Friday, May 26, 2006

More on Kimonos

My antipathy to the phrase "open the kimono" can be traced back to when I first heard it, about 10 years ago. I had recently moved to an in-house legal position and I was meeting with Lucent - recently spun out of AT&T - to try and resolve a commercial dispute that was teetering toward litigation. I don't even recall the particulars, but I vividly remember the counsel for Lucent, a humorless, pinched-face fellow in his mid-50's, saying he was "going to open the kimono." Yes, he was referring to Lucent's confidential data, but the mental image it created was most unpleasant.

Thursday, May 25, 2006

New Favorite Office Book

I just picked up The Dictionary of Corporate Bullshit, which is hilarious and absolutely on point. Taking a cue from Ambrose Bierce's classic The Devil's Dictionary, it offers witty and point-on definitions of corporate buzzwords and standards (e.g., "'Merger:' Source of major freakout mode amongst employees.").

Of course, I read through the more noxious entries with some distress, thinking of how often I have sputtered out hackneyed phrases like "paradigm shift" or "putting a stake in the ground." I am proud to say I have not used "productize", which does not merit entry in the dictionary but should have a special place in corporate-speak hell.

Speaking of which, I was in a meeting this morning discussing exchanges of confidential information where the phrase "drop our shorts" was used. I have to say I like that better than "open the kimono," but all the same I'd rather just talk about "skeletons in the closet."

Monday, May 15, 2006

Phone Records

I've been following this story about the big telcos turning over call detail records to the NSA with some interest. In the late 90's, when I was general counsel for Cellular One of San Francisco, one responsibility of my department was subpoena compliance, and we faced the same type of question every day.

We received all sorts of subpoenas, civil and criminal, from myriad agencies and private attorneys, seeking everything from invoices to wiretaps. Sorting out what could be provided in response to what kind of process (simple private subpoena to court order) was a daunting task: Different agencies have different rights, and circumstances matter, too. We would sometimes provide records in advance of a warrant or order when a kidnapping was underway, for example.

To make our way through this maze of regulations, we had a thick guidebook, regularly updated, that spelled out exactly what could be done in virtually any set of circumstances. Every telco of any size has a guidebook like this - ours could trace its origins to AT&T's guidebook. Received a warrant by fax from the DEA? ATF is calling saying they've got a subpoena? Santa Clara County Public Defender wants phone records? The procedures were all spelled out, along with the accompanying citations to statute, and my folks who dealt with this stuff on a daily basis were very good at sorting through it. They had great relationships with their counterparts in law enforcement and would only come to me when a very difficult or high-profile call needed to be made.

Of these, the hardest calls to make were those involving exigent circumstances - do you believe what law enforcement is telling you about the circumstances and the reasons they need the information now (rather than after they've provided a warrant), and do you believe they will get you a warrant after the fact? But these questions were measured in minutes or hours - getting a warrant is not difficult or time-consuming where the facts justify it.

The current furor over the records turned over to the NSA falls under the much easier category - law enforcement bullying their way to records they may not be entitled to. You see, despite the complexity of so many agencies being subject to different rules about what can and cannot be provided, there is a simple fallback answer when the request falls in a grey zone - "I'd be happy to comply with your request as soon as you give me a warrant (or court order, for wiretaps)." The beauty of this answer is how much ground it covers. It insulates your company from liability for providing records illegally, and if for some reason you are wrong in asking for the warrant, you get a quick education from law enforcement counsel, who will point you to the exact regulation that provides for access without a warrant. Most of the time, they'll grumble and then go get a warrant or order. Sometimes they just go away, as the NSA ultimately did after being rebuffed by Qwest.

In my view, Qwest did the obvious thing in response to the NSA's request. The surprising thing is that AT&T, Verizon and BellSouth rolled over and gave the NSA these records when the simple expedient of insisting on a court order existed.

Friday, May 05, 2006

Dread Not

Fascinating study making news today - it seems that feelings of dread are, in rough terms, a kind of pain, and a fair number of people will engage in irrational behavior to alleviate this pain. The experiment itself is sinister: Subjects are told they are going to get an electric shock, and if they wait longer the shock will be less painful. Apparently a decent number of subjects dread the prospect of a shock so much that they are willing to take a more painful shock now in exchange for eliminating the dread of the shock occuring later.

Like most people faced with an unpleasant task, I'd rather get it over with sooner rather than later. Of course, that may have less to do with dread than with the fact that in the real world the pain/unpleasantness is almost always greater the longer one waits to face it. I'm fascinated that, at least for some people, getting rid of the dread as quickly as possible is worth taking more (physical) pain.

Does this translate to decision-making in business? In cases like Enron or WorldCom hope (or hubris, or crookedness) led businesses and their leaders to delay taking the pain until it is too late and the negative impacts had mushroomed. But what about those businesses that ruthlessly weed out uncertainty, say, at the expense of promising new initiatives or technologies with uncertain paybacks or markets? Is this efficiency, or is uncertainty the corporate version of dread?

Monday, May 01, 2006

Merger-Hostile CEO

Surprising news this morning that Autostrade's CEO, Vito Gamberale, is now opposing the company's acquisition by Spain's Abertis. Surprising not only because you simply don't expect to see such things in any merger, let alone one where the target sells for over $10 billion, but also because Gamberale was publicly touting the deal last week.

What could possibly explain this behavior? It's not unheard of for a board to push for a deal the CEO doesn't like, and that may have been the case here, with the Benetton family controlling a majority of Autostrade. It's certainly odd that Gambarele apparantly did not even know the negotiations were going on until the 11th hour. However, you'd expect owners and CEOs to work these details out before the deal is announced, with the CEO falling in line or leaving. Now Gamberele likely will leave, but only after an ugly public spat. This seems like a worst-case scenario for all concerned - the guys at Abertis have got to be pulling their hair out.

It does bring to mind one aspect of executive compensation that you don't hear much about: Does the absence of a nice equity payout on closing of a merger make company management more hostile to deals that are otherwise in shareholders' interests? In other words, are some executives more concerned about keeping their jobs (or roles) than maximizing shareholder value? I have never witnessed this phenomenon firsthand (although I have seen it in spades among rank-and-file workers), but it would not be a shocker if Gamberale had a different agenda than the Benettons for this reason.