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Friday, August 7, 2009

Do it Like the Norwegians : Prudence, Stability and Sovereign Wealth Fund Legislation in Thriving Norway are an Example for the Rest of the World

Reposted from a May 23, 2009 LawPundit posting:

Do it Like the Norwegians : Prudence, Stability and Sovereign Wealth Fund Legislation in Thriving Norway are an Example for the Rest of the World

Norway is doing something right that many of the countries in our world are doing wrong, namely running the national economy wisely.

Is Norway a model for a healthy and prudent national economics?

Landon Thomas Jr. in his May 13, 2009 New York Times article Thriving Norway Provides an Economics Lesson gives us a nice summary of the economic policies followed by a "wealthy" but "relatively frugal" country. Of course, it helps that Norway is the world's third largest exporter of oil and in 2008 counted $68 billion in oil revenue. But that is not the whole story.

As Thomas writes:

"[I]n the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent. By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy....

Norway’s relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P.

'The U.S. and the U.K. have no sense of guilt,' said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. 'But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility.' "

Read the full article to find out why Thomas writes:

"The global financial crisis has brought low the economies of just about every country on earth. But not Norway. "

Thursday, August 6, 2009

A Private Equity Joint Bid ("Club Deal") for Acquisition of a Target Company not per se Illegal under the Sherman Act

Reposted from a March 11, 2008 LawPundit posting:

A Private Equity Joint Bid ("Club Deal") for Acquisition of a Target Company held Not per se Illegal under the Sherman Act

We just received in the mail a Paul|Weiss article about a private equity antitrust class action collusion suit (Pennsylvania Avenue Funds v. Edward Borey, et al., No. C06-1737RAJ, W.D. Wa.) which was dismissed on February 21, 2008 by Judge Richard Jones in what appears to be a case of first impression, holding that a joint bid by private equity firms (a so-called "club deal") is legal under the circumstances of that case, so we pass on more links relating to that decision: a WSJ Deal Journal article by Peter Lattman, a Linklaters Technical Bulletin, the HRO Antitrust Alert, the DLA Piper Antitrust Alert and the Truth on the Market blog, which discuss the decision.

The DLA Piper summary of the decision by Paolo Morante writes:

"After initially submitting independent bids, two of the private equity bidders, Vector Capital (Vector) and Francisco Partners (FP), remained as the only bidders in the running. According to the complaint, brought on behalf of a putative class of WatchGuard shareholders, in the final stages of the bid process Vector and FP agreed that Vector would drop its bid, allowing FP to purchase WatchGuard at a reduced price, and then that Vector would fund half of FP’s acquisition in exchange for a 50 percent interest in WatchGuard after the merger. The plaintiffs claimed, among other things, that the agreement between Vector and FP restrained competition in violation Section 1 of the Sherman Act."

Linklaters writes:

"Last week, a US federal district court became the first to conclude that an agreement by private equity funds to submit a joint takeover bid does not violate Section 1 of the Sherman Antitrust Act. If followed by other US courts, the decision may have important implications for private equity funds considering potential joint-bidding arrangements. See Pennsylvania Avenue Funds v. Borey, No. C06-1737 (W.D. Wash.)."

Paul|Weiss writes:

"While this result is promising for private equity firms, it is uncertain whether other courts will uphold this decision or apply the same reasoning as the district court did in this case. There is, however, little doubt that these issues will be revisited in other antitrust class actions against private equity firms."

McDermott, Will & Emery write:

"The decision is controversial and may well turn out to be overruled on appeal or distinguished by courts that address joint bids in the future. As such, companies should not take undue comfort in this lone district court opinion. This case is of interest, however, because it is the first opinion in several cases that have been filed challenging joint bids, or “club deals,” in corporate acquisitions."

Holme, Roberts & Owen LLP write:

"The decision, although one by only a single federal district court in the Western District of Washington, is nonetheless an important ruling for the buyout industry which has been targeted with antitrust suits around the country after the Department of Justice opened an inquiry into possible anticompetitive conduct related to club deals in 2006."

