Note: This essay is base on article in NY Post, July 7, 2015
Sergey Aleynikov, and immigrant from Russia with dual citizenship, was working for Goldman Sachs. In 2009 he decided to take another job at a hedge fund. As a going away present for himself, he stole 32 megabytes of code, which Goldman Sachs said was “secret sauce,”— their code for high speed trading.
Aleynikov was found guilty by a jury and had spent 11 months behind bars and spent over $7 million trying to fight the decision by arguing what he did was not a crime – it was only a civil dispute. He finally won. Two judges in Appeals Court agreed with him – in a 72-page decision.
Am I nuts or is the legal system nuts? It doesn’t matter what a jury decided. There exists in our code of law some hair-brained legal technicality arguing that stealing millions of dollars worth of secret code from a company isn’t a crime. Then what is a crime?
The judges argued that stealing computer information was a civil offense. Then Russia, as well as China, both who have a whole industry of stealing computer information from Americans, aren’t committing theft — they’re just committing a civil offense. Thus a victim of Russian or Chinese theft can just sue in a civil court and then try to collect. Yea, try to collect from Russian or Chinese thieves.
As with all good crooks, Aleynikov isn’t shy. Now he’s suing Goldman Sachs for his $7 million in legal fees. If he wins, his next step will probably be suing Sachs and the U.S. government for millions of dollars for time spent in jail. He could argue that he could have made millions of dollars if he wasn’t unjustly convicted of a pseudo crime.
This legal victory shows a general tendency in this country: if you have enough money for legal fees, you can win almost anything. And there are plenty of brilliant lawyers willing fight for anything, as long as the money is right. And in our system, often the smartest and hardest working lawyer (which, incidentally, is the most expensive) wins the case. As many lawyers will tell you, it is not a question of what is right or wrong, but whether what is legal or illegal.
Mrs. Horton goes broke
Not so in Canada. There, a lawyer can’t sue on contingency. Who knows whether this policy is working better than the U.S. or not, but it certainly should be studied. And it certainly seems to work better. At least Canadians don’t spend their lives trying to avoid being sued.
Lori Horton was the wife of Tim Horton, a member of the Hockey Hall of Fame and a co-founder of “Tim Horton’s,” the most successful restaurant chain in Canada (which sold for $11 billion to Burger King in 2014).
When the business was just beginning, and struggling to survive, Tim Horton was killed in an automobile accident. His wife, Lori, took over as co-partner with a businessman named Ron Joyce. (Horton’s co-founder, Jim Charade, who had the original idea of the restaurant, had been bought out.)
Joyce couldn’t get along with Lori Horton and offered to buy her out. An independent appraiser assessed the business being worth $1.7 million. Joyce and Horton settled on his giving her $1 million. Tim Horton’s went on to be very successful.
A group of lawyers convinced Lori Horton that she could sue Joyce for $10 million and win, arguing that she was incapacitated when she made the deal. In the U.S. the lawyers would have worked on contingency, but this is illegal in Canada. So Horton paid all the legal fees and eventually lost the case. She ended up broke.
In the U.S. the lawyers would have taken the chance on winning and took 30% of whatever money was won. But they possibly wouldn’t even taken Horton’s case because of their concluding that the odds of winning were against them. But if Horton was paying their hourly charges, what did they care?
Like much political phenomenon, we can look at the “contingency phenomenon” basically two ways: being for it or against it. This is a thesis and an anti-thesis.
History will eventually decide which system is better. In the U.S. this policy will be decided by the courts or by Congressional votes. Since both systems are dominated by the Bar Association, the argument is heavily biased on the pro-contingency side, which is the most profitable for the lawyers. But it seems to me reason is heavily biased on the side of anti-contingency. (“Reason,” in this case, being defined as what is best for all groups in the long run.)
However, with our current electoral system being dominated by financial political contributions rather than by rational arguments, it is doubtful that reason will win the argument any time soon.