In Pietrylo, a bartender at Houston’s Restaurant in Hackensack, New Jersey created a password-protected, invitation-only discussion forum on MySpace for employees to kvetch about the restaurant, company practices, the customers and anything else on their minds. The content of the postings was frequently derogatory and racy. However, the discussion group was created and maintained on the employees’ personal time and without using the employer’s computers or Internet access. A group member light-heartedly showed the discussion group page to a restaurant manager (not so bright move there), only to be asked the following week to provide her sign-in information to another manager. The second manager accessed the MySpace discussion group and was not amused. Pietrylo and a fellow server were told to take a hike.

The two employees then brought suit against Houston’s owners for wrongful termination, invasion of privacy and violations of the federal Electronic Stored Communications Act and New Jersey’s Wiretapping and Electronic Surveillance Control Act, among other things. The case was tried in the federal district court for the District of New Jersey. On June 16, the jury returned a verdict which found liability under the federal and state statutes, but rejected all of the plaintiffs’ other claims, including their claim for invasion of privacy (notably, the jury decided that the plaintiffs had no reasonable expectation of privacy in the online communications).

The result hinged, rather, on what was perceived to be unauthorized accessing by the employer of an invitation-only discussion group, access made possible as the result of a coercive request to turn over the sign-in information. Finding such behavior malicious, the jury concluded that the employer had unlawfully invaded protected electronic communications and awarded the plaintiffs $17,000 in back pay and punitive damages.

A limited victory for Pietrylo, to be sure. However, if the employer had not been so ham-handed, the result would probably have been different. For example, instead of accessing the discussion group directly, the restaurant manager could have asked a member to provide printouts or screenshots. Or it could have documented the hand-over of the sign-in information so as to dispel any suggestion of coercion. The case does NOT stand for the proposition that employees cannot be fired for criticizing their employer on their own time. (With that said, employers should still implement Internet posting policies specifically stating that employees have no expectation of privacy in commentary they post on blogs and social networking sites.)

As if the Nevada and Massachusetts laws weren’t fun enough, on August 1 the FTC will start enforcing the new Red Flags Rule, which requires “financial institutions” and “creditors” (as defined in the Rule) to develop and implement programs that identify and detect the warning signs (or “red flags”) of identity theft and provide for appropriate responses to prevent and mitigate identity theft. The Red Flags Rule applies to a wide range of businesses and organizations beyond banks and others under the supervision of a federal regulatory agency (who were required by their respective regulators to comply as of November 1, 2008), including any business that regularly defers payment for goods or services or provides goods or services to be billed later. Utility companies, mobile telecommunications providers and even ambulance services may have to comply. Accordingly, businesses which offer accounts, or are in any way involved in providing or servicing accounts, that may involve credit (even short-term payment deferral) and exposure to the personal information of consumers or individuals should determine whether they are subject to the Red Flags Rule. More information about the Red Flags Rule can be found on the FTC’s website here.

On a happier note, it’s Friday….

Final epitaph for a Philadelphia institution

To the causes just mentioned, I would add an institutional failure to grasp quickly enough the profound changes in business generation methods that took place in the 1990’s. Wolf Block in 1997 (the year I got there) had a tendency to sit on its laurels, relying on its mid-century reputation for excellence and the same institutional clients and web of personal relationships that had sustained it as a premier Philadelphia firm for decades. The idea of marketing itself aggressively, of making pitches to clients and building an attractive, content-rich website, didn’t really take hold until 2000 or so; by then much ground had been lost. Moreover, partners, as well as associates seeking to enter the partnership, were rewarded for loyalty and long-time service as much as (or perhaps even more than) for their books of business or their entrepreneurial spirit. In Wolf Block’s defense, this was how big law firms operated and stayed profitable until about 1990 or so. However, with the increasing mobility of partners and associates and the resultant fluidity of firm-client relationships, as well as the overriding need to use the Internet to connect with tech-savvy clients, a new marketing-driven business model had displaced the genteel one of earlier days. Try as it might, Wolf Block was never quite able to catch up. (It may be extremely petty of me, but I thought the website stunk until the very end.)