Truth on the Market writes:

"Private equity deals have been the subject of a good deal of speculation in antitrust circles in the past several years as bidding arrangements are the subject of pending litigation and have come under the scrutiny of the Department of Justice. It's just one decision, but this one seems pretty dismal for plaintiffs in these private equity collusion suits."

Wednesday, August 5, 2009

Law Firms as Investments under the UK 2007 Legal Services Act : Private Equity Funds Consider Investing in the Legal "Business" Starting 2011

The mass of law firm layoffs in the current recession, putting profits before principles, indicates that the practice of law as a profession in the modern era has become more and more a typical "business" and is less and less a noble legal profession conforming to the faulty image of professionally ethical attorneys nostalgically portrayed by the monopolistic bar associations. When push comes to shove in law firms across the nation and the world, attorney colleagues are coldly put out on to the streets to find their sustenance elsewhere under the motto that "someone else can take care of them". Ours is a hard world which shows no quarter.

Fitting in with this trend is the UK 2007 Legal Services Act which permits investment in law firms. Private equity funds, knowing a good "business" when they see one (as opposed to a "professional" deal), are already considering investing in BigLaw starting 2011, something which is already permissible in Australia.

Lindsay Fortado at in Private Equity Considers Investing in U.K. Law Firms (Update1) reports:
"Slater & Gordon Ltd., based in Melbourne, became the world’s first law firm to sell shares on a stock exchange two years ago after a similar bill was passed in Australia. The personal-injury firm raised A$35 million ($29 million) from the listing and acquired two law firms....'
Read the details about the UK here.

Some law firms are understandably resisting this development, but the march of time is against them.

Hat tip to Martha Neil at the ABA Journal and
Private Equity Funds Ponder Purchase of Up to 20% Interest in UK Law Firms

Crossposted to LawPundit.

Tuesday, August 4, 2009

The Potential Economic Impact of Weather and Climate on the Example of El Niño which is Back in Force for 2009 and 2010

Global warming is one thing but the cyclical El Niño is another.

Michael McCarthy, environment editor at the Independent - via Reddit - informs us that a new El Niño is developing - the second strongest El Niño on record, which means global economic impacts for the world based on weather implications in the coming 2009-2010 period.

The arrival of El Niño was reported at the NOAA, the US National Oceanic and Atmospheric Administration (NOAA) which has numerous El Niño website pages devoted to "Research, Forecasts and Observations", where they write:
"El Niño is a disruption of the ocean-atmosphere system in the Tropical Pacific having important consequences for weather and climate around the globe."
The NOAA writes inter alia about the Economic Implications of an El Niño, pointing to both unavoidable economic losses as well as forecast-based economic benefits:
"Implications of El Niño for the Nation's Economy

Weather and climate sensitive industries directly impacted by weather (such as agriculture, construction, energy distribution, and outdoor recreation) account for nearly 10 percent of GDP. Further, weather and climate indirectly impacts an even larger portion of the nation's economy, extending to parts of finance and insurance, services, retail and wholesale trade, as well as manufacturing. Some analysts estimate that nearly 25 percent of GDP, or $2.7 trillion, is either directly or indirectly impacted by weather and climate.

El Niño impacts important business variables like sales, revenues, and employment in a wide range of climate-sensitive industries and sectors. Overall, total U.S. economic impacts of the 1997-1998 El Niño were estimated to be on the order of $25 billion....

The Economic Benefits of Better El Niño Forecasts-Improving Economic Decisions

Although all losses cannot be avoided, NOAA's El Niño forecasts produce economic value by allowing individuals, industries, and public officials to take timely actions based on the forecast to mitigate and reduce losses or to capitalize on the information to improve economic outcomes...
Take a look at the NOAA article on economic implications in full for more information about this important economic development.

Crossposted to LawPundit.

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