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Blank Rome Sends a First Bill - SCO Billed for Cahn's Lawyer to Read Groklaw
Thursday, December 10 2009 @ 08:49 PM EST

Blank Rome, the law firm for Chapter 11 Trustee Edward Cahn, has submitted its first bill. The bill is for the time period that covers the termination of Darl McBride and other employees, so it's fascinating, but I also get a much clearer picture from it of what Blank Rome's position is and why. And one thing comes through on this bill: they don't miss much. And they are very, very careful to record it all, research what needs researching, and make their moves decisively, but with prior deliberation. I'd hire this firm any day. It's refreshing, even if they may not take the position I would want them to. Yet.

So I'd call this bill The Education of Blank Rome. And my preliminary impression is that they are honest people, who got an unholy mess dumped in their laps and are carefully picking through everything, trying to figure it all out. And they've made real progress in doing so. The bill is for $229,214, which you and I would view as a lot of money that SCO will never win back in the crazed litigation follies, but they don't know that yet. It will be interesting to see what happens once they get that part figured out. I seriously doubt they will ever be paid in full. The deeper they go, the worse it gets, unless there is a pot of gold at the end of the rainbow. Boies Schiller is in so deep now, their only hope is to follow the rainbow, but Blank Rome is in a different situation, and they may not enjoy gambling as much as David Boies is said to.

Here's the bill:

12/09/2009 - 986 - Monthly Application for Compensation // First Combined Monthly Fee Application of Blank Rome LLP For the Period of August 25, 2009 Through October 31, 2009 Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Objections due by 12/29/2009. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B) (Fatell, Bonnie) (Entered: 12/09/2009)

As you'll see, they have definitely noticed the foreign subsidiaries as a major issue, noting both Japan and Germany, the two we noticed here as well. And I conclude from this bill that their decision to go forward on the litigation was not the result of Darl's threatening letter. The position seems formed by the end of September, early October, and the letter from Darl came later. My sense is that their position was formed from talking too much to Ryan Tibbitts and Stuart Singer and not reading quite enough yet on their own, due to time issues, but no doubt that is what preliminary means, that they'll continue to do what needs doing to make sure they don't behave irresponsibly. You see that pattern all through the itemized bill.

Most intriguing notations? The ones surrounding Darl's termination, the planning around it. It was a very big deal indeed. We see a lot of emails about it, including to Kevin McBride, and then on October 16th a teleconference with SCO's General Counsel, Ryan Tibbitts, "regarding security of business records" and the next day a Fatell/Trustee teleconference "reporting on activities by D. McBride and company security; discussions regarding litigation." Company security, eh? Security of business records?

Not our Darl, surely?

And the next most interesting detail is that they read Groklaw. You'll find us on page 29 of Exhibit A, the entry for October 21 and 22. There was a hearing on October 23, so presumably there could be that connection. On the 22nd, it says that the reading included comments on a new article about the "SCO development". That could be about Darl being terminated on the 19th and/or the AutoZone settlement, I assume, although there was also the Cahn preliminary report, all on the 22nd.

This is not the first time that lawyers for SCO have read Groklaw, of course. Remember the article, "Lawyers Flock to Mystery Website" that said lawyers were positively mezmerized by us? And I recall also that Lee Gomes of the Wall St. Journal wrote an article for California Lawyer in 2004 saying that Groklaw was a must read for anyone following the SCO litigations. And Groklaw has won many awards for it. I remember Gomes' warning to other companies tempted to follow SCO's example:

One lawyer's barratry is another lawyer's strategy. But attorneys contemplating a legal assault based on dubious facts would be wise to learn a lesson from The SCO Group's litigation against users of the Linux operating system: Be careful who you pick a fight with. The Lindon, Utah, software company couldn't have chosen a tougher target-or one with a more dedicated group of allies.
Words to live by. So, lawyers do read Groklaw. We knew that, including SCO's, but so did SCO's management. SCO executives have smeared Groklaw and me from here to Kingdom Come for half a decade, so we knew they had to read it. But it is the first time I've seen a bill for reading Groklaw.

I should probably send them a bill for having to *write* it. What do you think? $345 an hour sound fair?

Kidding. It's a labor of love.

