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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 Law.com 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!


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