Interview with Jim Quinn

Earlier this month, Jim Quinn sat down with members of the HLS community to discuss free agency, competition, and other topics covered in his new book, Don’t Be Afraid to Win: How Free Agency Changed the Business of Pro Sports. Jim fielded a variety of questions from the large and eager crowd over Indian food and a shared excitement of the future direction of the major sports leagues.  Below are some excerpts from the Q&A portion of his discussion on campus.

The interview was conducted by Madison Martin ’21 (Online Content Chair, Sports) and Daniel Alford ’20 (Executive Editor, Online Sports Content), from the Harvard Journal of Sports and Entertainment Law. It has been edited for clarity.

Q: Didn’t Curt Flood bring about free agency in baseball?

A: The answer is no, Curt lost the case. The Supreme Court continued the baseball exemption … but it did not apply to basketball, hockey, and football, so as a result, we pressed forward under the antitrust laws. The biggest issue was the non-statutory labor exemption – the owners said this was all part of collective bargaining, so it should be exempt from the antitrust laws. The issue got to be “when does the labor exemption end?” Various cases (including Powell) said – as long as there was a collective bargaining agreement in place and a union remained a union, it was exempt under the antitrust laws. As a result of the McNeil agreement, we entered into what was called the White Agreement. For further reading, see http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1068&context=sportslaw.

Q: Could you speak a little more on the history of lockouts and free agency?

A: Ironically, the first lockout we had in 1994 turned out to be a disaster for the owners, and the teams collapsed – this was the first instance of free agency in the NHL. The reality is, once you have some level of free agency, some level where the competitive market sets the price, it impacts everybody along the line, because a player still under contract will say, “So and so got 5 million, and I am a better player than him so I should at least get that much.” As a result, it set a bar that impacted hockey and led to the year-long lockout in 2005, where (Gary) Bettman insisted he needed to get a salary cap in order to survive, which is where we live today.

Q: Do you think any leagues are headed toward a lockout or strike?

A: I don’t think any of them are. The money now is so huge on both sides, that having a work stoppage that actually effects revenue streams is unlikely. You can’t get that money back, no matter what you do, whether you are an owner locking out or you are a player and going to strike and forego significant salaries, it is very difficult. Is it possible? It may be possible in baseball, because they have some complicated issues now with the “youth movement” and the way their system worked. It has worked for a long time, but there is a question of collusion because older players aren’t getting the same level of compensation, and you have this whole question now of all these younger players just starting and becoming stars immediately and the league has to figure out have to deal with that. The chief negotiator for the union is one of my former partners, and I know that these are issues that they are wrestling with.

Q: In Chapter 9 of your book, you further discuss salary caps. Was the argument against salary caps based on the fact that there was a trust in regards to employment? And how does it matter that it is sort of a non-essential industry?

A: The owner’s argument always was that they needed all the restrictions to maintain competitive balance. The argument has always been bullsh-t and it is for the next 100 years because if you have competent people running teams, with the Tampa Bay Rays as an example, in a system where you have free agency and the draft in some form — and as an aside, the draft has become a little bit of a farce, it is little more than a marketing tool than anything else — all of this has been a huge boom to professional sports because it keeps the different sports in front of the public the whole year, because something is always going on, then you can’t lose that competitive edge.

Q: Any opinions on recent NCAA litigation in CA?

A: I am sure you are aware now, at least three states have passed laws relating to the use of likeness, which is just a disaster – because you can’t possibly have fifty states regulating an industry that is essentially a national industry. What happens when Auburn plays UCLA? Can the Auburn players now get paid? Legislation has to be on a federal level, or the NCAA has to get its act together and craft rules that will allow this. I tend to agree with the view that stipends serve as a possible solution. Putting the names and likeness issues aside, for the D1 schools and perhaps others, to give players a stipend to offset their inability to work during the summer — they can’t get jobs and vacation and so forth —  this would go a long way to quelling this whole issue.  However, the NCAA still hasn’t gotten their act together, it’s a horrible organization, the problem is it has 1100 members, and little schools have the same voice as Michigan. It makes zero sense, and maybe eventually it will be done out by a conference by conference basis.

Q: But what about players that contribute significantly more?

A: You can’t do it that way, it’s college sports. Unless you want to decide that it is just professional football, and nobody really wants that, you have to guide out a different kind of system. It can’t be just the NFL without steroids. The name and likeness thing is more confusing, and I am not sure how this will ultimately play itself out – you are really talking about nationwide, a couple dozen players that people care about, it’s not a lot of players.

Q: You worked on the Florette age eligibility case (on safety issues with younger athletes). I am curious your thoughts on the Women’s Tennis Association and Coco Gauff being 15, with regards to restrictions on how much she can play?

A: If someone wanted to bring a lawsuit they would probably win it, because obviously she can play. There is no competitive rationale to bar someone like her from playing. It is paternalistic. Similarly, in the NBA, there should be no “one and done”. It is different than football because it is not a safety issue. If you can play at 17, I mean just look at Kobe Bryant.

Q: Are there one or two important issues for students to keep their eyes on?

A: The continuing issues of IP and in a broader sense, you know that there is the DirectTV litigation in the West coast, which is an interesting piece of litigation. The economics of these sports are likely to change over time. Right now, the live sports are the lifeblood of the networks. At some point, there is going to be bidding from Amazon and Netflix and maybe even Disney as they create these streaming services. These people have incredible amounts of money, certainly long term, and I know talking to the head of NBC Sports, they see that as a long-term serious threat to their business.

 

For more information on these topics and others, feel free to check out Jim’s book, Don’t Be Afraid to Win: How Free Agency Changed the Business of Pro Sports. https://www.amazon.com/Dont-Be-Afraid-Win-Business/dp/1635766788

 

Interview with Erkut Sögüt – Soccer Agent for Mesut Özil

In the first part of a series of interviews with international soccer agent, Erkut Sögüt, we sat down to learn more about his background, his work, and how he sees the world of soccer evolving in the near future. Erkut, who has his PhD in sports law from Universität Osnabrück, is the director of his own agency (“Family and Football”), through which he represents many star Premier League players, including Arsenal midfielder Mesut Özil, Manchester City midfielder Ilkay Gundogan, Arsenal defender Shkodran Mustafi, and others. Whilst acting as the agent of Özil, he has dealt with all matters between the player and his club, including contract negotiations, commercial deals with Adidas, Mercedes-Benz and Beats, and the founding of the Özil Charitable Foundation. Dr. Sögüt has lectured at UCFB and FBA programmes as well as at Harvard University, and is fluent in German, Turkish, Spanish, and English.

The interview was conducted by Daniel Alford ’20 (Executive Editor, Online Sports Content) and Madison Martin ’21 (Online Content Chair, Sports), from the Harvard Journal of Sports and Entertainment Law. It has been edited for clarity.

Daniel Alford, Journal on Sports & Entertainment Law (JSEL): Hi Erkut, nice to meet you. Could you speak a bit about your background and how you got to where you are, especially in the sports industry and with Mesut?

Erkut Sogut (ES): Thanks, Dan! So, my story is I grew up in Hannover, Germany to Turkish parents who both had an amazing work ethic and wanted myself and siblings to achieve as much as we could. I was pushed to become a doctor or lawyer by my father, and eventually pursued a career in sports law. I’m currently based in London, and act as the agent and business partner of footballers (soccer players) such as Mesut Ozil. Besides football, I’m also a registered basketball and hockey agent too. It’s been an amazing journey thus far and feel that it is just the start!

