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DealBook: AT&T Plans to Bring Back Jobs Sent Abroad

August 31, 2011 by Leave a Comment

Randall Stephenson, ATT's chief, at a House hearing in May. He hopes to allay some concerns.Andrew Harrer/Bloomberg NewsRandall Stephenson, ATT’s chief, at a House hearing in May. He hopes to allay some concerns about the T-Mobile deal.

ATT, its $39 billion deal to buy T-Mobile USA under pressure from multiple fronts, is now seeking to promote one benefit of the blockbuster deal: jobs.

The company plans to announce on Wednesday that it will bring back 5,000 call-center jobs that were outsourced abroad. ATT also plans to commit to maintaining its and T-Mobile’s more than 25,000 call-center jobs in the United States.

ATT’s move — which the company describes as one of the biggest job repatriations since the financial crisis — is meant in part to assuage critical lawmakers’ fears of possible job cuts. In a letter to the two federal regulators reviewing the deal, Senator Al Franken, Democrat of Minnesota, wrote that “it is fair to assume that layoffs constitute a substantial portion” of the deal’s promised cost savings.

Other politicians, including Representatives Ed Markey of Massachusetts and John Conyers of Michigan, have also expressed unease over the proposed merger’s effect on jobs.

“Does this shore up an issue that people have?” Randall Stephenson, ATT’s chief executive, said in an interview on Tuesday. “Sure, I hope it does.”

Among the chief attractions of mergers is cutting costs, and ATT has forecast roughly $3 billion a year in savings. The telecommunications giant has said that it plans to create jobs by building out the combined company’s next-generation wireless network, an effort that is expected to cost more than $8 billion, though it is also expected to shutter hundreds of retail stores and other back-office positions.

But Mr. Stephenson said that as ATT was reviewing its and T-Mobile’s businesses, creating jobs in the United States became a way to create good will. The company had about 265,410 employees as of Jan. 31. T-Mobile, now a unit of Deutsche Telekom, employs about 42,000 in the United States.

“As I sit here and watch the news over the last month, I can’t help but ask, ‘What else can we do?’ ” he said. “This sends a good message to the U.S. and to the labor markets.”

ATT currently operates about 55 call centers throughout the country, while T-Mobile runs about 24. Mr. Stephenson said that his company had yet to determine where the new call-center jobs would be located. The existing call centers are in many locations around the country, including T-Mobile’s headquarters in Washington and ATT’s home in Texas, as well as in Pennsylvania and Maine.

Mr. Stephenson added that he had become comfortable that ATT would still meet its projected cost savings despite the move.

Jobs are not the only concern on skeptics’ minds about ATT’s planned mega-deal. Since it was announced in March, the proposed acquisition has taken fire from competitors like Sprint, consumer groups and federal and state lawmakers worried about combining two of the nation’s biggest cellphone service providers.

ATT has its supporters, including telecommunications workers’ unions, technology companies like Microsoft and Facebook and 27 governors. The company has also made a big lobbying effort to drum up additional backing.

Both sides have raced to put pressure on the federal regulators scrutinizing the deal, the Federal Communications Commission and the Justice Department. Several state regulators, including California’s public utilities commission, are also closely examining the merger.

Last month, the F.C.C. halted its review of the deal to examine ATT’s economic models supporting the deal, though it resumed the process last week.

The company took additional criticism after a briefly unredacted submission to the F.C.C. showed that ATT had projected spending just $3.8 billion to expand its nascent 4G wireless network nationwide, far less than the $39 billion it is spending to buy T-Mobile.

Mr. Stephenson countered that expanding its network without T-Mobile’s customer base, spectrum and cellular towers had “no business case.”

He added that he still expected the deal to receive approval by the end of the first quarter next year.

“Nothing has transpired to date that would make me think that will change,” he said.

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Representative John Conyers Wants Copyright Law Revision

August 29, 2011 by Leave a Comment

“For too long the work of musicians has been used to create enormous profits for record labels, radio stations and others, without fairly distributing these profits to the artists,” said Representative John Conyers Jr. of Michigan, who was chairman of the committee until January. Because “copyrights are a tool to be used by creators to earn a living from their work,” he added, it is important to ensure “a fair marketplace.”

When copyright law was revised in 1976, recording artists and songwriters were granted “termination rights,” which enable them to regain control of their work after 35 years. But with musicians and songwriters now moving to assert that control, the provision threatens to leave the four major record companies, which have made billions of dollars from such recordings and songs, out in the cold.

