Category: News Feeds

Every once in a while, I like to just go off on a rant. And this week, I’m particular perturbed by the snail-like pace with which law firms (and others) manage to keep up with technology.

You know, we live in a time when things move fairly quickly. The laptop I bought about four years ago still works, but it’s largely obsolete in terms of memory, storage, and processor speed. And that’s the way it goes with technology.

Almost across the board, we see new technologies emerge that constantly alter how we do things. Walk the vendor hall of any conference — not just legal technology conferences — and you’ll see all sorts of solutions to problems in any number of areas of commerce. It’s about more efficiency, better communication, interoperability, and (yes) some unnecessary things, too.

So, why is any conversation still occurring anywhere that raises questions about a law firm’s ability to deliver contemporary legal services to clients? I wrote about this not too long ago, and here I am — two years later — still saying it.

And it’s not just me. The American Bar Association and many state bar associations have tied technology competence to the duty of competence. It cannot be the case the nonlawyers are reading the model rules and update more closely than practicing lawyers. Or can it?

For readers in the legal operations space on the corporate side -– let’s for discussion purposes call you the “client” — I’ve suggested, and I dare to reminder you again, that you control the purse strings here. You can dictate to your panel firms and even to new firms the terms and conditions of any legal engagement. Why don’t you?

For my law firm friends, this is not an “if you build it, they will come” situation. True, some law firms have embraced technology and they provide some of the best and most-advanced technology services available on the market. With shrinking revenue, smaller margins, and a consolidating legal market, other firms are outsourcing technology and bringing outside experts to the table when needed.

But a large majority of firms and practitioners still just don’t get it. They have not heeded the ABA or any of the state bar requirements that the duty of competency in modern legal practice includes understanding technology and effectively advising clients on the importance and use of technology. Many firms have chosen just to not evolve.

You want to know why more and more work is moving in-house? Why you have less work than five years ago? Does anyone think that the rise to prominence of organizations like CLOC is just an accident? Or why your client now dictates which vendor to use?

It’s got nothing to do with the law you practice and everything to do with how you practice — and how you interact with your clients.

If I were building a law firm today — and this is not entirely hypothetical because in some countries nonlawyers can do this, and the US is hopefully not too far behind — I would not have a fancy office with a view. I wouldn’t have any of the amenities that I’ve observed at firms. Instead, I’d have a really good relationship with my clients, interact with them on a regular basis, and understand their legal and risk management needs. And, of course, how technology can be used to help them.

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Mike Quartararo is the President of the Association of Certified E-Discovery Specialists (ACEDS), a professional member association providing training and certification in e-discovery. He is also the author of the 2016 book Project Management in Electronic Discovery and a consultant providing e-discovery, project management and legal technology advisory and training services to law firms and Fortune 500 corporations across the globe. You can reach him via email at mquartararo@aceds.org. Follow him on Twitter @mikequartararo.

Welp, this is deeply disturbing. Among all the fear and misinformation, the quarantines and canceled events, the most reliable and oft-cited piece of advice from medical professionals is to wash your damn hands. Good advice pretty much all the time, but especially pertinent during a health crisis. So you’d think materials encouraging folks to wash their hands (and other hygiene tips) would be remarkably uncontroversial.

If you thought that, you’d be wrong.

Yup, that’s right, yesterday, the National Association of Immigration Judges (NAIJ) said that the Department of Justice, via the Executive Office for Immigration Review (EOIR), has told immigration courts to remove CDC posters about the coronavirus.

The offending posters include this benign one:

And this one (Spanish versions of the materials were also posted):

As Law & Crime reports, the surprisingly controversial posters were torn down:

“The NAIJ sent a correspondence to the Agency and a separate one to the [Immigration Judges] with the CDC recommended posters,” NAIJ President Ashley Tabaddor told Law&Crime. “Shortly thereafter, we received notice from our judges that those who had chosen to post the posters were told that they can not do so and the posters were literally torn down.”

And, though this entire situation seems absurd (some have even questioned the authenticity of the story), Law & Crime has tracked down the emails documenting the EOIR’s decision:

In one such email, EOIR Deputy Chief Immigration Judge Christopher Santoro wrote:

“Earlier today the NAIJ sent a message to immigration judges suggesting that they post a CDC-generated coronavirus precaution flyer in public areas of the courts, to include doors to courtrooms. This is just a reminder that immigration judges do not have the authority to post, or ask you to post, signage for their individual courtrooms or the waiting areas. Per our leadership, the CDC flyer is not authorized for posting in the immigration courts. If you see one (attached), please remove it. Thank you.”