The answer to this may actually surprise you, as I initially came into contact with Mesut through teaching! At the time, I was a lecturer (mainly in Germany and Turkey), teaching the regulations for being an agent. Lots of agents are actually the family members of players and many came to my seminars. Mesut’s father got in touch with me about assisting him and his team in Germany, and from there I became the lawyer of Mesut’s marketing company. As time progressed, I got closer with Mesut and it eventually led me to become his full-time agent! It’s amazing that it has now gone full circle! Having founded Football Agent Education a couple of years ago, I’ve been fortunate enough to go to some amazing universities across the world and teach the next generation of agents, as well as detail all of my experiences in my book!

JSEL: That’s so interesting to hear. Do you represent other athletes and how has that been?

ES: Yes – so the agency we founded is called Family & Football. Besides Mesut, we represent other English Premier League players including Mesut’s teammate, Skhodran Mustafi. In addition, we have Kieran Gibbs and Lucas Perez on our roster. Our mentality has always been simple: we’d rather have only a few high-profile clients and do everything we can to represent them as best as possible, on and off the pitch. That’s how we operate. Right now, we’re also starting to work with some really promising youth players in Europe, who we believe can reach a really top level too.

JSEL: And could you take us through your day-to-day? What is a day in the life of Erkut Sogut like?

ES: Every day is different, and that’s what makes this job so exciting. There’s no such thing as a typical day, but I’ve tried to make a routine for myself as much as possible. I wake up at about 5:00 and either start by reading contracts, sending and responding to messages, or anything else that needs to be done. This time of the morning is great, as few people are awake, and I feel I can really concentrate. As soon as I do arrive in the office, I normally have a meeting with my team to update each other on the latest, and make sure we keep on top of all the projects that we’re currently running. From there, the day may entail a number of different things. Whether it be sitting down with a club, a sponsor, other agents, visiting a client’s house, or flying abroad for meetings, anything can happen!

Even on the weekend the job doesn’t stop – in fact it’s sometimes busier! At Mesut’s box in the Emirates we have fifteen seats, and we often host important guests from abroad. Part of what I do is looking after them – meeting them in the days leading up to and after the game, as well as entertaining them during the match. Usually after the match ends I go downstairs to speak with Mesut. Every game, we have at least five seats reserved in our box for kids from local London charities, and we also of course take them after the game to meet Mesut. For me this is the most fulfilling thing I do.

JSEL: Wow, sounds very busy. What is, then, the most rewarding aspect of your job?

ES: As I mentioned before, the charity work we do with Mesut is incredibly rewarding for both of us. Not only is it rewarding, but I see it as one of the most important things I do. Aside from this, I’m fortunate to work with a great group of players, and as such have had lots of memories. In January 2018 we secured the biggest Premier League contract in history for Mesut and was obviously something really special and a moment to be proud of. Negotiating transfers and contracts always have their thrills – it’s hard work yet gives you this incredibly satisfying buzz. But at the same time, I still have this passion for teaching and education. As I said before, I deliver football agent seminars in London and guest-lectures globally, and the fact that people come from all over the world to see me speak is a truly irreplaceable feeling. Spreading knowledge, experience and advice is a true privilege for me. Likewise, when I see people have ordered our book from Australia, or Asia, or the US, it’s special.

JSEL: It is great to see such a rewarding return on your hard work. I must then ask, what keeps you up at night?

ES:  What keeps me up at night? My son Emre! He’s nearly two years old, and incredibly full of energy! It’s funny because in the garden I even got artificial grass and a goal, so I’m training my son! I’m trying hard to make him a left-footed player, but he still shoots with his right.

JSEL: Perhaps the next Messi? Speaking of which, how do you see the industry in the next ten years developing?

ES: The issue with football agency lies in its registration process. The rules to become an official agent are so relaxed and the procedure is extremely simple. Of course, initially this may seem like a good thing – it means that people can be an agent tomorrow if they wanted to! However, this is the main problem. You have people that are unqualified and don’t know how the industry works suddenly being able to represent a player. A lot of the time as an agent you can be dealing with players that are in their early twenties, or even teenagers. If you have people going to these young players saying that they are capable of representing them, but in truth only became a registered agent the day before, then the problems are obvious to see. Suddenly, lots of players are poorly represented by people with no experience or who operate immorally. In very few professions is this wide-scale lack of regulation present. I’m actually part of FIFA’s football agent commission, and one of the things we’re trying to tackle is exactly this. Whether it be the re-introduction of an exam for agents, or just more rigorous rules, it’s obvious something has to be done.

JSEL: That makes sense. How about yourself and your future?

ES: Actually, I see myself in the US! Not only has it always been a dream to move to America, but given how quickly the game is growing here it makes business sense for me too! The structure and the team we have created in London is really fantastic. We are like a family. Replicating this same setup in America is something that I really want to do, and perhaps even venture into other sports such as basketball. Also, I definitely feel that I want to do more on the educational side. As I said, it’s my passion, and teaching in perhaps more of a full-time role is something that is certainly a potential priority.

JSEL: That would be truly wonderful. We see the game growing exponentially here. Do you see any room for growth in the EPL here stateside? How about MLS?

ES: Obviously, it is tricky with the time difference (especially on the West Coast) but given how the English Premier League is going from strength to strength I think that viewership of soccer will only rise as the sport in general grows in North America. There’s a huge amount of talent right now in England, and with six of the best teams in the world playing in the Premiership, it’s at its height of entertainment.

I believe that the MLS has incredible potential. US soccer is growing incredibly quickly, and events like the 2026 World Cup will only boost the league. Like all American sports, the MLS is run really well, and all the regulations serve to help and grow the clubs. In the past the US has been seen as an almost retirement league for top players, but I feel that the MLS is becoming much more than this. It’s producing amazing young talent of its own, and I am confident that it has the potential of becoming a top-tier league in the coming years

Interview with Megha Parekh, Jacksonville Jaguars’ Senior VP and Chief Legal Officer

Interview with Megha Parekh, Jacksonville Jaguars’ Senior VP and Chief Legal Officer

This is a photo of staff member Megha Parekh of the Jacksonville Jaguars NFL football team on Wednesday April 16, 2014

The Journal on Sports and Entertainment Law recently sat down with Megha Parekh, the Senior Vice President and Chief Legal Officer of the Jacksonville Jaguars, to discuss current issues involving the Jaguars and sports law in general. Megha Parekh joined the Jaguars as vice president and general counsel on March 1, 2013, and was named senior vice president, chief legal officer in 2016. In her role, Ms. Parekh is responsible for oversight of all legal matters, including transactions, compliance, disputes, risk-management, government relations, and insurance, as well as people development and training, and information technology. Since joining the Jaguars, Ms. Parekh has worked on team-owner Shahid Khan’s acquisition of Fulham Football Club, the $63 million public-private funded improvements to EverBank Field in 2014, and the $90 million project involving renovations to the US Assure Club in addition to construction and the 2017 opening of Daily’s Place.  Ms. Parekh has also worked on the extension of EverBank’s naming rights and selection of a new food, beverage and merchandise provider for EverBank Field. Prior to joining the Jaguars, Ms. Parekh worked in the New York office of the law firm Proskauer, which is an international law firm known for its preeminent sports law group.  During her time at Proskauer, she worked on public and private acquisitions and financings and securities offerings, including the acquisition of the Jacksonville Jaguars, the Houston Astros and the Cleveland Browns. While at Proskauer, Ms. Parekh also worked on a variety of matters including public and private company acquisitions and equity and debt financings. Ms. Parekh was named in December 2012 and 2013 to Forbes Magazine’s 30 Under 30 Sports List, which honored the country’s top sports athletes and executives under the age of 30 who “represent the entrepreneurial, creative and intellectual best of their generation.”  Ms. Parekh has also been named a Woman of Influence (2014) and Ultimate Attorney (2016) since coming to Jacksonville. Ms. Parekh joined Proskauer in 2009 after graduating magna cum laude from Harvard College and Harvard Law School. While in school she was a sports writer for The Harvard Crimson and served as an intern for baseball’s Boston Red Sox.  Ms. Parekh also serves on the board of the Florida Sports Foundation and works with Women in Sports and Events.