As a result the major record labels — Universal, Sony, EMI and Warner — are now fighting the efforts of recording artists and songwriters to invoke those rights. The Recording Industry Association of America, which represents the interests of the labels, maintains that most sound recordings are not eligible for termination rights because they are “works for hire,” collective works or compilations created not by independent performers but by musicians who are, in essence, employees of the labels.

With years of costly litigation looming, groups that represent the interests of recording artists and songwriters said they found Mr. Conyers’s remarks encouraging. But given the issue’s legislative history any amendment process in Congress is likely to be long and complicated.

The American Federation of Television and Radio Artists, whose more than 70,000 members include many recording artists and composers, said it was “deeply appreciative” of Mr. Conyers’s “continued focus in working to ensure that our copyright system recognizes the rights of artists for their creative contributions and which fairly compensates artists for the exploitation of their music.” In a statement the group’s national executive director, Kim Roberts Hedgpeth, said it looked “forward to learning more about any recommendations to enhance the rights of artists as they prepared to reclaim their rights in their musical works, and we are working to ensure that there is an effective system by which musical artists fully benefit from their rights under law.”

But the Republicans are the majority party in the House, and some lawyers and artist managers see them as more friendly to the record labels and other big media companies. For that reason the lawyers and managers have expressed doubts that a bipartisan agreement can be reached on the main issues relating to music copyrights, like defining who qualifies as the author of a work and under what circumstances, if any, a song or sound recording should be considered a work for hire.

“Since I’m going to have to be working with them, I don’t want to tell you they are conservative and corporate oriented,” Mr. Conyers said when asked about the Republican position. “That won’t help. I’ll be going to Lamar Smith after Labor Day to talk to him about this, about getting a little fairness into the entertainment industry,” he said, referring to his Republican successor as the committee’s chairman.

Mr. Smith, of Texas, declined a request for an interview. Instead, his staff issued a general statement in his name, saying that legislation that “stimulates U.S. job growth and furthers the interests of creators, innovators and consumers is a top priority of the Judiciary Committee,” and that Mr. Smith was personally committed to legislation that “protects America’s innovators.”

Those creators and innovators could presumably include both recording artists and songwriters. But Mr. Smith’s staff did not respond to a request to clarify his views or to arrange an interview with Republican staff members on the committee who might be able to explain the party’s position on termination rights and related copyright matters.

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DealBook: Trying to Get Back in the Game

June 22, 2011 by Leave a Comment

Daniel Rosenbaum for The New York TimesAt the American Constitution Society convention in Washington, Melvyn Weiss, center, with Representative John Conyers Jr., a Michigan Democrat, left, and Ariana Stowe, an intern.

WASHINGTON — Several dozen of the nation’s top corporate lawyers convened at a conference here last week to discuss the future of securities litigation.

In years past, Melvyn I. Weiss would have played a central role in the debate.

But while the lawyers argued about Wall Street reform and the latest Supreme Court ruling, Mr. Weiss sat on a panel down the hall, speaking about his time in prison.

When a moderator called him “attorney Weiss,” he quickly corrected her.

“Former attorney Weiss,” he said, a poignant half-smile breaking out across his face.

Mr. Weiss lost his license to practice law when he pleaded guilty in 2008 to making illegal kickback payments to his clients. He spent a year in prison, another four months in a halfway house, and is now on probation for three years.

And though he is disbarred, Mr. Weiss wants to get back in the legal arena. He has mailed letters in recent weeks to about 200 of his former colleagues seeking work as a mediator.

“Despite the upheavals in my own life, I am happy to report that my body and spirit are in great shape, and I am motivated to be as productive as ever,” wrote Mr. Weiss, 75, on letterhead from his new business, MIW Mediating and Consulting.

Citing his experience as a court-appointed mediator and decades of practicing law, Mr. Weiss wrote, “Bottom line, I am available to mediate or arbitrate significant disputes.”

Mr. Weiss has spent his career in the middle of significant disputes. He and his partners at Milberg Weiss Bershad Hynes Lerach revolutionized shareholder class-action lawsuits, filing streams of cases against corporations accusing them of accounting fraud and other wrongdoing. Most of the companies settled rather than undergo costly litigation, earning the firm hundreds of millions of dollars in legal fees.

The firm’s aggressive tactics made it the bête noire of corporate America. Business groups called Milberg Weiss’s lawsuits a legal form of extortion. Congress passed a law in 1995 aimed squarely at its practices.

In 2006, Milberg Weiss was indicted on charges of secretly paying clients millions of dollars in illegal kickbacks to serve as plaintiffs in about 180 cases over 25 years. Mr. Weiss and three of his partners went to prison. His former firm, now called Milberg, paid $75 million to settle its role in the case.