I see no indication that they are reading the right articles, though. Here's what they need to read, about the GPL being doom for SCO's claims regarding copyright infringement. Remember what Gomes wrote about dubious facts? Dig until you know what he was talking about, that's my advice. So, welcome, and keep reading, by all means. They read other news stories as well, so they do care about how SCO is being perceived, I gather. For example, on October 26, a Blank Rome employee was reviewing "email re blog posting re McBride termination". Groklaw didn't write about that on the 26th. Only on the 19th, so I'll tentatively assume it wasn't an email about our coverage, although of course it could be.

Another entry that I found of interest is on September 14. It follows several entries about retaining Ocean Park, and you see that Blank Rome made some changes in the agreement. I think that is the first time we've seen anything like that. Definitely, there is new management at SCO, and it's for the better in that they are at least paying attention. After that entry, there are many more, looking at details of retaining Tanner and Boies Schiller, and on October 2nd, there is a change in terms of the Boies retainer mentioned. On the 7th, I see a telephone conference call with Stuart Singer about contingency fees, so someone at Blank Rome has noticed. The bill mentions sending materials to Bonnie Fatell and to Edward Cahn, so this is a compilation of everyone's time on this matter, not just Fatell's.

On the 21st, you see a discussion with Arthur Spector about his firm's fees. Later Mr. Singerman himself calls about it. We know the outcome, that they have to wait in line for whatever the prior retainer doesn't cover. See what I mean? There are no blank checks now. On the 25th, the firm is drawing up a chart of the various professional fee applications. You see Pachulski Stang asking about its fees too.

I smiled at the entry on October 30th, which mentions multiple conferences with "B. Fatell, S. Singer, T. Hiltz, Paralegal regarding same." Lawyers sometimes look down on paralegals, sort of like doctors do nurses. So the paralegal goes unnamed in the bill.

I think it's a mistake to underestimate paralegals, personally.

: D

But you should never underestimate support staff, in my view. It's the nurses who really know what is going on with the patients, because they are there when the doctor is sleeping. Same with paralegals. They track the details in a way lawyers do not, so they usually are the ones that really know where the bodies are buried. In this case though, Fatell is tracking and tracking and tracking. I am seriously impressed. And relieved.

Fatell, I see, also got a trip to Utah in August. She reports to Cahn on the 27th, on page 15 of the PDF, on the trip and on "management issues". Hmm. Is she the hatchet man that dropped Darl off the cliff, perchance? This item follows several about a conference call with a potential investor that Darl was to participate on.

And the most fascinating item in the entire 53 pages, to me, it this one:

August 27 09 - Conference with S. Tarr regarding SOFA's - Fatell - 0.10
Well, at least it doesn't mention hot tubs. Remember Santa Cruz's hot tub? I can just imagine what Blank Rome would have to say about them. Sofa's. I'm pretty sure they don't mean Status of Forces Agreements, since I don't think SCO has any military troops. I've long hoped not, anyway. And they probably didn't get an offer from the Netherlands software company. So what in the world can this be about? Did Darl have sofas in his office, and they're thinking of selling them off with the forklifts? If so, dibs, dibs, dibs.

And what is the entry about Zombie Designs about? On September 4, there is an "entry on Zombie Designs and McBride payment and issues regarding same". There is a website called that, in Uruguay, South America, but it's apparently about porn. That can't be it, can it?

[ Update: Groklaw member jrvalverde thinks this might be it, a Utah company Zombie Design, a creative design company, headed by a guy who worked for SCO in marketing at one time, maybe at the same time. They seem to design products and marketing materials, including some signs for SCO trade shows. One looks like a guy about to drown, so I'd say they are talented at capturing the essence of a brand.]

I spoke too soon. Here's the winner of most intriguing item:

Aug 27 09 - Review MORS and use of cash and interplay with foreign affiliates - Kelbon - 0.90
You go, girl. X marks the spot. I see there was a conference with Arthur Spector about that topic on the 31st. Trust but verify. That's all I'll say. Trust but verify, verify, verify.

For the rest, I'll leave you to find the rest of the gems. I have a really bad cold and I keep falling asleep, waking up, trying to finish this article, and now instead, I'll just tell you the truth. I'm too sick to finish today. So I'll leave the rest to you guys. We have always worked as a group, so it's in good hands.

So. SCO has to pay Blank Rome to read Groklaw. I know. As I drift back to sleep, I'm thinking, Perfection!