The interview was conducted by Loren Shokes (Class of 2017), the Executive Editor of Online Content and the Online Interview Editor for the Harvard Journal of Sports and Entertainment Law. The interview is part of JSEL’s interview series with lawyers in the entertainment and sports field that will be featured on JSEL’s website. It has been edited for clarity. 

 **Please note that, throughout this interview, Ms. Parekh was speaking in her capacity as an individual and a scholar, and not as a representative of the Jacksonville Jaguars**

Loren Shokes, Journal on Sports & Entertainment Law (JSEL): You were appointed as the Jaguars’ General Counsel only a few years after joining the law firm Proskauer Rose. Can you speak more about your decision to join the Jaguars and your transition from working as an associate at a large law firm to in house counsel for a professional football team.

Megha Parekh (MP): I was offered the job as General Counsel of the Jaguars about three and a half years after practicing at Proskauer in New York. While at Proskauer, I was part of the business law group, and I had the opportunity to work on a variety of deals, including securities offerings, credit and debt facilities, public and private M&A, intellectual property licenses, and other matters. One of the deals I worked on was the acquisition of the Jaguars for our current owner, Shahid Khan. About a year after the Jaguars deal closed, the then-general counsel of the Jaguars went to the Cleveland Browns (also an acquisition I had worked on), and I was offered the opportunity to come to Jacksonville. I knew that ownership and management had a reputation for being incredibly dynamic and for empowering their people, so while it was difficult to leave Proskauer, I simply could not pass up the professional opportunity to work for an NFL team and the ownership and management team here.

I transitioned not only from law firm to in-house counsel, but also from New York to Jacksonville. One of the first things I had to do after moving to Jacksonville was buy a car, my first since high school. In terms of the work, the breadth of work as an in-house counsel is much greater (but also, to some degree, shallower) relative to the breadth of work at a law firm. Towards the end of my time at Proskauer, I was working primarily on M&A and finance transactions; once coming to Jacksonville, my responsibilities were broadened to include labor and employment law, litigation and dispute resolution, and also human resources, IT and office services. In addition, management at the Jaguars assists with certain other undertakings of our owner. Once of the first transactions I worked on was the acquisition of Fulham Football Club, our sister company in the UK.

JSEL: Your current role as the Jaguars’ Senior Vice President and Chief Legal Officer involves far more than tackling the clubs’ legal issues and disputes. Along with Shahid Khan, owner of the Jaguars, you played an integral role in the acquisition of the English Premier League’s Fulham Football Club, the $63 million improvements to the Jaguars’ home stadium EverBank Field, and the $90 million renovation project to the US Assure Clubs including a new amphitheater and flex field. With such a wide range of duties, how to you decide what responsibilities you and other members of your team should perform and when to use outside counsel?

MP: Admittedly, I’m a bit of a hoarder when it comes to legal work at the Jaguars, and I try to limit use of outside counsel unless a matter truly involves something that will need special advice (e.g., tax, foreign law matters, etc.). I find that I need to have an intimate understanding of the business operations and the goals of my colleagues to be able to provide them with the most effective legal services; that’s just something that is difficult for outside counsel to replicate.

Within the legal team, we tend to divide and conquer the overall workload in the hopes that everyone will (a) continue to learn and have a general base of skills and (b) be able to maintain a reasonable workload and, relatedly, a reasonably quality of life (including taking advantage of Jacksonville’s beautiful beaches). That said, my background is from a law firm, and so I have the most experience with and tend to handle most of our M&A and finance; our general counsel has a background from other teams and so handles much of our sponsorship and employment-related matters; and our associate general counsel has a background in software licensing and intellectual property, so she takes the lead on handling many of those matters.

 JSEL: Since 2013, the Jaguars have played at least one game each season in London and signed an agreement to continue to do so until 2020. What are some of the legal questions and complications involved in playing a professional football game in a foreign country?

MP: Luckily, we are able to rely on the expertise of Fulham Football Club’s phenomenally talented general counsel to help us as we navigate the legal issues relating to the Jaguars business in the UK. The primary areas of sensitivity are labor and employment law, tax law, the Foreign Corrupt Practices Act and UK Bribery Act, and data protection laws. These are not novel issues, per se, but the regulatory schemes around the foregoing are different than what exists in the US.

JSEL: You have been on panels with Dolores DiBella, the Vice President of Legal Affairs at the National Football League, and you also know her personally. Through your conversations with Ms. DiBella, in your opinion what are the differences and similarities between working for the NFL and a specific football team?

MP: The League has a different perspective than the individual clubs, in that the League is consistently trying to protect the interests of all 32 clubs. Of course, at the team level, we want to do what’s best by the League but also have different, specific, local issues that arise from time to time.

JSEL: While a student at HLS, you interned for the Boston Red Sox. Do you find that in house counsel jobs for professional sports tend to be more alike than different, despite being in different leagues and entirely different sports?

MP: In house counsel jobs differ less by league and sport, and more by what ends up on the particular lawyers plate and the structure of rights. For instance, because the City of Jacksonville owns the stadium in Jacksonville, the matters that arise related to that are much different than for a team counsel whose team owns the stadium. I have responsibility for IT, which means that I get to focus on a lot of technology-related matters that other team counsel may not. That said, in the MLB and NBA, the teams have more local media rights, which is a significant difference from the NFL.

JSEL: As a Board Member for the organization Women In Sports and Events (WISE), can you speak more about what WISE does and how you become involved?

MP: I first became involved with WISE when providing pro bono services to help WISE modify its certificate of organization and bylaws. After assisting with various governance-related matters, I was asked to join the board. WISE does a tremendous job of offering women professionals in sports (who may or may not be athletes themselves; my hand-eye coordination is nothing but generally embarrassing) with resources and networking opportunities.

JSEL: You were twice honored by Forbes’ 30 Under 30 Sports List, which honors the top sports athletes and executives under 30 years of age who “represent the entrepreneurial, creative and intellectual best of their generation” for your work on representing Jimmy Haslam, chairman of Pilot Flying J, and certain members of his family in connection with the purchase of the Cleveland Browns football franchise as well as advising Crane Capital Group in the purchase of the Houston Astros baseball team while at Proskauer. You were also named a Woman of Influence in 2014 and Ultimate Attorney in 2016. To what and/or whom do you attribute to your success?

MP: Any credit for work that I do must be shared with (a) my family (who instilled discipline and reinforced the virtue of hard work), (b) my friends (who have always worked to try to make me more well-rounded, even when I was most comfortable studying all day), and (c) my professional mentors (who took the time to train me and teach me how to solve complex problems).

JSEL: When EverBank Field was undergoing its $150 million renovation, you and team owner Shahid Khan envisioned making the stadium more of a community-centered space that emphasized some of Jacksonville’s best qualities, including its beaches. What was the inspiration behind doing so and what do you think makes EverBank Field different than other teams’ home stadiums?