Another such email—from a different EOIR official—said the CDC posters “must be removed from all courts.”

If you think this sounds Kafkaesque, you aren’t alone. Angelo Guisado, a staff attorney with the Center for Constitutional Rights, said, “Consistent with fake hearing dates, show trials or no trials, and an abject lack of basic human decency, the Trump Administration continues to erode the already meager protections in our immigration system. Franz Kafka couldn’t write it any better (worse).”

Of course the “why” isn’t well known, but that doesn’t mean there isn’t speculation. As California Western Law Professor Danielle C. Jefferis said, “It’s irresponsible and potentially disastrous. And to what end? To risk the spread of what all signs point to a highly infectious disease so that people in proceedings can’t show up to court? It’s inexcusable.” Whether it was nefarious or just a petty office politics squabble, it is still not a great look.

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Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

Joe welcomes back Jason Cruz from our earlier “Step Inside The Octagon” episode to discuss his new book, “Mixed Martial Arts and the Law.” From antitrust to labor law to performance-enhancing drugs, there’s a lot more law going into this sport than you might expect for a cage match where people kick each other in the face.

I’m fully aware of the absurdity of my actions right now. I don’t think it’s worth putting my family’s safety or friends’ or colleagues’ safety in jeopardy with me getting sick. But at some point, I think it’s going to be a necessity for everybody.

— Jessica Tillipman, assistant dean for field placement at George Washington University Law School, commenting on the new precautions she takes while dining out thanks to the spread of coronavirus, including avoiding shared serving spoons and condiment shakers, and signing her name on electronic touch screens with single dots made with a pinky. She says she may start bringing her own lunch to work after eating out for more than a decade.

(Take our poll below. Will it be dining out or delivery?)

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

If middle schoolers can ‘shop cats ‘n’ shit into their TikToks, then the Federal Bureau of Prisons (BOP) can work out how to redact a video of an inmate getting stabbed in the dining hall. So holdeth Judge David Sentelle, writing for a unanimous panel on the U.S. Court of Appeals for D.C.

After “another inmate stabbed him multiple times with a Phillips-head screwdriver in the prison dining hall,” Plaintiff Michael Evans submitted FOIA requests for security camera footage of the attack and information from the BOP on the screwdriver’s origins. The BOP claimed the request for information about the weapon was too general, and anyway it wasn’t one of “theirs.” As to the video, the Bureau asserted multiple FOIA defenses, including the privacy rights of other inmates, insisting that it “does not have the capability to segregate images potentially responsive to [Evans’s] request from the images of third parties on video recordings.”

The District Court accepted that “no portion of the video was segregable and, even if it were, the Bureau lacks the technological capability to segregate it,” and upheld BOP’s refusal to hand over the tape. But the Circuit judges gave serious side-eye to both the imputed privacy argument and the TECH IS HARD FOIA defense.

“So far as we know from the current affidavit, all information that would be revealed is that seventy or so inmates were eating a meal in a place where they were not only expected to be, but were required by law to reside,” Judge Sentelle wrote. Even if the prisoners did have a right to privacy in the dining hall, the BOP is perfectly capable of blurring the faces of everyone but the person shanking Mr. Evans.

And if this is beyond the Bureau’s technical capabilities, they should find a teenager to help them with that.

[W]e live in an era in which teenagers regularly send each other screenshots from all sorts of video media. Presumably, most of these teenagers have fewer resources than the United States government. It is not at all clear why the government could not at least isolate some screenshots that would meet the same sort of segregability standards typically applied to printed material. The government further does not explain why it cannot by use of such techniques as blurring out faces, either in the video itself or in screenshots, eliminate unwarranted invasions of privacy. The same teenagers who regale each other with screenshots are commonly known to revise those missives by such techniques as inserting cat faces over the visages of humans. While we do not necessarily advocate that specific technique, we do hold that the government is required to explain why the possibility of some similar method of segregability is unavailable if it is to claim the protection of the exemption.