Blank Rome Sends a First Bill - SCO Billed for Cahn's Lawyer to Read Groklaw | 192 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Authored by: PolR on Thursday, December 10 2009 @ 08:59 PM EST

[ Reply to This | # ]

OT Thread
Authored by: PolR on Thursday, December 10 2009 @ 09:00 PM EST
Make links clickies if you can.

[ Reply to This | # ]

Newspick thread
Authored by: PolR on Thursday, December 10 2009 @ 09:02 PM EST
Place the newspick title in the comment title for clarity please.

[ Reply to This | # ]

Blank Rome Sends a First Bill - SCO Billed for Cahn's Lawyer to Read Groklaw
Authored by: dio gratia on Thursday, December 10 2009 @ 09:03 PM EST
August 27 09 - Conference with S. Tarr regarding SOFA's - Fatell - 0.10
Statement of Financial Affairs? Let me guess, something not disclosed about one of more foreign subsidiaries.

[ Reply to This | # ]

Ryan Tibbitts -- No Respect
Authored by: Anonymous on Thursday, December 10 2009 @ 09:12 PM EST
In Exhbit A, his last name is spelled at least five different ways.

Six, if you include the correct spelling.


Spelling lesson here:

[ Reply to This | # ]

The Wages of a Labor of Love
Authored by: spambait42c on Thursday, December 10 2009 @ 09:17 PM EST
But it is the first time I've seen a bill for reading Groklaw. I should probably send them a bill for having to *write* it. What do you think? $345 an hour sound fair? Kidding. It's a labor of love.

Really, PJ, $345 an hour? That little? And what would you do with half a billion dollars, anyway?

[ Reply to This | # ]

Security of business records
Authored by: Dave Ivedorne on Thursday, December 10 2009 @ 09:29 PM EST
Kevin McBride was being paid five figures per month by SCO for document
management services. Reminding him of his duties as a member of the bar, and to
the company, was reasonably likely the rationale for communicating with him
prior to Darl's termination.

The shorthand used in the descriptions leaves Cahn's pleasure with Kevin's
performance in that role, an open question.


[ Reply to This | # ]

Security of business records
Authored by: Anonymous on Thursday, December 10 2009 @ 10:53 PM EST
If they were discussing "security of business records" on the 16th,
and Darl was being terminated on the 19th, then I imagine they were making sure
that all important records would be "secured" before Darl was notified
he was being booted out. That would include making sure his network login was
revoked while he was at the meeting where he was terminated, and that his laptop
was turned over immediately.

As Kevin McBride is Darl's brother, they would need to sit down with him
simultaneously to make sure that he was informed so that Darl couldn't ask him
for copies of any records before Kevin found out that Darl was no longer running
the company.

These are routine precautions when terminating employees, so I wouldn't be
surprised to see this happen. Given Darl's position in the company and also
SCO's current situation, it would be doubly important that this would be handled

As for "email re blog posting re McBride termination" on the 26th
versus Groklaw writing about it on the 19th, that timing would seem about right
for a subject like that. A blog post wouldn't be a high priority item, so taking
a week to getting around to reading it, investigating what it said, and then
writing an e-mail about it sounds about right. I wouldn't expect someone to drop
everything they were doing to look into a bog post. The timing certainly sounds
like a "could you look into this and get back to me by the start of next
week" sort of response.

[ Reply to This | # ]

SOFA - Statement of Financial Affairs (bankruptcy court) N/T
Authored by: Anonymous on Thursday, December 10 2009 @ 11:10 PM EST

[ Reply to This | # ]

Get some sleep
Authored by: LocoYokel on Thursday, December 10 2009 @ 11:51 PM EST
And get well, no posting for at least 24 hours. Seriously.

Get a gallon of orange juice, some chicken soup and just huddle up in bed.

We all love you here and really don't want to see you wearing yourself down like
last time so it takes you months to get your health back.

[ Reply to This | # ]

Other Bits extracted
Authored by: Anonymous on Friday, December 11 2009 @ 12:11 AM EST
Oct. 22 09
Fatell 0.40
Telephone Call with H. Jackson, Shareholder regarding Status

[ed note: Herb Jackson from Renaissance, a bagholders bagholder, from 2003 quarterly calls, and wrote in support of the May 2009 re-org plan]

Oct 31 09
Begin review of minutes of every board meeting since 2006
[ed. well its a start]

Oct. 16
Review public statements regarding D. McBride
[ed. Virtually certain, That would be the MOG/McBride Dear Ed. open letter]

review issues on setoff claims 0.5

[ed. Setoff claims are simultaneous credit and debit events. This indicates an attempt to zero out some claim. This research occurs prior to the Autozone deal -- does this refer to a setoff against the Novell judgment for some other claim.]