MP: EverBank Field showcases 18 video boards in the stadium, including two large boards above the north and south end zones. The technology in the stadium illuminates the fans and the fields, and offers people a view of live action and video that simply cannot be replicated at home. In addition, given that it is Florida and that Jacksonville has beautiful beaches and weather, the Jaguars added two spas to the north end zone so fans could enjoy the comfort of being at the beach and watching a game. EverBank Field also features a number of very unique premium products, including field-level seats and “chalets” that replicate living rooms. One of the core values of the Jaguars is to seek innovative opportunities, and the stadium certainly reflects that.

JSEL: In 2014, Shahid Khan invited you and other senior level executives at the Jaguars to an NFL owners meeting, an untraditional business practice for an owner but it showed his trust and commitment to his management team. How often do you work with other senior level executives outside of your legal team and how do you think it has helped the Jaguars’ enterprise as a whole?

MP: I work with executives outside of the legal team every day. We believe is transparency, collaboration, and accountability. While we may disagree professionally from time to time, I appreciate that we have those debates as opposed to operating in silos.

JSEL: What is the best piece of advice you can offer law students who have an interest pursuing a career in sports law?

MP: Consider the various ways in which one could get involved in “sports law”. For instance, lawyers have become everything from in-house counsel to league commissioners to collegiate athletic directors. I’d encourage students to explore the different opportunities available and identify what they are most interested in in terms of subject matter and breadth of responsibility; all jobs in sports are not, in a great way, created the same.

Interview with Steve McKelvey

Updated McKelvey Umass photo

The Journal on Sports and Entertainment Law recently sat down with Associate Professor Steve McKelvey, the Associate Chair for External Relations and Graduate Program Director in the Mark H. McCormack Department of Sport Management in the Isenberg School of Management at the University of Massachusetts, Amherst. Prior to joining the UMass Amherst faculty in 2002, he spent 15 years in the sports industry while traversing both sides of the ambush marketing debate. While serving in the corporate sponsorship division of Major League Baseball, he staunchly fought against companies seeking to align themselves with MLB without authorization. Over nine subsequent years, he advised a host of companies in designing and executing ambush marketing campaigns when official sponsorship rights were, for whatever reason, not an option. His experiences well illustrate the reality that, when it comes to ambush marketing, it ultimately depends on which side of the fence one is on.

The interview was conducted by Loren Shokes (Class of 2017), the Executive Editor of Online Content and the Online Interview Editor for the Harvard Journal of Sports and Entertainment Law. The interview is part of JSEL’s interview series with lawyers in the entertainment and sports field that will be featured on JSEL’s website. It has been edited for clarity.

**Please note that, throughout this interview, Mr. McKelvey was speaking in his capacity as an individual and a scholar, and not as a representative of the University of Massachusetts – Amherst **

Loren Shokes, Journal on Sports & Entertainment Law (JSEL): What are some of the challenges you anticipate will face Pyeongchang in regards to protecting companies’ intellectual property from ambush marketing at the 2018 Winter Olympic Games?

Steve McKelvey (SM): In a general sense, the challenges will be the same as with any other mega-sports event: Savvy non-sponsors will work within the boundaries and grey areas of the law to construct advertising and promotional campaigns that seek to associate their brands with the Winter Games. The prevalence of ambush marketing, however, varies depending on the event itself and with the host country. Ultimately, the extent of the ambush marketing is a function of the popularity of the event: non-sponsors have less interest in “ambushing” events that have little spectator interest or media coverage. As for the upcoming Winter Games, when compared to the Summer Games, these have historically been of less interest to non-sponsors. The fact that the Games are taking place a half a world away will also temper the amount of ambush marketing activity that occurs within the U.S. Finally, in terms of the host country itself, the political landscape also dictates the parameters of ambush marketing. If the Chinese government says to its local businesses “don’t ambush,” expect there to be little if any likelihood of ambush marketing.

JSEL: In your most recent case study, you stated that for the Vancouver 2010 Winter Olympic Games the Canadian Olympic Committee (COC) “made a conscious strategic decision to move away from the overly aggressive, heavy-handed enforcement mentality that had been utilized in previous Olympic Games. Instead, the COC emphasized education and relationship development, seeking to encourage cooperation from the Canadian business community in protecting the integrity of the COC’s official sponsorship program.” Do you feel that it is the duty of the individual companies, the organizers of the Olympic Games, or others to monitor and report instances of ambush marketing?

SM: Since the inception of the term “ambush marketing” (first popularized during the 1984 Los Angeles Olympic Games), sport properties (e.g., the Olympics, FIFA, NFL) have promulgated the pejorative notion of ambush marketing. One of my recent research studies indicates that the general print media has historically described and positioned the practice of ambush marketing as somehow illegal or unethical. Another older research study found that top sponsors were less concerned with so-called ambush marketing by competitors, and more concerned with sponsorship clutter (properties that signed on too many official sponsors). Marketing executives who are official sponsors of mega sports events understand that competitors will often seek to creatively align with these events (after all, if they were non-sponsors, they would!). They understand that their best defense is to out-market their competitors. The challenge lies in the fact that sport property rights-holders too often “promise” their official sponsors (often in sponsorship contracts) a level of category exclusivity that it can’t legally deliver. As a result, official sponsors come to expect that the properties will be able to halt so-called ambush marketing campaigns. While I have no problem when official sponsors report instances of ambush marketing, they should also expect legal recourse only to the extent that the campaign actually violates applicable trademark or unfair competition law.

JSEL: The US and Canada do not have a statute that directly addresses, let alone prohibits, ambush marketing, and as a result companies have to rely on common law or statutory law relating to trademark infringement and/or unfair competition. Do you feel that the penalties for trademark infringement and unfair competition are sufficient or do you think that ambush marketing warrants creating a sui generis law specifically tailored to stop this practice?

SM: Each country has its own existing system of trademark law, for which the consequence of infringement is well spelled out. Over the past 15 years or so, mega sport organizations including such as the FIFA and the IOC have also been successful in getting host countries to enact, for the duration of their events, event-specific ambush marketing legislation (“ESAML”) that provides an extra (and extraordinary) level of trademark protection (i.e., London’s “right of association” law). A growing cadre of legal commentators and scholars, myself included, have questioned the need for and efficacy of such extraordinary legislation, achieved largely as a result of the monopoly power of these mega-event organizations. While I appreciate the financial interests sought to be protected by these sports properties, I personally believe the existing trademark and unfair competition laws of each country should be sufficient. Anecdotally, all that EASML typically ends up doing is freezing out and “chilling the speech” of smaller companies who are simply afraid of being ceased and desisted by their local Olympic “trademark police.”

JSEL: In your opinion, what are some of the most effective mechanisms companies and organizations can utilize to prevent third parties from trying to imply a commercial association with them without having secured official sponsorship rights?

SM: What sport properties provide official sponsors is exclusivity within advertising and promotion to use their official marks and logos. Legally this exclusivity does not, and should not, extend to sports properties “owning” the entire “thematic space” of their respective events. It is appropriate for sports properties to communicate to the business community what types of advertising and promotional activities are legally acceptable. Within the Olympic context, the Canadian Olympic Committee provides a great example of educating the business community as to the parameters of their legal protections. This can be one of the more effective mechanisms: explaining to the business community how official sponsors support the overall program through their financial investments, and how the ambush marketing of non-sponsors can potentially devalue official sponsorship programs at the risk of losing such funding for Olympic programs. In other words, educating the business community can serve as a potential deterrent. The so-called “name & shame” campaigns, whereby sports properties publicly chastise non-sponsors can, however, backfire. One notable example of this is when FIFA and official beer sponsor Anheuser-Busch called out the Bavarian Beer Girls during the World Cup in South Africa in 2010. Their vigilance in arresting a handful of women for ambush marketing resulted in millions of dollars in publicity for the Dutch Bavarian Beer Company and a groundswell of negative publicity. I would contend that the best approach in this scenario would have been to simply ignore the Bavarian Beer girls’ publicity stunt! Ultimately, I think the most effective “mechanism” official sponsors can use is simply to “out market” their competition in terms of advertising/promotion dollars spent, and creativity in better capturing the consumers’ attention.

