Be Careful With Legal Self Help

Self-help sounds like a good idea, and may be in many pursuits, but in legal matters it can be a terrible idea. And in a bad economy it is a common practice as payment cycles get longer and companies are focused on cash flow. We have seen a rise in self help efforts, almost all of them fraught with unnecessary risk. Many of these risks are related to doing things that you think will put pressure on your debtor, but which really can expose you to liability. For example, a former employee of a company told the company that unless they paid him the amount demanded, he would post their source code on the Internet: The former employee ended up being arrested for extortion. Another former employee went into his former employer’s website and messed with customer data: He was arrested for federal computer crimes. You might try to scuttle a sale that you were working on while still employed: And get sued for “interference with prospective business advantage.” The right kind of self help? Help yourself to a lawsuit against your debtor if you have to. Once litigation had been filed, an immunity arises to things like slander, extortion, and interference with prospective business advantage, while prosecuting your lawsuit.
-- Paul Marotta

Scofflaw?

We have been following a fight between UBS and the IRS. The IRS wants the names of UBS accountholders who are not paying their US taxes and UBS is asserting Swiss law making it criminally illegal to give up those names. The Internal Revenue Service sued UBS to try and force the bank to turn over information about 52,000 account holders the agency says have $14.8 billion in assets and are using Swiss bank secrecy to illegally evade paying US taxes. We guess that this current era of non-hegemony ends at the pocket book. UBS asked that a Miami federal judge deny the IRS petition. The Swiss government weighed in that the IRS case might threaten an intended Swiss-US tax treaty being negotiated: “There can be no question that the Swiss interest in enforcement of its financial privacy laws is strong and legitimate...In contrast to some other countries’ financial privacy laws, the laws of Switzerland impose criminal, as opposed to merely civil, liability on those responsible for violations.” UBS quoted from the US Supreme Court case M/S Bremen v. Zapata Off-Shore Corp. 407 U.S. 1, 9 (1072) that, “[w]e cannot trade and commerce in world markets...exclusively on our terms, governed by our laws, and resolved in our courts.” Sounds good to us IRS.
-- Paul Marotta