Confer with Kelbon multiple times regarding autozone pleadings and revise same review SEC filings regarding same, research regarding code Section 107 and Bankruptcy Rule 9019 and email Kelbon regarding same.

[ed. [redacted]le 9019 is a proscription against confidential deals, indicates early in the AutoZone motion preparation they were worried that the Autozone deal would be objected to based on that rule. One of the exceptions is for "inmaterial" deals., don't know if that the escape picked.]

I think the next two are especially important, This indicates that Novell wrote Blank Rome a detailed letter saying SCO could not hypothecate the APA to raise money to continue the court case. There are other line items on the same subject, I didn't transcribe all.

10/15/09 review Novell detailed letter regarding alleged restrictions on transfer of APA

10/20/09 anaylsis of Novell matter and begin draft memo regarding same

[ Reply to This | # ]

Blank Rome Sends a First Bill - SCO Billed for Cahn's Lawyer to Read Groklaw
Authored by: iraskygazer on Friday, December 11 2009 @ 12:26 AM EST

Your part in this play has been invaluable.

Go Girl.... And take care of yourself so you can enjoy the holiday season.

[ Reply to This | # ]

Comerica Objections?
Authored by: Anonymous on Friday, December 11 2009 @ 01:12 AM EST
Did I miss something?

[ Reply to This | # ]

SCO Billed for Cahn's Lawyer to Read Groklaw
Authored by: jbb on Friday, December 11 2009 @ 01:22 AM EST
Money well spent. At last.

You just can't win with DRM.

[ Reply to This | # ]

The "Get well soon, PJ" thread
Authored by: nutmeg on Friday, December 11 2009 @ 01:47 AM EST
While we all hope you get better soon, do take time out for a day or two while
you do so. You don't want to burn out just when you might have greatest effect.

perl < /dev/random # Try something new today

[ Reply to This | # ]

Zombie Designs: FOUND
Authored by: jrvalverde on Friday, December 11 2009 @ 03:32 AM EST

It's a design company based on Utah. In their list of clients figures currently
first of all (I guess as the latest one) SCO:

The SCO Group (UNIX and mobile phone software company) “Kip has exceptional
talent and ability with design. His creative approach to his work dramatically
improves the product and company image. He works faster and more professionally
than any other creative design group I've worked with. He is easy to work with
and quickly grasps the market plan and approach necessary to leave a
professional impression with customers and clients.” – Craig Bushman, VP

It seems based in Centerville City, Utah: from a web directory in

Name of Business Business Address Business Phone Owner of Business Type
of Business

Jose R. Valverde

[ Reply to This | # ]

Authored by: Anonymous on Friday, December 11 2009 @ 04:52 AM EST

SCO has to pay Blank Rome to read Groklaw.

Well, at least SCO gets billed for someone to spend one and a half hours reading Groklaw. Let's wait and see how much they actually pay out of their steadily shrinking bank balance.

[ Reply to This | # ]

Groklaw Trumps Novell
Authored by: DaveJakeman on Friday, December 11 2009 @ 04:52 AM EST
You do realise, don't you PJ, that you are now partly responsible for Novell not getting their money back?


I think it's a mistake to underestimate paralegals, personally.
That could possibly be my absolute fave Groklaw quote, ever. A lawyer, being paid to be educated by PJ, a paralegal.

I wish I too could get lawyer rates for reading Groklaw.

[ Reply to This | # ]

Blank Rome's Project Codes are All Mixed Up
Authored by: DaveJakeman on Friday, December 11 2009 @ 07:53 AM EST
From the main PDF, Project Code 4 represents "Debtor's Business
Operations", 227.30 hours, totalling $128,866.50; in the Project Code
Summary in Exhibit A, Project Code 4 is described as "Claims Analysis and
Objections", 227.3 hours, $128,866.50.

The Code Summary gives "Debtor's Business Operations" Project Code 7,
with 0.0 hours and $0.0 billed.

That's just one example. Other project codes/descriptions likewise to not marry
up with their description in the main PDF.