JSEL: The National Football League (NFL) partnered with local law enforcement to form Operation Team Player to help curtail the illegal importation of counterfeit sports apparel and merchandise. The successful operation led to the seizure of nearly 450,000 counterfeit sports-related items worth an estimated $39 million. Do you think that it would be an effective practice for companies concerned about third parties “ambushing” their brand’s marks to use similar tactics?

SM: It is important to distinguish between counterfeiting and ambush marketing. Counterfeiting entails the unauthorized use of protected trademarks on tangible products. This is clearly illegal. On the other hand, ambush marketing is implemented through advertising and promotion campaigns (not involving tangible products). Any non-sponsor seeking to align or associate with a sporting event is typically savvy enough to not include registered trademarks in their campaigns. Thus, during the Super Bowl, we see official sponsors using the Super Bowl logo and word mark, and non-sponsors using non-trademarked phrases like “The Big Game.” Whereas sports properties have mechanisms to stop counterfeiting (i.e., partnerships with governmental customs agencies and on-site “logo police”), these don’t apply to advertising/promotion campaigns, which instead can only be policed by the properties’ sponsorship/marketing divisions.

JSEL: Companies often utilize social media platforms such as Facebook, Twitter, and Instagram to advertise their newest collections and launch their latest advertising campaigns. Through monitoring various social media platforms, one of the COC’s interns at the Sochi Olympics discovered that a major brand was running a sweepstakes that erroneously used the COC’s brand mark. For companies and organizations with a global presence, how can they protect their intellectual property mark’s online from such activity?

SM: Social media remains a bit of the Wild West as it pertains to ambush marketing specifically. Ultimately, as with instances of ambush marketing in traditional media, the question is the same: has the company utilized protected trademarks in a manner that is likely to cause consumer confusion as to sponsorship or affiliation between the company and the respective sports property. The use of hashtags by non-sponsors has created an even thornier issue, as I and my co-author John Grady of the University of South Carolina recently addressed in a Sport & Recreation Law Association conference presentation in March.

Prior to the 2016 Summer Olympic Games, the United States’ Olympic Committee (USOC), in its efforts to prevent ambush marketing, took a novel legal approach by enforcing its trademark rights in event-related works marks when those marks are used as hashtags. They sent letters to non-sponsor companies warning they would infringe the USOC’s marks if they incorporated into social media posts any of the USOC’s protected marks, including #Rio2016 and #TeamUSA, regardless of the content of the social media messaging. The letter further prohibited the sharing of any Olympic results or retweeting from official Olympic accounts by any non-media outlets. This unprecedented step prompted immediate criticism as “trademark bullying,” and over-reaching beyond what rights the USOC can legally assert.

The constitutionality of the USOC’s initiative is currently pending in a lawsuit filed in federal court a few days prior to start of the Olympics by a small carpet cleaning business called Zerorez. The lawsuit is filed under HSK, LLC. v. United States Olympic Committee. Zerorez anticipated discussing the Olympics, contemplating social media posts on Facebook and Twitter such as “Are any Minnesotans heading to #Rio to watch the #Olympics? #RoadToRio.” Zerorez has requested declaratory relief from the court, arguing that speech is not commercial in nature merely because it is on a business’s social media account. This was in response to the USOC’s assertion that every social media post from a corporate account constituted commercial speech and was therefore prohibited.

Although the Supreme Court has long grappled with how to define commercial speech, it provided insight as to what is not considered commercial speech in its 1976 decision in Virginia State Bd of Pharmacy v. Virginia Citizens Consumer Council in which it held that speech is not necessarily commercial just because money was spent to project it. The Supreme Court has held that the fact that speech is commercial does not alone deprive it of constitutional protection. Although the 7th Circuit’s more recent decision in a right of publicity case brought by Michael Jordan against the grocery store chain Jewel Food Stores arguably broadened the scope of commercial speech, the USOC’s assertion that every social media post from a corporate account constitutes commercial speech is arguably over-reaching.

The second legal issue raised in the Zerorez lawsuit turns on the application of the Lanham Act to the USOC’s actions. The Lanham Act makes liable anyone who uses a registered mark in commerce “in connection with the sale … or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” Trademark law, however, also recognizes that there are other ways to use another’s mark without misleading consumers or infringing the owner’s rights, including inter alia descriptive fair use and nominative fair use. Furthermore, one can argue that the use of trademarked hashtags in social media posts that do not directly incorporate selling messages is not necessarily commercial speech (such as in congratulatory messages). Nor, it can be argued, are these posts likely to confuse or mislead as to the company’s affiliation, or lack thereof, with the Olympic Games. This issue reflects an emerging line of legal scholarship which further contends that given the foundational purpose and use of social media, hashtags are incapable of designating a sole source of origin as required under trademark law.

The Zerorez case is still working its way through issues of ripeness/case in controversy, so this will be an interesting case to watch. But even if it is tossed out on jurisdictional issues, a similar case is likely to arise if the USOC continues its aggressive stance on the use of hashtags. Ultimately, sports properties and official sponsors need to step up their policing game in order to monitor ambush marketing activity that may cross the legal lines, but at the same time they need to be cognizant of free speech rights as well.

JSEL: One of the challenges with policing ambush marketing is that the typical sports fan does not know about ambush marketing, including the fact that it can amount to trademark infringement and unfair competition. The music industry faced a similar challenge around a decade ago when the majority of the public did not understand that downloading music without paying for it was illegal. To counteract such practices, the music industry began to aggressively litigate against consumers but quickly realized that the threat of being fined or facing possible criminal charges did not have the deterrent effect that they were expecting. Do you think that companies should try to educate the public about ambush marketing, and if so, how do you think they should go about doing so?

SM: Good question. Ambush marketing is a very nuanced practice. It was a term created and perpetuated by sport properties but it is premised on consumers actually knowing not only what sport sponsorship is, but also understanding what rights official sponsors have (and hence, what non-sponsors don’t have). 99 out of 100 sports fans cannot tell you what “ambush marketing” is. Furthermore, research has consistently shown that sports fan cannot tell you what exactly constitutes an official sponsor versus a non-sponsor. Historically, sports properties, and especially the IOC, FIFA and country governing bodies, have tried to appeal to consumers with the message that “official sponsors fund our program and hence fund our success,” but this message only works from a nationalistic standpoint (again, assuming sport consumers know what “official sponsorship” entails). Furthermore, fans of sport properties like the NFL or MLB know that the games will go on, with official sponsors, or without. Today’s sport consumers are savvy enough to see through any messaging by sport properties that says “support our official sponsors and reject ambush marketers … or our property will eventually lose sponsorship funding and go out of business.” Furthermore, despite 30 years of legal ambush marketing activity – engaged in by some of the most well-known international brands – no sport property has “gone out of business,” let alone lost any significant sponsorship revenue due to ambush marketing. One might intuitively ask: if ambush marketing is so prevalent (which it is) and so financially damaging, why have the official sponsorship fees for every major sport property only increased with each subsequent negotiation?