Judge Sentelle, who is 77 years old, just told the BOP to stop being such a noob and slap some cat emojis on that footage before handing it over to the plaintiff. Or at the very least, to try a little harder to come up with a rational justification for their steadfast refusal to do it.

Michael S. Evans v. Federal Bureau of Prisons [USCA Case #18-5068 (D.C. Cir., May 10, 2020)]

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Elizabeth Dye lives in Baltimore where she writes about law and politics.

Perhaps nowhere has our country’s polarization been more obvious than when it comes to the general view toward law enforcement. For all too many, law enforcement can literally do no wrong. Even in situations where an officer so obviously and so drastically escalates an otherwise peaceful encounter with deadly violence, accountability is nowhere to be found. The perpetual tragedy of not holding bad actors accountable, however, does not just result in the deaths of unarmed, peaceful civilians. It also results in tragedy inflicted onto peaceful officers. This passage written by conservative writer Leon Wolfe after the killing of five police officers in Dallas nearly four years ago has stayed with me ever since:

Reasonable people can disagree about the prevalence of police brutality in America, and the extent to which race plays a factor in it. I don’t think reasonable people can disagree that excessive police force is punished way less often than it actually happens. And that’s the kind of problem that leads to people taking up guns and committing acts of violence — tragically (and with evil intent) against cops who as far as we know have done nothing wrong.

But people’s willingness to act rationally and within the confines of the law and the political system is generally speaking directly proportional to their belief that the law and political system will ever punish wrongdoing. And right now, that belief is largely broken, especially in many minority communities.

And it’s the blind, uncritical belief that the police never (or only in freak circumstances) do anything wrong that is a major contributing factor to that.

It’s at least as much of a factor, if not more so, than the blind, uncritical belief that the police always do things wrong –- which many conservatives today are blaming in entirety for what happened in Dallas. The truth, as always, lies somewhere in the middle, but acknowledging that requires looking in the mirror in a way that makes us all a little uncomfortable.

No one seems to be more uncomfortable with holding police accountable than our nation’s courts. In fact, in order to shield law enforcement from a straightforward statute that would otherwise allow citizens to hold bad actors accountable, our courts have concocted an atextual, ahistorical doctrine. The supporters of this unilateral created immunity contend that police officers cannot function if they fear they will be held personally liable for unlawful actions. As I said before, viewing the responsibility of an officer taking into account whether they are depriving individuals of their rights as a burden instead of as an ever-constant duty of law enforcement is quite puzzling in its logic. However, David French, an Iraq War veteran who has seen first-hand when deadly force is warranted, had what I consider to be the best answer to qualified immunity supporters:

How can we second-guess decisions made under duress, critics ask, when seconds count and lives could be on the line? This is the excuse juries use when they vote to acquit. It’s the excuse law enforcement officials make when they refuse even to bring charges. But we second-guess these decisions because the law requires us to. We also judge these decisions because respect for life and liberty demands it. No man or woman is required to be a police officer. No man or woman is required to carry a gun on their person. When you pick up a weapon, you are exercising a constitutionally protected freedom, yes, but you are also taking on an awesome responsibility. And the gravity of the responsibility requires an armed citizen — like a police officer — to tolerate a degree of risk and danger before he or she escalates to deadly force. Any other rule reaches absurd (and deadly) results.

Of course, absurd and deadly results are precisely what have occurred, and the ability to hold anyone accountable has gotten noticeably worse. Just recently, Radley Balko at the Washington Post highlighted the fact that in addition to the barriers to personal responsibility the qualified immunity standard unilaterally puts in place, those seeking accountability also often have to deal with jurisdictional games designed to quash actions before they can even begin.

Some might be asking why am I bringing all of this depressing stuff up. Well, just yesterday a rather amazing thing happened: The Supreme Court left undisturbed (paywall), a ruling that a police officer claimed “will eviscerate qualified immunity for law enforcement officers in use of deadly force situations.” Of course, I don’t bring up this case to suggest that one denial of cert has actually eviscerated all the issues with qualified immunity and holding accountable the bad actors who apply deadly force. Qualified immunity is still a massive problem even with this denial and, as I noted above, a problem that is actually becoming noticeable more difficult to traverse past legally. But in my opinion, this denial does show progress of a sort. Twenty years ago, I think it is likely qualified immunity is extended in that case by both the lower courts and the Supreme Court. What I don’t think is a question is that shedding light on the tragedies that occur from granting armed government officials a separate standard than what the rest of us live under, along with immense power with little to no accountability, is how we got to the point where courts are beginning to allow accountability in any cases.

