Could the trustee sue the former SCO lawyers?

Certainly you recall that the SCO lawyers were paid some $30 million or so in legal fees.

Now a trustee will call all of the shots.

A trustee will decide what the business does and a trustee will decide what to do with all of the pending litigation. And a trustee will decide if some assets should be sold etc. And a trustee could also decide that the company is doomed and Chapter 7 is the way to go. All kinds of new options may surface.

But, what about going after some of that $30 million or so in legal fees paid to the former SCO lawyers?

Well, I say former SCO lawyers while in fact those lawyers still do represent SCO. And it is not likely that any trustee is going to change current legal representation unless necessary. After all that would cost some more money. And cash is tight.

But, remember the discussions regarding the communications between the former SCO management and the SCO lawyers? What did they tell SCO management about copyright law, contract law, etc? What did they tell SCO about their legal chances if they sue Novell, IBM, Red Hat, AutoZone?, Chrysler and BofA? Remember BofA? They were the target of similar law suits to AutoZone? and Chrysler. Earlier versions of the AutoZone? law suit had penciled in BofA.

Well, just what did the SCO lawyers tell SCO management?

Did they tell management that copyright assignment documents were not really needed? Did they tell them that “we do not need no stinking badges”? Did they tell them that “we can just sue them and collect big money for the nuisance it will generate”?

If you recall the discuss I mentioned that we may never know what they told the management. And that may be true. We may not.

But, can the trustee find out if the trustee wants to go after some of that $30 million paid out or wants to sue those lawyers for malpractice?

You have to keep in mind that the attorney-client privilege is a right of the client not the lawyer. And now the trustee will be the client. The trustee is SCO. Now the new trustee coming in is not aware of the communication between the former management and the former lawyers. But, the former SCO lawyers can not assert an attorney-client privilege against disclosing what those communications were. Neither can the lawyers refuse to inform the new management regarding communications with the former management.

The trustee is the client.

But, does that all mean that the trustee will go after the former SCO lawyers?

Frankly I doubt it. But, the trustee does have the obligation to go after any claims for cash that the company might have. After all the responsibility of the trustee is to get the creditors paid and the company out of bankruptcies. And notably the trustee has no interest in driving SCO into the ground in order to bad mouth Linux or pursue nuisance lawsuits just to make himself rich. (Do you really think the former SCO management had such objectives? Or, maybe I should say do you really think they did not have those objectives?)

Of course going after the former SCO lawyers is going to cost money too. So nothing in this possible course of action is a free ride.

But, if the trustee does have some IP litigation experience I can think of a number of very important questions that might be asked of those lawyers? Contract law. Copyright law. Litigation choices, etc.

Why in the hell did SCO sue Novell for slander of title when they had to know for certain that they did not hold the copyright transfer documents? They might have had a case they could bring against Novell for the failure to transfer the copyrights, right? But, you have to be a fool to sue someone for slander of title when you know you are not holding valid copyright documents. Gosh. Even the communication between the OldSCO lawyers and the NewSCO lawyers pointed out that the chain of title documents were missing. So they knew they did not hold the necessary title documents. (Of course we all know that SCO could not admit it did not hold valid transfer documents because their extortion plan against Linux customers would not work if they admitted to not holding the copyrights. Yet.)

And why did they sue IBM for some $5 billion? Did they not read the APA? Did they not have a copy when they gave SCO legal advice?

Why did they charge SCO $30 million in legal fees when they knew SCO did not have a case? Or, that it would be extremely difficult to over come all of the legal issues with the copyright transfers, contract terms and even the communication between AT&T and IBM originally? Hey, we figured it all out. And most of the evidence was not even publicly available. Did the SCO lawyers advise SCO not knowing what the documents said? A $30 million fee from ignorant lawyers?

Just what did SCO lawyers tell SCO management about their case?

Did they claim to have IP expertise?

“We don't need no stinking badges”?

“Our nuisance law suit is just as good”?

“Our extortion plan will snow ball and we will never need to prove anything to any court”?

“IBM is sure to settle once we start to stink up the streets”?

“Customers like AutoZone?, BofA and Chrysler will settle and we do not have to prove anything to them either”?

Those idiot SCO lawyers deserve to be sued big time. Personally I doubt this is going to happen.

But, a trustee has the responsibility to gather in whatever cash it can in order to see the creditors are paid and the company can exit the bankruptcy. And a trustee is not into extortion or nuisance law suits. A trustee has no interest in bad mouthing Linux just to turn a buck.

A trustee does have the obligation to pursue any legal claims that the company may have. And that could include suing former lawyers for malpractice.

But, alas, that is likely not to occur. And that is too bad. SCO suing its former lawyers for bad legal advice, wrong legal advice or malpractice would really be an interesting case to follow. And it could raise some cool millions to pay off those creditors. Do not think it can not happen. But, it is unlikely.

Rats.

It would be much more difficult for the trustee to sue the former SCO management. Perhaps the lawyers and management were a team of sorts. But the SCO lawyers have a whole lot to lose depending upon the advice they gave to SCO. And it would be fun to watch as the lawyers and the management point fingers at each other.

Also do not rule out law suits from stockholders. The company has been run into the ground because of defective legal decisions. Bankrupt. And even though some of the SCOSource revenue may not have developed “but for” the extortion plan, wasting a bunch of money on losing litigation did drive the company into bankruptcy. No company offering a Linux product can blame the bankruptcy on Linux.

Stockholders have some interesting law suits to consider too. But, the trustee can waive any attorney client privilege. And it may not do so unless it is bringing the legal action.

About all you can really say is that the final chapter is not written yet. It might be titled “The trustee steps in”.