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SCO Puts a Cap on its Legal Expenses
prostoalex writes "The SCO Group reached an agreement with the lawyers to limit the litigation expenses to $31 million until the IBM lawsuit is resolved. The company already paid $12 million to Boies Schiller & Flexner LLP, Kevin McBride and Berger Singerman, which provide legal services to the company."
Is he related to Darl?
This is less than encouraging
It really sucks to be Boies. He, and the snide side of my personality was looking forward to weeks and weeks of election litigation. And now this SCO deal is failing.
Oh, well. At least the lawyers got paid.
Irene KHAAAAAAN!
It may as well have been some secret snake oil formula at stake. I see the whole thing of the CEO of a small company setting up an unwinnable court case against IBM as a way to funnel funds into the family pockets. Stay tuned for SCO to implode and Darl to sue for what he can get from it's smoking corpse. If legal dogs chase, Darl will simply funnel the funds somewhere inaccessable, pretend he is bankrupt, and blame it all on those kids and their darn penguin destroying the American way.
I know you're kidding but it's still a sad commentary on the way the legal profession has undermined the economy.
Those lawyers have done nothing for SCO and yet they have greatly enriched themselves from shareholders' money. Granted some of that money came from outfits with questionable morals themselves, like The Canopy Group, but that's also money that could have been invested in hiring software people to help improve their products and their competitive position in the market. SCO was once a reputable company, after all.
Here's a question for some legal expert. Since Boies et al were paid in stock a while back, they are now a major stockholder in SCO, 25% as I recall. I wonder if they can therefore be sued by any parties who have a grievance against SCO? Like practically the entire open source development community, IBM, Redhat, Novell, etc.
I have personal experience with the damage they have caused; I have dealt with people in the embedded market who were avoiding embedded Linux because of "the lawsuit". The very lawyers who represent this rogue company are its owners; they are purely and openly in it for the profit regardless of right and wrong.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
Any one else wonder if SCO is just setting themselfs an easy out later? I mean when this doesnt go SCOs way and they hit the cap all Darl has to say is 'We would have won if we had more time and money' then he keeps the shadow over linux serving his Micky$oft masters. Since this was never about making money only hurting linux, I suspect this is a winning stratgy in the end. All MS has to say is point to some shlep that buys up the reminants of SCO and say they can sue you, this was never settled. Lets hope SCO implodes and someone like IBM or Novell buys them for pennies on the dollar and kills this lawsuit business.
I am continuously amazed at the ability of lawyers to run up huge bills. I've heard $200/hour quoted somewhere as an average, so I'll run with that, even though I know many charge way more. Someone else quoted 18 months of activity in the discussion above. I skipped a lot of assumptions, but that translates to about 60000 hours, which means 19 lawyers working 40 hour weeks, raking in about $600000 each ($400 K/year).
Does anyone know the actual number of lawyers involved or their rates and can anyone enlighten me about what other costs SCO is likely including in their figure of $12 million spent so far?
[From Yahoo Finance Posting by stdsoft0]:
Investors need to be very, very careful. The wording of the legal fee "cap" announcement is highly deceptive.
While it may sound good to the uninformed, the legal fee "cap" does nothing practical to help SCO with the legal expense problem. Taken together, the following statements from the 8-K filing are HIGHLY misleading:
Statement 1:
"For future legal fees, the Engagement Agreement will require SCO to pay to the Law Firms $2.0 million per quarter for each successive quarter beginning September 1, 2004 and ending December 1, 2005..."
Statement 2:
"SCO's purpose in entering into the Engagement Agreement was to limit the cash expenditures needed to pursue the SCO Litigation to approximately $31 million, until the litigation with IBM concludes."
Taken together, SCO is saying that the litigation with IBM will end by December 2005. The problem, though, is that only the FIRST round of court action with IBM will have concluded by 12/2005. For the sake of argument, consider the highly unlikely event that SCO wins some sort of favorable decision. The appellate process will have only just begun. The odds of a decision being sufficiently favorable to warrant additional equity investment is highly unlikely, and SCO will be out of cash. Further, SCO is likely to still be defending against counter-claims.
I bet they had this planned from the beginning. The banks that loaned them the money must feel like a a$$.
I didn't use the preview button, so get over it!!!!
Mike
So anyone know why this puts their share price http://finance.yahoo.com/q/bc?s=SCOX&t=3m&l=off&z= m&q=l&c= up 15% on the day and it looks like 25% on the week? Seems to me someone out there thinks they could still make money if they'd just sell some of their great software instead of wasting their money on this lawsuit. *snicker*
-Looking for a job as a materials chemist or multivariat
I've noticed this SCO litigation story not even making major news headlines anymore, and even here on slashdot the interest is tailing off. SCO is not going to win their case. That is fairly certain by now unless certain, uhm, vested interests *cough*new reelected friends of microsoft*cough* bring their weight to bare on the legal system. But I don't think that's going to happen, and if it does happen, expect many tech companies to simply pull up stakes and move outside the US.
In the time being, Linux is continuing to gain corporate and government mindshare all over the world. I don't think that all that many people really listen to MS paid for FUD tactics. The rate of Linux uptake speaks for itself.
Good reply. I couldn't have explained it better.
As far as #2 goes, Actually, I'm kind of surprised that someone hasn't tried #2 yet
the share price of SCOX is still higher than it was pre-litigation. So Darl has actually increased shareholder value since the days before litigation. Anyone who bought after the start of litigation was buying into "litigation as business model", and has no leg to stand on, regardless of whether they got in early and cheap or too late and when the stock was at it's peak.
What needs to happen, and probably won't (due to an underfunded SEC and a look-the-other-way Justice Dept.), is an investigation of stock manipulation by Canopy Group as well as an investigation of the Microsoft connection.
SCOG was already a soon-to-be dead company, before they took on IBM. If anything, Darl has managed to keep SCOG alive, and for a while, with an impressive stock price. I'm sure he has made Ralph Yarro very happy, and that's the only shareholder he need ever answer to.
It's not offtopic, dumbass. It's orthogonal.
> but that's also money that could have been invested in hiring software people to help improve their products
Most of the new money came to SCO from Baystar, Microsoft and Sun. I believe all 3 of these wanted SCO to put the hurt on IBM and Linux. None of these companies wanted SCO to develop any products. Baystar actually said it in no uncertain terms in several interviews they did.
> Here's a question for some legal expert. Since Boies et al were paid in stock a while back, they are now a major stockholder in SCO...
This was the plan but it never did happen this way. SCO ended up paying ~ $8mil. cash. We dont know why the lawyers did not want stock anymore. Maybe because they realized it was worth less than toilet paper in the end.
Funny thing is last year when Boies agreed to be paid in stock (it was flying high then) he said in the investor conference call that getting paid in stock is a bit unusual but they do it when they are confident of the direction of the company.
I wonder what changed?
If you squint hard enough in the right light, they can probably get away with what they're saying quite easily:
Wait and see. If anyone gets into trouble over this, you can bet it won't be the lawyers. After all, a judge has to preside over a court case, and a judge is just a lawyer who's been promoted.
OK, everyone using Linux should file a frivilous... er rather a lawsuit of merrit against SCO. This will require SCO to answer lawsuits in virtually every county in the nation and perhaps abroad. Sue for say 5 million apiece. Just the lawyer power requied to even begin to answer those would kill them. If they don't answer it, you get a 5 million default judgement against them. Claim they messed up your chances of starting a business using Linux.