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Tyler Broker’s work has been published in the Gonzaga Law Review, the Albany Law Review, and is forthcoming in the University of Memphis Law Review. Feel free to email him or follow him on Twitter to discuss his column.

Before you can build a successful product, you have to know who you’re building it for. I’m not talking about just identifying a segment of the market; rather, you need to understand, in depth, just what your intended audience needs from your product. Audiences aren’t one-size-fits-all, so products shouldn’t be either.

When it comes to lawyers, they don’t tend to care about how sleek or advanced or next-generation their technology is. In fact, “[s]uccessful law firms … use legal technology not because it’s cool but because they know legal tech makes their work better.” 

But how, exactly, can software help lawyers work better? What are the main pain points to keep in mind when designing technology that lawyers use? To answer that, let’s look at what technologies lawyers have adopted and what they indicate about lawyers and their priorities. 

What Technologies Have Lawyers Embraced? 

Lawyers will adopt technology that makes their work better and their lives easier. Take smartphones, for example: with mobile phone service and increasing computing power, lawyers can stay in touch with their clients and get work done anytime and anywhere. As a result, most lawyers are inseparable from their phones. 

That trend continues in the office. Lawyers no longer write documents out in longhand or bang out drafts on a typewriter. While a few may still dictate content, most have become proficient in Microsoft Word as well as document assembly and document management tools. Instead of typing out the same basic document multiple times, lawyers usually start a new document from an existing template. They also save their preferred clauses in emails, documents, and local folders to insert into the new document. Similarly, Bates numbering and redaction have been transformed from laborious arts-and-crafts projects to one-click digital processes. 

Then there’s legal research. Lawyers readily abandoned the dusty stacks of legal reporters for online case law resources and have never looked back. Like word processing software, digital research improves client outcomes, providing on-point precedents and compelling arguments, and simultaneously reduces the workload for lawyers, putting that relevant case law at their fingertips in moments.

What does it say about lawyers that these technologies have successfully permeated their practice?

What We Can Learn About Lawyers From the Tech They Use

Lawyers are focused on client service. 

Lawyers have no tolerance for incompetent representation. Despite lawyers’ affection for their Westlaw and LexisNexis subscriptions, if a client needed something that could only be found in a book, you’d better believe their lawyer would be nose-deep in that book. The first priority for lawyers is that technology should enhance the services they provide to their clients. 

Lawyers are pressed for time and driven by billable hours.

Lawyers — under the ever-present pressure of the billable hour — don’t have time for repetitive, rote tasks like retyping contracts or clauses. They also don’t have time to figure out how to use a complex or non-intuitive system. This isn’t a statement about whether lawyers are tech-averse or tech-resistant; it’s about their need to be efficient and effective with their time.

Lawyers put a premium on convenience and functionality over bells and whistles.

Lawyers are busy people who are pulled in multiple directions. They’ll often pass on overhyped, trendy tools in favor of tried-and-true time-savers. In fact, the 2019 Aderant Business of Law and Legal Technology Survey found that most lawyers weren’t interested in artificial intelligence or blockchain; instead, they were looking for “the tools lawyers use day in and day out, the bread-and-butter tools of a modern law practice,” including document management, e-billing, and knowledge management solutions. Lawyers also favor convenient tools that save them time by fitting within their existing workflows.

So, what should technology companies keep in mind when designing software for lawyers?

Designing Technology That Works for Lawyers

If you want lawyers to actually use your technology, it has to be effective in providing better results for their clients. Usefulness—as measured by client outcomes—is the bottom line for legal software solutions. If a tool allows lawyers to provide better service to clients, improves client results, or increases the firm’s profitability either directly or by reducing write-offs, you’re halfway there.

But no technology works unless the user uses it. To that end, legal technology must also be efficient with lawyers’ time. It should be easy to launch, easy to learn, and ultimately easy to use on a daily basis. If it requires a laborious setup or a long, slow learning curve, it’ll be hard for lawyers to recognize any client service benefits because they just won’t have the time to seek it out in the press of daily work.

