Class Action Litigation in Outsourcing: Managing Consumer Litigation Risk after Class Action Fairness Act of 2005
October 9, 2009 by Bierce & Kenerson, P.C. ·
The enactment of U.S. federal legislation forcing litigants to argue large class-action claims in federal court will help business generally. If class actions are basically about violations of consumer rights, what impact will it have on outsourcing, and why? This article applies to all those who manage call centers, credit cards, employment and payroll, HR […]
Failed Deals: CSC Sues Sears over Termination
October 9, 2009 by Bierce & Kenerson, P.C. ·
Sears and Computer Sciences Corporation entered into a $1.6 billion IT infrastructure outsourcing in June 2004. By April 2005, Sears had given notice of termination for cause. Claiming the termination was in bad faith as a means of escaping a termination fee, CSC sued Sears alleging irreparable injury to reputation and seeking to enjoin the […]
Consumer Protection in Outsourcing and Out-Tasking: Statutory Rules Governing Document Preparation (Bankruptcy Petition Preparers)
October 9, 2009 by Bierce & Kenerson, P.C. ·
The federal Bankruptcy Abuse Prevention and Consumer Protection Act, signed by President Bush on April 20, 2005, establishes a new outsourcing (or “out-tasking”) business for “bankruptcy petition preparers.” Such businesses (which could be in corporate or sole proprietorship format) would assist persons in the preparation and filing of bankruptcy petitions. While other laws relate to […]
Litigation in Outsourcing: Liability of Corporate Affiliates, Secured Lenders and Venture Capitalists and their Attorneys under WARN Act for Termination of Employees
October 9, 2009 by Bierce & Kenerson, P.C. ·
The Worker Adjustment and Retraining Notification Act, 29 USC § 2101, requires employers to give at least 60 day’s notice to their employees before the effective date of a mass layoff or a plant closing. The Act, adopted in the wake of numerous plant closings in the 1970’s and 1980’s, attempts to soften the blow […]
Hewlett Packard and NEC, 2002 Joint Ventures in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Overview. On December 12, 2002, Hewlett Packard and NEC announced a joint venture (“JV” or “alliance” for our discussion) with NEC to deliver managed information technology outsourcing services in Asia, the United States and Europe. The legal structure of the joint venture was not fully disclosed, but some guesses may be made. This case study […]
Code of Ethics for Auditors: Some Case Studies and Legal Principles in Auditing Standards
October 9, 2009 by Bierce & Kenerson, P.C. ·
Auditors have their own codes of ethics. Where there is no code of ethics, or where the code of ethics permits a degree of conflict of intere+/st, the auditors tread at their own risk. The following case study underscores the traditional common law obligations of auditors as fiduciaries, even before the adoption of the Sarbanes-Oxley […]
Sarbanes-Oxley Act of 2002: Disclosure of Material Outsourcing Contract Contingencies
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary: Under Section 401(a) of the Sarbanes-Oxley Act of 2002, issuers and registered investment companies reporting to the Securities and Exchange Commission must disclose “off-balance sheet” transactions that may be material. On January 22, 2003, the SEC issued a rule defining the rules governing such disclosures for each annual and quarterly financial report required to be […]
Internal Controls and Corporate Governance under Sarbanes-Oxley: Planning and Audit Processes in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Outsourcing poses a challenge to corporate governance principles and internal controls. Compliance Mandate. The rules are both simple and complex. They are set forth in the Sarbanes-Oxley Act of 2002 and related regulations of the Securities and Exchange Commission, the Internal Revenue Service, the Department of Labor and the U.S. Sentencing Commission and the fiduciary […]
Impact of Sarbanes-Oxley Upon Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Corporate Governance and Accountability under Sarbanes-Oxley Act of 2002. On July 30, 2002, President George W. Bush signed the Sarbanes-Oxley Act of 2002. The bill establishes new rules of corporate governance and accountability for accounting for U.S. and foreign publicly owned companies whose shares are registered with the U.S. Securities and Exchange Commission. If you […]
International Outsourcing: Business Judgment Factors
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary. Why do you need an international outsourcing strategy? You might be negligent if you don’t have one. Fiduciary Duty. Directors are legally responsible for managing their companies. They have a duty to exercise their own business judgment for the best interests of the company and its shareholders. Offshore outsourcing has matured in many industries […]