Here's a listing of the discrepancies:

Project Code: 1
Main: Chapter 11 Trustee Specific Matters; 28.60; $15,751.70
Ex A: Blank Rome Fee/Employment Applications; 28.6; $15,751.70

Project Code: 2
Main: Blank Rome Fee/Employment Applications; 6.70; $2512.00
Ex A: Other Professionals' Fee/Employment Issues; 6.7; $2512.00

Project Code: 3
Main: Other Professionals' Fee/Employment Issues; 65.60; $28,210.00
Ex A: Executory Contract and Unexpired Leases; 65.6; $28,210.50

Project Code: 4
Main: Debtor's Business Operations; 227.30; $128,866.50
Ex A: Claims Analysis and Objections; 227.3; $128,866.50

Project Code: 5
Main: Case Administration; 18.60; $7,839.00
Ex A: Committee Business and Meetings; 18.6; $7,839.00

Project Code: 6
Main: IP Litigation; 72.30; $40,449.00
Ex A: Case Administration; 72.3; $40,449.00

Project Code: 9
Main: Employee Benefits/General Labor; 48.00; $27,446.00
Ex A: Evaluation and Negotiations of Debtor's Plan and Disclosure Statement and
Exclusivity Requests; 48.0; $27,446.00

Project Code: 10
Main: Plan and Disclosure Statement; 34.70; $13,020.00
Ex A: Financing Issues; 34.7; $13,020.00

Project Code: 11
Main: Sale of Assets/Asset Purchase Agreements; 27.70; $17,872.50
Ex A: Regulator Matters/SEC Matters; 27.7; $17,872.50

Project Code: 13
Main: Tax Issues; 1.10; $759.00
Ex A: Stay Relief Issues; 1.1; $759.00

Project Code: 15
Main: Hearings - Attendance / Preparation; 6.70; $2,036.50
Ex A: Tax Issues; 6.7; $2,036.50

Project Code: 16
Main: Non-Working Travel Time; 2.6; $1,755.00
Ex A: Asset Analysis and Recovery (identication and review of potential assets
including causes of action & non-litigation recoveries); 2.6; $1,755.00

Same numbers, more-or-less, but different descriptions. Makes it kind of hard
to understand the summary of how much time (and money) was spent on what.

If Blank Rome issue a correction, we'll know how closely they've been following


[ Reply to This | # ]

A Suggestion
Authored by: DaveJakeman on Friday, December 11 2009 @ 09:04 AM EST
I don't know if this would be worth the effort, but it would useful for piecing
things together:

The individual timekeeping entries are interesting in themselves, but are not in
chronological order, making it difficult to figure out what happened in relation
to other events. It would be a lot of work, but Exhibit A could be converted to
text and put in sequence. We couldn't put it in exact sequence, as we only have
date stamps and not times.


[ Reply to This | # ]

The AutoZone Cluebat
Authored by: DaveJakeman on Friday, December 11 2009 @ 09:18 AM EST
The AutoZone settlement activity seems to immediately follow this entry:




Looks like we guessed right, and that Novell and IBM now have the recipe for
dealing with SCO successfully.

[ Reply to This | # ]

Ocean Who?
Authored by: sk43 on Friday, December 11 2009 @ 11:38 AM EST
P. 26, Oct 9 09 FATELL
"Team meeting with OCEAN PACIFIC, R. Kelbon and S. Tarr"

Bonnie seems to have lost track of the name of her financial advisor.

[ Reply to This | # ]

lawyer billing
Authored by: publius_REX on Friday, December 11 2009 @ 07:39 PM EST
Yes, the lawyers keep track of *everything* related to their work for a client.
And, clients review their bills to make sure they're getting what they're paying
for. Even very short phone calls can be very important, so they are always

In the old days, their secretaries typed up the call logs and sent them to the
accounting staff. My wife relates a story about a yound partner that tried to
bill clients for work he did while commuting to work in Washington, D.C.
Needless to say, the client wasn't buying it, and neither were the senior
partners in his firm. Not a good career move.

[ Reply to This | # ]

Filed their first bill before they filed the delinquent MOR's
Authored by: Anonymous on Saturday, December 12 2009 @ 10:43 AM EST
It sure is nice that they found the time to type up and file this detailed
itemized bill for their services, while they still haven't found the time to
file the MOR's for the past several month, which are required to be filed
monthly by the federal bankruptcy code. I guess we see where their priorities

[ Reply to This | # ]

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