyout for the lawyers to get the 20% share?

    • Re:Contingency (Score:5, Insightful)

      by Ath ( 643782 ) on Thursday November 06, 2003 @10:40AM (#7406707)
      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 (Score:2, Insightful)

        by Anonymous Coward

        What law firm would spend $$ on a case if they knew that the potential outcome could be the buyout of their client by the opposition and not have a condition for remuneration set for this in the representation agreement?

        Ok , my client agreed to be bought by IBM so they make out well. The case gets dropped. I'm left with nothing when it was my effort in bringing forth the case that caused the buyout.

        Its a logical consideration to have this clause in the contract.

        Its not a logical representation contract o
    • Probably because, with the bosses of SCO selling stock as fast as legally possible, a takeover is extremely likely - thus making the contingency the most interesting part of the entire case.

      If you think you're going to win and receive a few billion in damage, you BUY BACK stock as fast as you can. It'll be worth a fortune. The company and the execs would be rolling in money.

      If you think you're very very likely to lose, the converse is true. You don't want to be near the stock, once the price crashes thr

    • Re:Contingency (Score:5, Interesting)

      by eric76 ( 679787 ) on Thursday November 06, 2003 @01:13PM (#7408114)
      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.
      • Close, but that's not the way it works.

        First, the most important thing to remember is that the person who decides not to pay employment taxes is a thief. Period. In order to kep their company going, they stole money from their own employees. Say that you owe me USD$100 and I ask you "Hey, look, I owe my neighbor $10. Can you just give me $90 right now and then let him have the $10 when he drops by this afternoon?" You agree to do so, but when the neighbor shows up you refuse to give him the $10. What

  • My thoughts (Score:4, Funny)

    by ajakk ( 29927 ) on Thursday November 06, 2003 @10:31AM (#7406604) Homepage
    "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 (Score:3, Interesting)

    by milo_Gwalthny ( 203233 ) on Thursday November 06, 2003 @10:31AM (#7406609)
    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 (Score:3, Insightful)

      by Spazmania ( 174582 )
      How is this a conflict of interest? It would only be a conflict of interest if the lawyers were working for the other side of the argument.
      • The lawyers are given incentives for keeping the lawsuit going until they win or the company gets sold, regardless of whether or not keeping the lawsuit is in the best interest of their client. For SCO shareholders this should be a big issue, since Boies and his partnerse will only lose their time and work if SCO is bankrupted in the process, and will score massively if they succeed.

        Lawyers are meant to take into account their clients best interests, not just blindly do whatever is asked of them.

        Note th

    • There's no conflict of interest, it's merely greater interest. Conflict of interest would be if SCO's lawyers owned IBM stock. Even so, it would probably be up to SCO to fire them.

    • Re:Equity (Score:3, Insightful)

      by ajakk ( 29927 )
      It doesn't matter. You only have a conflict if you have an interest in a party you are against. Why would a court matter if a law firm has an interest in their own client? The only thing that means is that the law firm might work harder to win the case. Do you think it would be OK for a company to have its in-house attorneys represent it in court? What makes that attorney's conflicts any less than an attorney who works for a firm?

    • Re:Equity (Score:5, Interesting)

      by milo_Gwalthny ( 203233 ) on Thursday November 06, 2003 @10:49AM (#7406778)
      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.

      • Re:Equity (Score:2, Interesting)

        by fishbonez ( 177041 )
        I think a corollary would be: Does the agreement giving ownership in the event of sale open the law firm and lawyers to direct liability if it is proven that this lawsuit is tied to a pump and dump stock scheme as some have alleged? Does the fact that the law firm only gets ownership in the event of a sale protect it from this? Or is it such an unusual arrangement that it eliminates the usual protections afforded attorneys from clients' wrongdoing? Basically, is there any chance David Boies could go to jail

        • Re:Equity (Score:3, Interesting)

          by milo_Gwalthny ( 203233 )
          Damn man. If you are NAL, then you should be one.

          I don't think the timing of the payment makes any difference as to whether this should be considered equity... even Common shareholders do not get paid for a sale until the sale is made. The question is, then: if Boies et al were a de facto 20% owner of the company and is involved in day-to-day management decisions, is he accountable for them and to whom?

          (1) I would think that their criminal accountability as a member of management for a fraud is no less

    • so it is not an issue.

      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.

      The law firm won't receive anything until/unless a) the suit is settled, or b) SCO is sold in the meantime. In the first case the law firm will be collecting its fee from the settlement; they are working on contingency* (as described elsewhere in this thread). In the second, SCO will have a new owner, and the law firm's fee wil
      • Being entitled to a piece of the value of a business is equity. Ask Enron, they 'learned' this the hard way.