No one has yet to hire Mr. Weiss as a mediator, and he said that he realized that his baggage presented a challenge for his fledgling business. Yet he is serious about the venture — last summer, he took a weeklong arbitration course at Pepperdine University School of Law.

Can a disbarred lawyer serve as a mediator?

Most legal experts say that there is no problem with Mr. Weiss acting in that role; after all, nonlawyers can act as mediators. Sol Wachtler, the former New York judge who lost his law license in 1993 after pleading guilty to a harassment crime, acted as a mediator before being reinstated to the bar a few years ago.

But Bruce Green, a legal ethics professor at Fordham University, says he believes that Mr. Weiss could be acting inconsistently with his disbarment order.

“I am not so confident that it is permissible for a disbarred lawyer to serve as a mediator and expressly draw on his prior legal experience, as Mr. Weiss appears to be doing,” Mr. Green said.

Mr. Weiss, the Bronx-born son of an accountant, would not be mediating for the money. During the years 1983 through 2005, Mr. Weiss’s share of his firm’s profits totaled about $210 million, according to court filings. (As part of his penalty, he paid a $10 million fine.)

He splits time between a waterfront mansion in Oyster Bay Cove, N.Y., and a luxury condominium in Boca Raton, Fla.

Yet financial clouds loom. While in prison, Mr. Weiss learned that a chunk of his savings had been wiped out in the Bernard L. Madoff Ponzi scheme. The Madoff bankruptcy trustee then sued Mr. Weiss, his family and a former law partner claiming that they earned $20.4 million in fake profits from the fraud that had to be returned to the victims.

Mr. Weiss declined to comment on the lawsuit.

He is also locked in arbitration against his former law firm, which wants Mr. Weiss to compensate the firm for the tens of millions of dollars in legal fees it spent defending itself.

During his talk, Mr. Weiss did not address those personal problems. Instead he focused on the issues faced by his fellow inmates.

“The advice I got from most of my friends was, Why do you want to dwell on the criminal part of your life?” said Mr. Weiss, addressing a crowded room at the American Constitution Society convention.

“How could I go through that experience with my 50 years of legal practice and not try to do something about it? So that’s why I’m here.”

He decried the conditions at his halfway house, a “decrepit Salvation Army building” in West Palm Beach, Fla., that he complained had one small television with rabbit ears, basketballs that didn’t bounce and patio furniture that was falling apart.

“I walked into this environment and said ‘How is this supposed to be a transition into society?’ ”

He expressed frustration that he could not help his fellow prisoners because his probation prohibits him from having contact with felons.

That rule prevents him from speaking with William S. Lerach, his former protégé and law partner. Mr. Lerach, who ran the West Coast operation of Milberg Weiss and brought in many of the firm’s largest cases, also served prison time. Despite a bitter split in 2004, he expressed warm feelings for Mr. Weiss.

“I admire his decision to work again and think he could be enormously useful to the system as a mediator,” Mr. Lerach said.

But the 65-year-old Mr. Lerach, who has written some opinion articles and lectured at law schools since leaving prison, said he had no interest in such commercial pursuits.

“I had a lifetime of work and these days I’m just puttering along,” said Mr. Lerach, who lives in a mansion in La Jolla, Calif., perched on a cliff overlooking the Pacific Ocean. “I’d rather tend to my garden. Right now I’m harvesting blueberries and boysenberries.”

Mr. Weiss does not garden, and while he golfs, having kept country club memberships on Long Island (Glen Oaks) and in Florida (Boca Rio), he said he was not wired to live a life of leisure.

“Some guys work all their lives and then can turn off the spigot,” said Mr. Weiss, who has a wife, three children and seven grandchildren. “They play golf in the morning, gin rummy in the afternoon, go to dinner with their wives at night and that’s it. That’s not me.”

After his talk here on Friday, Mr. Weiss milled about the conference, thrilled to be back in the game. A judge from Iowa introduced himself and said that he once presided over a life insurance marketing fraud case brought by Mr. Weiss. One of his former Milberg partners came over to say hello.

A top plaintiffs’ lawyer gave him a warm welcome; they agreed to have dinner with their wives when they returned to New York.

Down the hall, a lawyer who tried cases with Mr. Weiss marveled at his onetime colleague holding court. “He was a terrific lawyer; I loved trying cases with him,” said the lawyer, who would only be quoted on the condition of anonymity.

“But he also made serious mistakes and disgraced our profession. It’s a mixed bag with Mel.”

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