On that note, legal software solutions should be convenient to use. Lawyers spend too much time looking for the right clause and then sifting through them meticulously looking for information that needs to be adjusted. When your technology is integrated within existing workflows, your audience doesn’t have to remember to look for it or switch screens to use it: it’s right there when they need it.

These are the considerations we think about every day at Litera. How can we create technology that lawyers want to use? How can we improve client outcomes, reduce the barriers to adoption, and fold our products into lawyers’ workflows and processes so that they’re available when and where they’re needed?

A great example of legal technology that just works for lawyers is the new Anonymize feature in Clause Companion. With Anonymize, lawyers can designate a document as a template and have the software automatically extract dates, names, numbers, and other case-specific data, creating a fillable form for future use. This improves client results by producing clean, up-to-date templates, saves lawyers time, and fits easily within our unified Microsoft Word ribbon. We think it exemplifies how software companies can learn from their audience and design technology that meets that customer’s unique needs.

About Litera

Litera is the leading provider of software for law firms and document-intensive organizations across the globe, helping them satisfy the demands of clients. Our document drafting products empower users to create, proofread, compare, clean, and distribute high-quality content quickly and securely, from any device, while our transaction management platform converts the manual, tedious process of managing transactions by creating a secure, collaborative workspace and automating the entire signature process. Learn more at litera.com.

A Texas judge facing a seven-count wire fraud indictment has successfully made it onto the Fall ballot because some people just know how to run a campaign!

Judge Alexandra Smoots-Thomas was tagged with wire fraud over allegations that she embezzled $26,000 from her campaign. But this didn’t stop 33 percent of the voters from supporting her reelection — enough to get her into a runoff against an assistant county attorney who got 41 percent.

From Texas Lawyer:

Kent Schaffer, Smoots-Thomas’ criminal defense lawyer, said that her prosecution is political, and he thinks she will beat the charges.

“I don’t think the average voter had any idea that Judge Smoots-Thomas was under indictment,” said Schaffer, a partner in Schaffer Carter & Associates in Houston. “I didn’t hear it mentioned at all.”

This was never mentioned? What kind of campaign wouldn’t bring this up? Apparently the judge’s opponent claimed that she “didn’t want to be perceived as the one with the ax to grind” which sounds noble but given her job is more likely the nice way of saying “a representative of the prosecutor’s office can’t be going around calling people guilty pre-trial.”

As of now, the Smoots-Thomas trial is scheduled for September. Her attorneys are hoping to have her cleared before the election.

No word on whether or not this has put a crimp in her fundraising…

Voters Supported Suspended Texas Judge, Who’s Also Been Indicted [Texas Lawyer]

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Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

A hallmark of an important professional development is when definitive statements proclaiming a new reality are made by serious sources. If anyone was unsure of whether the litigation finance phenomenon had reached that tipping point, they can now feel free to rid themselves of any uncertainty. No lesser a source than the New York City Bar Association Litigation Funding Working Group has spoken, declaring that “the New York Rules of Professional Conduct should be modified to accommodate the reality of litigation funding.” Lest you think that this impactful statement is the product of unserious thinking, please understand that the members of this working group include prominent academics, practitioners, litigation funders, and former jurists. A group that collectively worked over a year to conduct a “comprehensive study and review of the issues and practices surrounding litigation funding” before issuing their report, while also soliciting input on numerous occasions “from a range of guest speakers, including practitioners, scholars, and experts in the fields of commercial and consumer finance.”

Their just-issued report on litigation finance represents serious effort, by a serious team, on perhaps the most serious issue confronting the legal profession today. One that comes just after the City Bar’s Committee on Professional Ethics’ notorious (at least in litigation finance circles) prior decision that “non-recourse financing agreement secured by legal fees in a matter — i.e., an arrangement in which it is contemplated that the lawyer will make future payments only if the lawyer recovers fees — constitutes an impermissible fee-sharing arrangement” in violation of ethics rules. While that decision did not seem to have much of a chilling effect on the spread of litigation finance nationwide (or even in New York,) it did stand out as the clearest statement of concern that litigation finance arrangements could constitute ethics violations. Not the greatest messaging for a burgeoning industry attracting immense investor interest — or for the lawyers and firms eagerly lining up for a shot of that sweet nonrecourse manna being doled out by flush funders in an effort to generate returns for those investors.