International Outsourcing: Legality of Xenophobia in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Summary: In the United States, layoffs during the downward economic cycle following the dot.com bubble and then the 9/11 attack have had a severe impact on the local economies. In the resulting legislative debate over the impact of outsourcing, some state legislators have proposed a reversion to the “Buy American” principle that conflicts with international […]
Health Spending Accounts: Employers and Co-Employers Can Escape ERISA Fiduciary Liability through HR Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173 (the “Medicare Modernization Act”) was signed by President Bush on Dec. 8, 2003. Under this law, “health spending accounts” (“HSA’s”) are authorized to allow individuals to pay for current health expenses and save for future qualified health expenses on a tax-free […]
Failed Deals, Bankruptcy and Class Action Securities Fraud in Global Outsourcing: In re Alcatel Securities Litigation
October 9, 2009 by Bierce & Kenerson, P.C. ·
In a pre-Sarbanes-Oxley time, the hypergrowth Dot.Com era disintegrated into “Dot.bomb” implosions. Reciprocal deal-making in speculative ventures was almost the norm, particularly in telecommunications transport. The litigation aftermath of failed deals, bankruptcy and class actions for securities fraud is reaching resolution. This short case study provides a synopsis of some key points of failure in […]
Bankruptcy in Outsourcing
October 9, 2009 by Bierce & Kenerson, P.C. ·
Overview. The possibility of a bankruptcy is a legal risk that affects customers, service providers and their respective employees and their respective supply chains including subcontractors and indirect customers. Bankruptcy rules have a special bite in a normal outsourcing, since outsourcing does not necessarily involve a sale of goods by a vendor. Accordingly, special attention […]
Deal Structure: Countertrade – Transformational Outsourcing — Call Centers — Customer Care
October 9, 2009 by Bierce & Kenerson, P.C. ·
Outsourcing Service Provider as Distributor for Customer’s Core Services In early February 2004, IBM and Sprint Corp. prepared to announce a major outsourcing agreement for IBM to assume the responsibility for customer services for Sprint wireless PCS telecom services. The deal affects 5,000 to 6,000 jobs at Sprint. According to news reports, the value of […]
Business Process Transformation for Chinese-American Joint Venture Outsourcing after Divestiture of Manufacturing Operations: IBM’s Services Agreement with Lenovo for Personal Computers — Financial, HR, Legal and Regulatory Issues in International M&A
October 9, 2009 by Bierce & Kenerson, P.C. ·
On December 7, 2004, IBM announced a definitive agreement for the transfer of its Personal Computer Division (“PCD”) to Lenovo Group Limited (formerly known as Legend), a Chinese state-owned enterprise. The transaction and resulting ongoing commercial relationship between IBM and Lenovo herald a new era in post-sale support following divestiture of product manufacturing business. In […]
Case Study in “On Demand” Computing: American Express Company
October 9, 2009 by Bierce & Kenerson, P.C. ·
Motivations for an “On Demand” Computing Deal. American Express Company is the world’s largest issuer of credit cards and provides financial services. Why did American Express Company decide in February 2002 to sign a $4 billion seven-year deal with IBM, the world’s largest information technology company, that the two companies hailed as “on demand” computing? […]
Outsourcing after Divestiture of Manufacturing Operations: IBM’s Services Agreement with Lenovo for Personal Computers
October 9, 2009 by Bierce & Kenerson, P.C. ·
In early December 2004, IBM’s announced sale of its personal computer division to Lenovo Group Ltd. (formerly known as Legend), a Chinese state-owned enterprise, heralds a new era in post-sale support. Sensitive issues of management control, marketing, trademark goodwill and customer support need to be addressed on cases of divestiture. The new model breaks ground […]
Finance & Accounting Outsourcing: Does Outsourcing Reduce Risk?
October 9, 2009 by Bierce & Kenerson, P.C. ·
When enterprises look to outsource in-house responsibilities, finance and accounting functions are usually not the first ones farmed out. Executives might expect to read headlines like, “Aon Negotiating to Outsource Most of its U.S. IT Infrastructure to Computer Sciences Corporation,” a development Aon and CSC touted in a 2004 press release. Sophisticated business process outsourcing […]
Frequently Asked Questions For Employees
October 9, 2009 by Bierce & Kenerson, P.C. ·
A) “Outsourcing” does not mean the automatic loss of your job. It may improve an employee’s career opportunities by opening the door to new environments for providing service. Indeed, with the technical training that an outsourcing service provider gives its new employees, being “outsourced” can be a ticket to personal growth, improved opportunities for lifestyle […]