For more information about this topic, consider McKelvey, S. & Grady, J., #JoinTheConversation: The Evolving Legal Landscape of Using Hashtags in Sport. Journal of Legal Aspects of Sport, 27, 90-105, available at: http://journals.humankinetics.com/doi/pdf/10.1123/jlas.2016-0013

Interview with Spotify General Counsel Horacio Gutierrez

Interview with Spotify General Counsel Horacio Gutierrez

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The Journal on Sports and Entertainment Law recently sat down with attorney Horacio Gutierrez, General Counsel of Spotify, to discuss current issues in music streaming law.  As Spotify’s top lawyer, Mr. Gutierrez is responsible for overseeing Spotify’s legal, compliance and regulatory affairs around the world, and serves as corporate secretary to its board of directors. Mr. Gutierrez received his LLM from Harvard Law School in 1991 as a Fulbright Scholar, a LL.B as from Universidad Católica Andres Bello in Caracas, Venezuela, and a JD from the University of Miami in 1998.

The interview was conducted by Loren Shokes (Class of 2017), the Executive Editor of Online Content and the Online Interview Editor for the Harvard Journal of Sports and Entertainment Law. The interview is part of JSEL’s interview series with lawyers in the entertainment and sports field that will be featured on JSEL’s website. It has been edited for clarity. 

 **Please note that, throughout this interview, Mr. Gutierrez was speaking in his capacity as an individual and a scholar, and not as a representative of Spotify**

Loren Shokes, Journal on Sports & Entertainment Law (JSEL): With over 100 million active users as of June 2016, Spotify is undoubtedly the titan of music streaming. Nonetheless, there is increasing competition from other streaming services such as Apple Music, Tidal, Pandora, and Amazon Music Unlimited. With that in mind, how has Spotify been working to ensure that it not only retains, but also expands, its customer base?

Horacio Gutierrez (HG): The only way a company like Spotify can get, and stay, ahead in the technology industry is through a combination of two key things: innovation—in technology, business model, as well as in other aspects the service that we provide our customers; and customers delight —we have to not only satisfy customers, but even surprise and delight them, by offering them experiences they don’t get in other services. The combination of those two things is the only way that we can be sure to remain a leading force for years to come.

JSEL: There have been increasing demands from artists, music executives, and record labels for Congress to enact mandatory minimums for streaming services as many view streaming service’s payment structures as unsustainable for musicians and labels alike. Spotify disclosed that it pays an average of $0.006 to $.0084 cents per song streamed and other streaming services pay both lower and higher rates for the same content. Do you think that mandatory minimums are necessary or should streaming companies be able to continue to set their own rates and payment structures?

 HG: It is not accurate to say that streaming companies set their own rates and structures. Rates are the result of negotiations with rights holders; record labels, publishers and the other players in the music industry. One of the things that inspired the creation of Spotify and is part of the DNA of the company from the day it launched (and remember the service was launched for the first time around 8 years ago) was addressing one of the biggest questions that everyone in the music industry had at the time—how would one tackle and combat online piracy in music? Spotify was determined from the very beginning to provide a fully licensed, legal alternative for online music consumption that people would prefer over piracy. If you look at what has happened since the launch of the Spotify service, we have been incredibly successful on that score. Figures coming out the music industry show that after 15 years of revenue losses in music industry, the music industry is once again growing thanks to music streaming.

Most people do not realize that over 70% of all the revenue Spotify generates goes back to the creative community that owns the right to the music content that we distribute through our service; artists, songwriters, record labels, publishers. That’s as it should be. Our success translates into the success of the music industry and vice-versa.

The key question going forward is if the growth is sustainable, and I believe it is. We have opportunities to continue to grow geographically, in terms of further penetration of the markets in which we already operate in, in terms of our ability to convert free users to our premium service, and in our ability to monetize other aspects of our service, including our free tier. If we can succeed doing that, we will all benefit. Everyone in the music industry benefits and the number of people who will be able to make a living, whether they are performers, songwriters, other artists, or people in the services associated with the music industry. The number of people who will be able to live off their craft and their creations will continue to increase. We see that as part of the mission. But in order to do that, we must have a profitable business. And therefore, while everyone should benefit, we also need to be able to fund the investments we are making on innovation from a technology perspective, and to fund our infrastructure and expansion into new markets. Striking a balance among those things is not a trivial thing; it is hard to do but we think, if anything, Spotify is an example that in fact that can be done in a fair and balanced way.

JSEL: There is more and more discussion that Spotify is planning to announce its IPO sometime in either late 2016 or early 2017. Although Spotify’s revenues have grown each year since its launch in 2006 and the company has a current valuation of approximately $8 billion, Spotify has reported a loss every year since 2009.  With that in mind, how can Spotify convince investors that its business model is not only sustainable but is also a worthwhile and profitable investment?

HG: I cannot comment on IPO plans or provide forward-looking financial information. We take the long view when it comes to these things. We’re making the investments now that are necessary for us to continue to grow as a business and remain a leader in the industry, and we will continue to do so in the future.

JSEL: In response to criticisms that Spotify underpays artists, Spotify claims that it has helped reduce piracy by migrating listeners away from piracy websites and less monetized platforms, to its free, ad-supported tier, thereby generating far greater royalties for labels and artists alike. Furthermore, once customers begin using Spotify’s free tier, the company tries to drive users to its premium subscription tier. Do you think that the criticisms against Spotify’s payout structure are unwarranted and that the counterargument that it has helped curb the piracy plague is sufficient?

HG: I think one just has to look at data to recognize that the freemium model for online music consumption works. Our free tier is a key to attracting users away from online piracy, and Spotify’s success is proof that the model works. We have data around the world that shows that it works, that in fact we are making inroads against piracy because we offer an ability for those users to have a better experience with higher quality content, variety richer catalogue, and a number of other user-minded features that make the experience much better for the user. As we continue to succeed in monetizing the free tier, and continue to do a good job of converting free users to paid subscribers in the way we have done so far, we have a proven formula and a formula that, once again, will benefit everyone in the industry.

JSEL: Prior to joining Spotify, you worked at Microsoft for 17 years and your last role at the technology conglomerate was General Counsel. Can you compare your duties and responsibilities as General Counsel for Microsoft to those in your role as General Counsel of the world’s largest music streaming service?

HG: There are some aspects of the day-to-day role that are very similar. Fundamentally, setting aside the difference in size and breadth of the respective businesses, Microsoft and Spotify are both technology companies. There’s a tremendous amount of software innovation that takes place in both places; both companies care deeply about understanding their users and using the insights generated from usage patters in order to have a closer understanding of its users and provide more value to them in the form of services. And that raises similar kinds of legal and regulatory questions that one has to deal with on a daily basis. There are issues about the protection of the privacy of the personal data of users; there are issues related to the regulatory environment from net neutrality to competition law to other telecommunication regulatory issues; clearly there are intellectual property and IP licensing related questions on both sides, even though in the case of Spotify it is more heavily focused on music and other content-related copyright. Spotify’s business, like Microsoft’s, is an intellectual property-based business in many significant ways. Being able to enter into licensing agreements with the key stakeholders is important for both companies. So in some respects it is very similar. In others, it is very different. Spotify is a company that has fewer than 3,000 employees. Microsoft has over 100,000 employees. The legal department at Microsoft is multiple times larger than the legal department at Spotify. That in and of itself is a reflection of stage of development of Spotify and the nature of its business as compared to a company that really is a conglomerate of several multi-billion dollar businesses like Microsoft is. So I am certainly enjoying the learning curve that I’m going through at Spotify, especially when it comes to the music copyright and music licensing space, but in other respects it’s just a continuation of a learning curve that had started at Microsoft.