But as I referenced above, the new recommendation is that the ethical rules be modified, not that litigation funding be restricted. Bending to the new reality, if you will. While serious questions still remain about the impacts on (distortions of) the attorney-client relationship that are engendered by litigation finance arrangements, it seems clear for now that both the bar and funding industry are committed to working together to minimize the potential negatives so that the glorious positives can be realized. Is there self-interest on all sides motivating the relationship? Of course. But there must also be a committed response to what is actually going on in the legal industry in the US — one that takes into account both the historical record and treatment of third-party funding of lawyers and claims, as well as the lessons that can be learned from the development and deployment of litigation funding overseas.

To that end, the Working Group’s report is a major contribution. At minimum, it serves as a handy primer on the historical concerns surrounding the use of third-party funding as a driver of litigation, along with a useful overview of how litigation funding is being handled by other common law legal systems such as Australia. For that alone it is a must-read for anyone whose practice is impacted  by litigation finance — i.e. nearly every litigator practicing today, as well as an increasingly wide swath of nonlitigators, such as in-house counsel or those corporate types who serve the litigation finance industry, just to start. But the report’s main contribution, at least in my view, revolves around its competing proposals for amending the ethical rules in New York to allow for certain permissible litigation funding structures. A detailed analysis of those proposals will have to wait for a future column, especially as they relate to the reality of litigation funding in today’s IP industry. For now, however, I think it is very important to highlight a few critical observations about the nature of litigation finance underlying the need to amend the ethical rules at all.

First, the report provides confirmation that the very existence of litigation funding implicates ethical concerns. Indeed, those concerns primarily manifest themselves in the answers to a simple set of questions, such as: Could a funder “improperly influence the legal representation?”

“Of course” is the only rational answer, which is why both proposals make clear that the existence of a funding relationship should not influence the decision-making of the lawyer, or somehow vest the funder with decision-making authority on critical issues such as settlement or litigation strategy. Whether a funder can advise on those issues is addressed more permissively, but there remains a fundamental unease with the idea that a litigation funder can somehow displace the “client” and become the lawyer’s true client just because they are contributing to the cause financially. For now, at least, the Working Group is endorsing ethical rules that would allow some forms of what I term “passive” litigation funding, Where that leaves funders and investors in favor of more activist approaches is a very important question that will likely need addressing over time.

Second, the report is also a tacit acknowledgment of what has been said about the true aims of the litigation funding industry. Namely that it is effectively an elaborate workaround of the traditional ethical stricture around nonlawyer investment in law firms. In what I think is implicit recognition of that tension, it was not surprising to see a split between the two proposals on how litigation funding can be used. One proposal seeks to limit the use of litigation funding to only those expenditures incurred for the benefit of the client during the representation — and proposes limiting language to that effect. The second, however, suggests that a more expansive use of litigation funding be sanctioned, which would allow for law firms to make operational investments that more indirectly benefit the client’s interests. This is a critical issue, since we know that both funders and law firms are always looking for ways to diversify their exposure to the risks they each face, which has led to heightened interest in things like portfolio financing of a law firm’s entire contingency book of business, as just one example.

Ultimately, these are just preliminary thoughts based on an initial reading of the entire report. At the same time, just how important a contribution this report is to the vital discussion around the issue of litigation funding can’t be overstated. Those of us — particularly those of us in IP where litigation funding has already transformed the patent litigation landscape — have no choice but to become informed about all the contours of this career-defining issue. Because failure to accept the “reality of litigation funding” dooms uninformed lawyers — and their unfortunate clients — to both a difficult present and challenging future.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

Ed. note: Please welcome Nathalie Bougenies to the pages of Above the Law. She will be writing about the legalities surrounding cannabis and hemp CBD. This post is the first in a series dedicated to the federal and state legality and regulation of hemp-derived cannabidiol, more commonly known as “hemp CBD.”

The enactment of the 2018 Agricultural Improvement Act (the “2018 Farm Bill”) and the legalization of hemp and hemp derivatives, including hemp CBD, in some states has led to a massive hemp CBD health craze in the United States. The highly coveted cannabinoid is currently infused into everything from bath bombs to dog treats, and even workout clothes (yes, workout clothes!). According to a 2019 survey conducted by Cowen, the sales of these products are expected to reach $16 billion by 2025.

