Eurolawyer

iPhone Free: 999 EUR

According to this press statement by T-Mobile, the iPhone without a contract will go for 999 EUR. Surprisingly, T-Mobile initially said the phone would be sold without subsidies. What then is the price increase? I foresee some more legal disputes here. In any case, 999 EUR? No, thanks, but no.

Vodafone: Injunction against T-Mobile re iPhone

Link: de.biz.yahoo.com.

Hmmmhhh, Steve Jobs will want an update, about this thing they have here, call iNjunction :-). Vodafone has applied for and has been granted an interim injunction by a court in Hamburg, arguing that selling the iPhone only with a contract by T-Mobile is a violation of German fair trade and competition laws. This is an interim decision, against which T-Mobile has different appeal options. Expect some more clarity on this in about 1-2 months. This may lead to an interesting situation: possibly T-Mobile may need to breach their contract with Apple to conform to the court order. This has some potential!

Do not wager away the gains!

The German Council of Economic Experts and Advisors has presented the new report here. The experts counsel the administration to continue on its path of economic reform, outlining that the reforms have brought about increased growth and prosperity. They gave their report the title: Do not wager away the gains! If only politicians and trade union activists would heed the advice and dislodge themselves from their 1950 mentality. Ther is enough robustness in the German economy to withstand some more setbacks, but we´d rather see a continuation of success than a return to old failures.

As an example: older unemployed used to receive benefits for a longer time than younger employees. The legislative aim was "justness" and "fairness" - someone who has contributed more (the right word here is: longer....) to the unemployment "insurance" should receive more. Sounds good?

Only if one makes a number of false assumptions and completely shuts out reality. Is it insurance? No, it is a tax levied on work, that shows no direct realation between payment and return. Otherwise, assuming I pay more taxes than others, I should be given better roads?

Reality-check: once employers knew that the could fire older employees and have them coast along on unemployment benefits until pension, guess what happened: they fired them. Why worry? He'll be taken care off.

Luckily, this was scrapped. Rather help someone older find a job, school him, pay relocation. The unemployment figures than actually came down, not only because of this measure, but also because.

And, like an addict in a therapy, once the pain subsides, the cravings are back. "Just a little bit of justice....just a touch of equality...." and suddenly, we are back on the sweet poison of social benefits.

Keep your fingers crossed that we go the full way in rehab!

The Surprise

An old client called: he had sold equipment to a foreign company for 2 or 3 years. On the basis of individual sales contracts. Out of sheer friendliness, he had informed this company that he would now use an agent in this country and all future sales would need to go through this agent. All well, but suddenly, a letter by a law firm demanding a high six-figure payment. As there had been, they allege, no sufficient notice period, mandatory law now gives rise to a claim for damages. This is where we came in. A short call to a lawyer we work with in that country reveals: yes, there is a public policy provision that requires sufficient notice, or else! We now need to go over the details and especially the question if a succession of individual contracts warrants the application of this law.

A typical example of why it pays to ask the lawyer before: a short call would have clarified the situation and we would have avoided the current discussion.

Oh, which country has this provision? France. (Who else would?)

New Insurance Intermediary Law in Germany

The European Union, in its never ending quest to empower the consumer and redress the grievances of a free market economy (attention: SARCASM) a while ago decided to look into the are of insurance intermediaries. Salesmen and brokers. Germany has now enacted national laws based on the EU Directive. Since May 22, 2007, salesmen and brokers have to register and will become "certified", i.e. there is some requirement as to knowledge and financial soundness, including a mandatory insurance - one of the few cases, where those hurt by a new law also profit. What the EU possibly did not foresee is the insurance industry's reaction. This Sunday, the newspaper was full of ads by brokers and other players that they are now government certified or claim superior knowledge. Interesting aspect of Unfair Trading Law: at least in Germany, using a required license as a basis for a claim of singularity is considered to be  misleading advertising.

The legislative also took care of lawyers: in the official reasoning, it is stated that some issues will remain open for the practical application and the courts to settle over time- Every lawyer who drafts contracts or counsels in a non-litigious situation hates these situations: either your caveats are loooooong, or you face potential liability.