JSEL: I read that you graduated from Universidad Católica Andrés Bello law school in Caracas, Venezuela in 1986, where you also obtained a Specialization in Corporate and Commercial Law, then received an LLM from Harvard Law School in 1991 as a Fulbright Scholar. And yet, despite having two law degrees, you pursued a J.D. from the University of Miami in 1998. When recollecting on your experience at UM, you explained that, “it wasn’t until I obtained my J.D. at UM that my career really took off.” Many of our readers are graduates of foreign law schools and either have, or are in the process of obtaining, an LLM from Harvard Law School and hope to practice law in the U.S. Can you explain why you felt that having a J.D. from an American law school helped your career.

HG: There was one very concrete reason why I needed to have it and then sort of a general reason why I think became helpful later on. It is unusual for someone who has basically three law degrees to decide to go to law school at night to get a fourth one the way I did it after working full time. At the time I lived in Florida, and Florida, like some other states in the US, required that in order to sit for the bar exam, one actually needs a JD from an ABA accredited university. I was already admitted in New York (I had taken the bar exam in New York after my LLM at Harvard and had passed and was a member of the New York bar) but was not, and could not, have become a member of the Florida bar had I not completed the Juris Doctorate program. So that was the more pressing, practical reason why I did it.

In hindsight, and even though it was a tremendous sacrifice from a personal and from a family perspective (I always tell people the story of how my second daughter was born the night of the property law exam and joke that I almost named her “Rule Against Perpetuities”) that in the end having gone through the JD program in addition to the LLM did two things for me. First, it gave me a deeper understanding of the common law system, in a way that the LLM program really did not provide. An LLM will give you depth in a focused field of law or will give you breadth in a variety of fields of law, depending on which approach you choose to take. I had chosen to focus on corporate law, corporate finance, and international finance in my LLM, but there were a number of other important subjects of law, in some ways the “building blocks” of the US legal system, which I did not have an opportunity to focus on during my one year LLM. So the JD did that for me—it gave me the ability to more deeply understand the US legal system and, in the process, do a comparative law exercise based on my previous experience in the civil law system. The other thing that it did was help remove any doubts in people’s minds, including potential employers, as to whether I was in fact fully qualified to practice law in the US. And regardless of the fact that I had been admitted to practice in New York and could have waived into the bars other jurisdictions in the United States, I think sometimes employers erroneously assume that a foreign law degree does not prepare you well enough to practice law in the United States.

JSEL: Through your various positions throughout your career as an attorney you have been exposed to both civil and common law jurisdictions. I read that when you began working for Microsoft you were as a commercial attorney for the Latin America region in Fort Lauderdale, you then transferred to Microsoft’s corporate headquarters in Redmond, Washington, then you were stationed in Paris as Associate General Counsel for Europe Middle East and Africa, and ultimately back to the company’s headquarters in Washington state where you worked as the Deputy General Counsel and finally as General Counsel. Moreover, while you were still enrolled at the University of Miami, you worked full time at the law firm Morgan Lewis LLP as an international consultant. Within the last 10 years, Spotify has expanded to over 50 countries on 5 continents, some of which are civil law countries and others are common law jurisdictions. How has your prior experience helped you in your position as General Counsel to manage the various types of legal issues that arise in the jurisdictions Spotify is based?

HG: Well just as the economy is now globalized, the practice of law has similar become global. And while no single person will be admitted to practice in every jurisdiction around the world, the reality is that in-house counsel must be prepared to navigate very disparate legal regimes in different parts of the world, including the very different cultural traditions and philosophical foundations of those different legal systems. So the experience I had, both prior to joining Microsoft as well as during my Microsoft tenure, was very international in nature. As we’ve discussed, I was trained and practiced as a lawyer in a civil law jurisdiction then I was trained and practiced as a lawyer in the United States. I led Microsoft’s legal department in Europe, the Middle East, and Africa region, and when I returned to Microsoft’s headquarters in Washington State my practice continued to have an international component. So I believe that the opportunity to have worked in those jurisdictions, to have visited there frequently, to have negotiated transactions and interacted with practitioners, regulators and policy makers around the world, has been key to my ability to take on the role that I am now performing at Spotify. As you said, Spotify is still in the process of expanding internationally, it is itself a very globally minded company, and if I had not had the kind of global breadth of the practice that I had before coming here, I might never had the opportunity to join Spotify as General Counsel.

JSEL: I read that you said that moving to Spotify “was just the right opportunity at the right time.” What enticed you to work for Spotify?

HG: You don’t leave a company like Microsoft, one that was so important to my professional and personal development, and you don’t leave people that you respect and admire as much as I admired my colleagues at Microsoft, unless you are passionate about the next opportunity you are pursuing. I had started at Microsoft basically an entry-level corporate attorney and over seventeen years I climbed all the way to the General Counsel position. It was a tough decision to make. The thing that really attracted me to Spotify is the fact that the nature of the business was such that it fit very well to the skillsets I had developed, in the areas of intellectual property and intellectual property licensing, which is such an important part of the business of Spotify from a content licensing perspective, but also all these other international legal issues including global regulatory issues. But it was also the excitement about the experience of joining a company that was still in its early stages of development. It is as if I had joined Microsoft in 1982, a couple years before it became a public company. The opportunity to be a contributor to the development and execution of the strategy as the company continues to grow and expand just proved irresistible to me—the opportunity to be part of a project like that and start not quite from the beginning but certainly at a time in which the company still had quite a bit of room to grow and to expand and to become more successful. However long I have left in my professional legal career, this was the way I wanted to spend that time.

JSEL: Can you tell me more about your career path?

HG: Life has a way of taking you to places and most of the time the path that you take is not a straight line between points A and B. You take a number of turns. I’ve always guided my career decisions in part by a sense of where my competence lies but also where my heart wants to take me. I need to feel excited about the opportunity ahead of me, I need to feel proud of a project that I am joining and that is the reason why I left private practice to join Microsoft in 1998, and the reason why over the 17+ years there I took a variety of roles that really stretched my skill set and challenged me to go through steep learning curves. And that is why when the opportunity to join Spotify presented itself I decided to take it. It was not a predictable outcome for a kid born in a province of Venezuela and who did not speak English. And I think if you try to lay plans as to where you are going to be 10, 15, 20 years down the road, it is very unlikely that you’re going to end at the place where you originally thought you were going to end up; you have to adjust your plans as you grow, mature, and as your interests and curiosity take you different places.

JSEL: What advice would you give law students interested in pursuing careers in technology and entertainment law and going in-house?

HG: The obvious part of that is there are a number of courses in the curriculum in law school that one can take. I don’t think I can overemphasize the importance of taking intellectual property classes as well as international law classes. If someone wants to go in house, particularly in a technology company, whether they are dealing with questions related to competition law or corporate issues, those intellectual property issues tend to be part and parcel of practice within the technology industry. Having a global focus is really critical for companies nowadays who have a global marketplace. Especially today, there’s a tremendous amount of focus on issues related to privacy, and other legal and regulatory aspects of the big data and machine learning and analytics, and all of the data sciences as they explode. Those are going to be the issues that technology companies will be dealing with in the future.