        I call this 'essentially' equity because there are circumstances where the attorneys are not entitled to a piece of the value of the business, although it is hard to envision these: (1) the lawyers lose the case, (2) the company is not sold and (3) the company continues to be worth something. I think it is number three that will be difficult to achieve without either one or two.
      • This doesn't make any sense. If SCO were sold it's then former owners would have enough money to pay legal fees on a normal per-service basis. Giving them a percentage of the sale cost puts it in Bois best interest to help pump the stock price up as high as possible by manipulating public perceptions and see this trial, assuming they believe as everyone but (possibly) Darl does it's unwinnable, never makes it to court. All of which has nothing to do with the justice system.
    • Uhm, a lawyer being biased in favor of a client is not a problem. They are SUPPOSED to be on the client's side. That's the deal.

    • Re:Equity (Score:2, Insightful)

      by alexq ( 702716 )
      There's nothing wrong with an attorney owning part of its client, is there? A client can even defend _itself_, so why can't an attorney have more than a professional interest in the client?

      If it were the judge that owned 20%, then well...

  • "LLP"? (Score:4, Funny)

    by Zocalo ( 252965 ) on Thursday November 06, 2003 @10:31AM (#7406613) Homepage
    Let me guess... "Libelous Legal Practice"??? ;)

  • Thank god for IBM (Score:5, Funny)

    by theparanoidcynic ( 705438 ) on Thursday November 06, 2003 @10:32AM (#7406622)
    With such um, motivated oposition I'm glad that we have IBM's ninja attack lawers on our side.

  • .....SCO SCHMO (Score:4, Insightful)

    by tolan's my name ( 234431 ) on Thursday November 06, 2003 @10:33AM (#7406628) Journal
    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.

  • That is actually a fair thing (Score:5, Insightful)

    by alexhmit01 ( 104757 ) on Thursday November 06, 2003 @10:34AM (#7406635)
    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
    • Yeah, but this runs contrary to current /. thinking: that SCO is full of hot air, and once the source code is made available to knowledgable scrutiny, it'll be shown that they have nothing. Assuming this is true, SCO has to know this, and I can't imagine a lawfirm agreeing to this unless they had a VERY strong belief that either a) SCO will win, or b) SCO will get bought. Unless they plan on dragging this out ad infinatum, and hope that IBM will buy them to stop the annoyance, which IBM does not seem inclin

      • Inadequately cynical (Score:3, Insightful)

        by MarkusQ ( 450076 )

        Yeah, but this runs contrary to current /. thinking: that SCO is full of hot air, and once the source code is made available to knowledgable scrutiny, it'll be shown that they have nothing. Assuming this is true, SCO has to know this, and I can't imagine a lawfirm agreeing to this unless they had a VERY strong belief that either a) SCO will win, or b) SCO will get bought. Unless they plan on dragging this out ad infinatum, and hope that IBM will buy them to stop the annoyance, which IBM does not seem incli

    • Re:That is actually a fair thing (Score:5, Insightful)

      by Simon Brooke ( 45012 ) * <stillyet@googlemail.com> on Thursday November 06, 2003 @11:08AM (#7406948) Homepage Journal
      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.

  • All that and a cool mill (Score:5, Interesting)

    by Resaurtus ( 639635 ) on Thursday November 06, 2003 @10:39AM (#7406692)
    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.

    • While it looks like "a friggin ton of compensation," it really amounts to little going out of SCO's door in terms of cash. As many other tech firms have done over the last decade, they're only committing other people's money (lawsuit settlement or company buyout), but the potential is enough to make it worth the law firm's while. Not only are they betting the company on winning this lawsuit, but they're getting 3rd parties to pile on as well.

      Frankly, in this deal, I think the law firm's management is the
    • Law firms are pretty expensive, you know. Your standard garden variety law student fresh out of one of the top national schools, with no experience under her belt, gets 125K a year. A couple tens of millions makes a bonus that a partner yawns at.

      Doing one search on the most limited database in Lexis costs $10. One search on something pretty complex--like searching all federal cases--costs around a hundred bucks. And you need to do a lot of searches to do a case like this....

      Even bad lawyers cost a s

    • Don't forget they get 20% of any equity investment in SCO as well (which would include the recently announced 50 million investment by baystar/royal bank of canada) so boies and company have already been paid 10 million.
      • Don't forget they get 20% of any equity investment in SCO as well

        Not to mention 20% of the proceeds from the sale of all those SCO/Linux licenses.

        I can't see Boies eating too many lawyerly dinners on the proceeds of *that* though.

  • As I read it, Boies & Co. already got $10M (Score:5, Interesting)

    by Thagg ( 9904 ) <thadbeier@gmail.com> on Thursday November 06, 2003 @10:40AM (#7406698) Journal
    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 (Score:5, Insightful)

    by Inexile2002 ( 540368 ) * on Thursday November 06, 2003 @10:40AM (#7406701) Homepage Journal
    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.