The new law also poses a few problems for all telemarketers: the caller has to supply status information that, if curtailed to the minimum possible, will still take about 2-3 minutes to read to or tell the potential customer about. If this sounds bad, things go downhill from here: the law requires the intermediary to explain the general basis for his advice, ask individual questions as to the situation of the potential customer, make a suggestion and then send a documentation of this to the customer.

Wow.

Some of the better salesman now start their pitch with: laws to protect you require us to...

The same problem exists for websites: all that information needs to be on there and may need to be put into an individualized Q&A process. The website guys will love it: a lot of code will need to be written.

All in all, I am not overly optimistic. Rather, this law will bring about more than a few cases to clarify it, produce uncertainty (also for lawyers) and thus costs. These will not be borne by the insurance industry. This alone is for sure.

Blogging Lawyers wearing Bow Ties

Link: feeds.wsjonline.com.

Missing from the picture is my dear friend Dan Hull, who also sports a bow tie, whenever he feels the need for something more formal than the relaxed, beachy Southern California look.  Which begs the question: how many bloggers do the Southern California look?

German Laws on Limited Liability Companies to undergo major reform

It began with the decision of the European Court of Justice, effectively allowing UK ltd corporations to keep their status as limited liability companies even if their effective seat was Germany. Suddenly, many compared the UK ltd to the German GmbH, and decided to opt for the UK model. Germany requires a minimum fixed capital of 25,000 EUR, the UK ltd can be started with 1 Pound. German law requires noatrization, while the UK ltd essentially can be created online. Many small businesses suddenly saw the opportunity to create a corporate vehice - allowing them to opt out of the otherwise mandatory unemployment insurance and pension scheme - at a fraction of the costs. The numbers of UK ltds in Germany can only be estimated, but some speak of more than 20,000 in 2006. Thus, the pressure was on, and Germany had to either losse out or reform. As of next year, the minimum share capital will be reduced to 10,000 EUR, the need for notarization will be curtailed and a new entity will be created to be called Unternehmergesellschaft (entrepreneur's corporation) that does not require any share capital - but requires the shareholders to keep 25% of their profits in the corporation until a 10,000 EUR reserve has been created.

One thought: when the first Limited Liability Corporation Code was enacted, the then minimum fixed share capital was the equivalent of more than a lavish house. Now, it will be a Korean or Romanian car. More creditors will ask for personal security and the courts in all likelihood will find even more ways to hold the shareholders personally liable. Thus, the house is gone - again.

It remains to be seen, how this reform will change the use of UK ltd's and the landscape of corporations.

www.iht.com

Link: www.iht.com.

The Story of Avis: Buy-out, PE, Taken Private, Taken Public and more of it.

If you ever wondered about corporate finance, this post has the definitive answer. Take with grain of salt.

This is your employee - the court says

A wonderful, striking, informative case that makes you wonder and provides some lessons on how not to do things:

A corporation finds itself awash in unpaid invoices. They decide to so something about this. They believe their lawyer is too costly (BIG MISTAKE) and decide to look into matters on their own (BIGGER MISTAKE). They find through some sheer coincidence a law student, about ready to start his articling and decide to have him work on these matters. This, the corporation believes, should be done through an outsourced company they work with for some functions.

As all parties know each other well, and are (ok, were...)at least acquainted, if not friends, they neglect to put things in writing. After a few weeks, the employment is terminated. Guess what? The law student now sues the corpration for wrongful dismissal and claims that they were the real employer. The termination was invalid, as a non-director had done so; further payments are also claimed.

The legal issue: in absence of a written contract, the employer has - effectively - the burden of proof. Which means, if the labor court even only is undecided, the employer looses the case. What is there to do, but negotiate a settlement?

The good thing: the client understands that hiring a lawyer usually is the best and most cost-effective way. That´s one lesson. The second one? If you mix business and friendship, business-rules should be followed. Had we had in writing the contract between the student and the outsourced company, no problem.

Different Outlook

We are currently working on a transaction, where the German owner will become the director of the entity bought by a US investor. Striking differences in outlook manifest itself clearly in such situations: while (often) the German will see the entity as a vehicle to provide him with the finer things in life, the US investor whishes to see the entity as lightly burdened as possible. Example: German  car allowance in excess of EUR 2,000. US car allowance? Less than US $ 750.

These issues have to be negotiated, but clearly addressed: leaving them for later is a seed for future failure.