Despite this strong consumer interest, the Food and Drug Administration consistently takes the position that the sale and marketing of these hemp CBD products is unlawful and that the use of hemp CBD is dangerous. That was until the newly appointed FDA Commissioner, Stephen Hahn, M.D., publicly announced on February 26 to a roomful of representatives from state Departments of Agriculture that the FDA’s current approach to hemp CBD is not sustainable:

“We’re not going to be able to say you can’t use these products. It’s a fool’s errand to even approach that[.] We have to be open to the fact that there might be some value to these products and certainly Americans think that’s the case.”

The FDA’s new stance on the regulation of the sale and marketing of hemp CBD products raises the question in the minds of many of whether the agency will cease its enforcement actions against hemp CBD companies, which to date have been limited to sending warning letters to those companies that make egregious, unfounded health claims about the therapeutic value of hemp CBD.

Although Commissioner Hahn’s statements are promising, they did not ultimately do away with the FDA’s current moral position on hemp CBD, which is one of extreme consumer caution. Indeed, in his February 26 speech, the FDA Commissioner reiterated the agency’s goal of providing consumers with sound information about the effects of these products so they can make educated decisions about their purchases.

But what exactly gets the FDA’s hackles up around Hemp CBD?

According to the FDA, hemp CBD foods and dietary supplements can neither be lawfully sold nor marketed. The FDA takes issue with these products because of the Drug Exclusion Rule. The Drug Exclusion Rule provides that an article that has been approved or investigated as a drug cannot be a dietary supplement or be added to food unless the article was marketed as a supplement or food before it was investigated. Hemp CBD has been approved as a drug ingredient in the treatment of epilepsy (i.e., Epidiolex) and the FDA does not believe that hemp CBD was marketed as a food or dietary supplement prior to that investigation. Nevertheless, the Food, Drug and Cosmetic Act (“FDCA”) gives the FDA Commissioner the authority to override the Drug Exclusion Rule by issuing “a regulation, after notice and comment, finding that the article would be lawful under [the FDCA].” As the head of the FDA, Commissioner Hahn has the ability to regulate hemp CBD, so his recent statements certainly suggest he may eventually act on that conferred power.

Despite its position on food and dietary supplements, the FDA indicated that hemp CBD can be added to topicals, which fall under the FDCA definition of “cosmetics,” so long as these products (1) do not contain marijuana, (2) are not adulterated (i.e., unsafe) or misbranded or intended to be used as drugs, and (3) if no claims are made about these products regarding diseases or bodily structure/function on their packaging, labeling, or in their marketing materials. Not making health claims on a product label or other marketing materials will significantly reduce the risk of an FDA enforcement action because any claim made about the therapeutic value of hemp CBD will lead the FDA to conclude that the product is a “drug.” And because no hemp CBD products have been approved by the FDA for the diagnosis, cure, mitigation, treatment, or prevention of any disease (other than Epidiolex), those products will be deemed unlawful by the FDA if such claims are made.

The FDA has yet to address the sale and use of hemp CBD smokables. This is likely due to the fact that the FDA has the authority to regulate the sale, manufacture, and marketing of tobacco products, but has repeatedly refused to extend its authority to products free of nicotine or tobacco. Accordingly, it seems unlikely that hemp CBD smokables devoid of tobacco would be considered “tobacco products.” Although the FDA is not likely to regulate most hemp CBD smokables like it does tobacco products, it could potentially regulate them as a drug under the FDCA if any health claims are made about the therapeutic value of the products.

Therefore, until the FDA adopts a formal legal path for the sale and marketing of hemp CBD products, industry players will need, at a minimum, to comply with those loose FDA guidelines and applicable state laws, which, as I will explain in the second portion of this series on hemp CBD, are all over the map.

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Nathalie Bougenies practices in the Portland office of Harris Bricken and was named a “2019 Rising Star” by Super Lawyers Magazine, an honor bestowed on only 2.5% of eligible Oregon attorneys. Nathalie’s practice focuses on the regulatory framework of hemp-derived CBD (“hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She also advises domestic and international clients on the sale, distribution, marketing, labeling, importation and exportation of these products. Nathalie frequently speaks on these issues and has made national media appearances, including on NPR’s Marketplace. Nathalie is also a regular contributor to her firm’s Canna Law Blog.