All that said, this post is a eulogy, not an indictment. While the corporate practice had dwindled by the time I joined it, and the e-commerce/IP sub-practice of which I later became a part never got as fired up as it should have, Wolf Block was a rewarding place to work for six years. The firm taught me to draft contracts and gave me remarkably free rein to play in the technology and e-commerce area to which I felt inexorably drawn. Wolf Block sold me the very day of my first interview, when a member of the real estate practice group (who is now the general counsel of a large company with many properties in Philadelphia) walked in without shoes and promptly put his argyle-stockinged feet up on the conference room table. At the time, the firm’s offices were laughably decrepit — it was still headquartered in the Packard Building at 15th and Chestnut Streets, where it had been since the 1920’s – and even the partners joked about the shabby accommodations. The dungeonlike contraptions that passed for elevators took forever to arrive, the paint was peeling in the offices, the art on the walls was about as contemporary as a disco ball, and the men’s rooms were biohazards. That was all right, though. Chic office space didn’t really impress me; intellectuals who wore no shoes at work did. (The firm finally moved to better digs at 1650 Arch in the summer of 1999.)

At Wolf Block I rode the wave of the 1990’s dot-com boom, a time flush with expensive closing dinners, 23-year-old Internet prodigies being primed with angel funds, and epiphanies about the limitless dirty uses to which emerging technologies could be harnessed. (Around 2000, before employer liability and virus concerns made computer and Internet use policies a staple of the corporate workplace, it was common for law firm associates and even partners to e-mail each other .exe files containing everything from snarky, irreverent fun like “Frog in a Blender” and “Gerbil in a Microwave” to incredibly disgusting, but occasionally hilarious, grainy videos showing all manners of goofy perversion.) It was a heady time to be a young lawyer in the big city, just out of law school but not yet mature, and earning more money than a 25-year with still-nascent legal and business skills has a right to earn, especially considering the unaffordable billing rates and mass layoffs that are the order of the day now that the party has ended.

It wasn’t all good times. After the dot-com implosion and September 11 knocked the country into recession in 2000-01, the holes in Wolf Block’s business became gaping wounds. Associates in the transactional practice groups, starved of billable hours, were prodded to write article after article for legal publications in a futile attempt to make up for the service partners’ inability to generate business. At associates’ meetings we were lectured on the pressing need to uphold the standards of “Wolf Block Work Product,” or WBWP, as we called it. But by the early 2000’s WBWP was no longer what it had been in the 1960’s and 1970’s, when Wolf Block was still the preeminent destination for Ivy League-educated Jewish lawyers in the Philadelphia region. As the firm gradually fell behind its competitors in attracting the top associates and young partners, the intellectualism and progressivism that had characterized the first three-quarters of its history began to give way to an atmosphere of conformity and petty office politics. On one performance review, I recall being admonished for not going to lunch enough with a particular senior associate who was the partners’ darling, seemingly because of his confident and cocksure attitude.

In the summer of 2002, with many of its lawyers sitting idle, Wolf Block laid off a slew of associates, including several people close to me. Although I was getting positive reviews and being told to stay the course, at a billing rate of $350/hour and climbing, I didn’t see how I could bring in enough business to make a name for myself, and the IP/e-commerce group clearly was not generating enough business or billing enough hours for me to become a service partner. As it was, for political reasons, the firm failed to grant partnership to one of my colleagues who had a $300,000 book of business (not bad for a senior associate then and not bad now), illustrating once again Wolf Block’s ambivalent attitude toward business generation. In the spring of 2003, therefore, I took a job with one of Wolf Block’s few remaining institutional clients, which turned out to be a wonderful move for me. Fairness dictates, however, that I give Wolf Block due credit for helping to form and maintain that relationship.

Looking back on it all, I am very sorry that Philadelphia will not have a Wolf Block through most of the new century. I would have liked to see the firm reinvent itself, but am relieved that so many talented lawyers were acquired by other firms around the city. I am keeping tabs on old colleagues, both lawyers and support personnel, who are having difficulty finding a new home, and I would heartily recommend many of the lawyers I knew at the firm. With Wolf Block gone, a part of my life, and Philadelphia’s, is now sealed. To those in the Wolf Block diaspora, best wishes and best of luck.