    • Re:Big Surprise (Score:3, Insightful)

      by yog ( 19073 )
      You can sue anybody for any reason. Of course someone can sue Boies and his law firm. It's a tactic that is sometimes used to *discourage* lawsuits; if someone sues you, countersue them and also sue their attorney, who then will need to hire his/her own representation. The good ol' American legal system, gotta love it!

    • C= scumbags...Only IBM... (Score:4, Interesting)

      by Chordonblue ( 585047 ) on Thursday November 06, 2003 @11:45AM (#7407273) Journal
      ...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.

  • Capatalist... (Score:3, Insightful)

    by BubbaTheBarbarian ( 316027 ) on Thursday November 06, 2003 @10:41AM (#7406711) Journal
    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

    • In this case, I cannot say I blame the lawyers. If they did not take that kind of an offer, another firm would.

      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? If I offered you millions of dollars to supply contaminated food to famine victims, would you do it? If, ten years ago, I had offered you millions of dollars to supply anthrax to Saddam Hussein, would you have done it?

      No-one is obliged to do unethical things. Ju

      • There is a far cry, at least to those that set the standard of such things, between torture equipment, WMD's and taking dosh for a lawsuit. Accordingly, the items mentioned in you poor example above have been of an illicit nature and have always been so in the eyes of both US and international law. While what is going on with SCO is disturbing, it is legal in the eyes of the law, and therefore, if your business and livelihoods are in that area, and your company is one that depends on this type of business

      • Re:Capatalist... (Score:5, Funny)

        by dipipanone ( 570849 ) on Thursday November 06, 2003 @11:40AM (#7407231)
        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.... (Score:4, Informative)

    by overbyj ( 696078 ) on Thursday November 06, 2003 @10:42AM (#7406722)
    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 (Score:5, Funny)

    by Schlemphfer ( 556732 ) on Thursday November 06, 2003 @10:45AM (#7406746) Homepage
    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!

    • This article's a dream come true all of us who post on Slashdot without first reading the article.

      Sorry to mess up your plan. But here is a nice result on a google search for username / password /wall street journal.

      http://academics.smcvt.edu/sburks/BU331.htm

      Slashdot their account so they learn security discipline.

  • David Boies (Score:3, Interesting)

    by 4of12 ( 97621 ) on Thursday November 06, 2003 @10:48AM (#7406768) Homepage Journal

    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.

    • He's a lawyer. You think he gives a flying stuff about the politics and ideologies behind any of this? He wants more money, and the way to get more money is to be known, and the way to be known is to try and pick high-profile or contentious cases. Failing that, at least go for one which has plenty of opportunity for personal enrichment.

  • Read the article without subscribing (Score:5, Informative)

    by Randar the Lava Liza ( 562063 ) on Thursday November 06, 2003 @10:51AM (#7406794) Homepage
    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]

  • If they lose (Score:4, Insightful)

    by techstar25 ( 556988 ) <techstar25@gCHICAGOmail.com minus city> on Thursday November 06, 2003 @10:59AM (#7406851) Journal
    Of course if they lose, 20% of zero is still zero.
  • Not to say WSJ isn't mainstream...

    CNN's article... [cnn.com]
  • 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... (Score:5, Funny)

    by jd ( 1658 ) <imipak@ y a hoo.com> on Thursday November 06, 2003 @11:17AM (#7407032) Homepage Journal
    The further SCO progresses with litigation, the stronger the solar flares are getting?


    Can we countersue SCO for environmental damage?

  • 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 ? (Score:4, Informative)

    by Dragoon ( 10644 ) <robert@NoSpam.durdle.com> on Thursday November 06, 2003 @11:24AM (#7407097) Homepage Journal
    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.

  • wow!!! (Score:2, Interesting)

    by bpland ( 529369 )
    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? (Score:3, Interesting)

    by couch_warrior ( 718752 ) on Thursday November 06, 2003 @11:49AM (#7407314)
    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 (Score:4, Insightful)

    by Anonymous Coward on Thursday November 06, 2003 @11:56AM (#7407384)
    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. (Score:4, Funny)

    by pclminion ( 145572 ) on Thursday November 06, 2003 @12:22PM (#7407612)
    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 (Score:5, Interesting)

    by Onan The Librarian ( 126666 ) on Thursday November 06, 2003 @12:35PM (#7407723)
    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! (Score:3, Redundant)

    by ca1v1n ( 135902 ) <snook.guanotronic@com> on Thursday November 06, 2003 @12:35PM (#7407725)
    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 (Score:3, Interesting)

    by tomdarch ( 225937 ) on Thursday November 06, 2003 @12:36PM (#7407745)
    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'!)
    • that would be a very foolish thing to do, as things are already starting to go very badly for SCO in the courts...the price could plummet to a much more realistic under-$5 a share very soon. Let the legal system tenderize them a little first....

  • Looks like SCO has cash flow problems... (Score:4, Informative)

    by linuxjack55 ( 536587 ) <gdtrfb55@gmail.com> on Thursday November 06, 2003 @01:11PM (#7408099)

    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.

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