Interview with Rachel Barnett, General Counsel of Travelzoo

Interview with Rachel Barnett, General Counsel of Travelzoo

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The Journal on Sports and Entertainment Law recently sat down with attorney Rachel Barnett, General Counsel of Travelzoo Inc. (NASDAQ: TZOO), a global Internet media company and trusted publisher of travel, entertainment and local deals. Ms. Barnett runs the legal department and is responsible for all aspects of Travelzoo’s domestic and international legal affairs. As General Counsel, Ms. Barnett manages a wide-range of legal matters for the company, including, among other things, corporate governance, employment, intellectual property, corporate transactions, securities compliance and general litigation. Prior to joining Travelzoo in 2013, Ms. Barnett was a member of the Litigation department at Skadden, Arps, Slate, Meagher and Flom, LLP, where she specialized in representing corporations and their officers and directors in a variety of litigation matters including merger and acquisition litigation, shareholder derivative lawsuits and securities fraud class actions at both the trial court and appellate levels. She earned her juris doctor degree from Columbia Law School and a Bachelor of Science degree from Cornell University. Ms. Barnett clerked for the Honorable Vice Chancellor Stephen P. Lamb of the Delaware Court of Chancery.

In the Spring, Ms. Barnett co-teaches the course “Exploring the Role of the General Counsel” at Columbia Law School along with the General Counsel of LVMH Moët Hennessy Louis Vuitton Inc., Louise Firestone.

The interview was conducted by Loren Shokes (Class of 2017), the Executive Editor of Online Content and the Online Interview Editor for the Harvard Journal of Sports and Entertainment Law. The interview is part of JSEL’s interview series with lawyers in the entertainment and sports field that will be featured on JSEL’s website. It has been edited for clarity. 

**Please note that, throughout this interview, Ms. Barnett was speaking in her capacity as an individual and a scholar, and not as a representative of Travelzoo or any of Travelzoo’s affiliates**

Loren Shokes, Journal of Sports & Entertainment Law (JSEL): I read that as General Counsel you are responsible for all aspects of Travelzoo’s domestic and international legal affairs, which includes managing the company’s corporate governance, intellectual property, corporate transactions, securities compliance and general litigation. With such a wide range of responsibilities, do you ever use outside counsel, and if so, how do you decide when to do so?

Rachel Barnett (RB): As General Counsel of a global company, there are a variety of legal matters that surface in any given day. For example, I could be drafting an SEC filling one hour and then advising our Human Resources team on an employment matter the next. It is the range of responsibilities that makes the role of a global General Counsel both challenging and exciting. While I strive for efficiency and handle most matters in-house, there are times when the company needs advice from outside counsel who has expertise in a particular area. To that point, one important responsibility of the General Counsel is using good judgment in deciding when to retain outside counsel and when to handle the matter internally to save on costs. For example, if the legal question regards a matter that could expose the company to $2,500 in liability, it probably would not make sense to seek the assistance of outside counsel and be charged more than the matter is worth. However, if you are faced with a larger issue such as a bet-the-company litigation or an acquisition opportunity, it is prudent to seek outside legal assistance.

 JSEL: While there is no “typical day,” can you describe the kinds of tasks, duties, and responsibilities you have in a typical day or week?

RB: I agree with you that there is no typical day for an in-house lawyer. With that said, there are a number of tasks that an in-house lawyer faces on a daily basis, which often include such things as negotiating commercial arrangements, working with Human Resources on employment matters, advising on corporate governance issues, reviewing marketing materials, and overseeing intellectual property matters. When I speak with other in-house colleagues, we discuss our similarities in how the role requires us to maintain an ongoing checklist of tasks that are prioritized and then managed. Ultimately, I strive to provide advice that is practical, that fits within the business objectives of the company, and that can advance the business forward.

JSEL: I understand that you are Travelzoo’s first in-house counsel. What were some of the challenges and surprises of being able to establish Travelzoo’s in-house department? 

RB: When I started at Travelzoo a little more than three years ago, there was a lot to learn about the Company’s history, culture and operations. The Company was relying exclusively on outside counsel and legal expenses where higher than they needed to be. I believe it was good timing to have a General Counsel join the Company because, at that time, Travelzoo was in the process of expanding and developing new products, syndicating its travel content through multiple media platforms, developing a hotel booking platform, and broadening its operations globally. This provided me the opportunity to dive right in and provide legal assistance for these growing areas of the business. The initial challenges that I faced as the first in-house counsel revolved around building confidence and trust with employees so that they knew they could rely on me for advice. I wanted to establish myself as a business partner to my colleagues rather than a legal road block. I also made an effort to build a reputation of responsiveness so that the business could count on the legal department to respond timely when urgent matters arose.

 JSEL: Prior to joining Travelzoo, you first clerked for the Honorable Vice Chancellor Stephen P. Lamb of the Delaware Court of Chancery and then worked as an associate in Skadden, Arps, Slate, Meagher and Flom, LLP New York office. Can you discuss the transition from being a clerk to an associate at a top big law firm to in-house counsel? 

RB: I have been fortunate to sit side-by-side with some of the foremost legal experts and attorneys in the world. My experiences and the associated mentorship I received from these top legal professionals early in my career provided me a solid technical foundation to grow from. As a law clerk, I saw first-hand how corporate issues were litigated and resolved in the courts. A clerkship gives you a behind the scenes look at the judicial process. Vice Chancellor Lamb refined my critical thinking and pushed me to strive for writing perfection. Through the clerkship, I was able to develop a deep understanding of the practice of law in the Delaware courts. When I transitioned to Skadden, the first thing I had to learn was to become more of an advocate. I spent the year of my clerkship listening to both sides of the argument and approaching cases objectively. At Skadden and as a litigator, the focus was shifted to advocating for your clients and writing more persuasively. I became skilled in defending companies against shareholder lawsuits and counseling boards of directors on corporate governance matters. My move in-house allowed me to expand my legal knowledge, become more of a generalist, and dive deeper into the commercial aspects of a company. I was no longer advising on a technical legal issue or a one-time litigation exposure for a particular client as was often the case at Skadden. Rather, as General Counsel, I learned to think in a different, and more practical, way. I became strategic, studied the inner workings of the company and considered the overall business strategy and associated company objectives when providing legal advice.

JSEL: Along with Louise Firestone, the GC of LVMH, you taught the course Navigating the Challenges Faced By In-House Counsel during the Spring 2016 semester at Columbia Law School. What is the most important lesson you want students to take away from the course?

RB: I think many of the classic law school classes teach students about legal theory and how to spot issues and apply the appropriate law. The classes don’t necessarily teach you the practical side of commercial law such as how to write an email to the CEO, how to make sure the CFO is properly reserving in the company’s budget for legal matters or what in-house counsel (the client to the law firms) are thinking when deciding whether to retain outside counsel. The class that Louise and I designed at Columbia is meant to educate students on the practicalities that go on in the business world. The lessons we teach are based on real-life simulations that expose students to actual matters faced by in-house legal departments in Corporate America. The premise of the class is for students to run the legal department of a technology company as it successfully grows from a VC-funded enterprise and ultimately decides whether to IPO. By asking the students to envision themselves in the role of in-house counsel, we intend for the course to teach students how to exercise commercial judgment and to act decisively, all the while navigating a complex corporate environment.

What surprised me after we taught the class last Spring was how quickly the students absorbed the practical elements and were able to apply them in a simulation-based learning environment. I think more law classes should be developed that provide similar hands-on experiences since they are directly relevant to the actual practice of law and prepare students for real life experiences.

JSEL: From your own personal observations, what are some of the similarities and differences between your position as General Counsel of a travel company compared to Ms. Firestone, the General Counsel of LVMH? 

RB: When Louise and I met for lunch to brainstorm ideas for our course, we noticed that we shared similar experiences even though I worked at a travel company and she at a luxury goods company. You start to realize that there are categories of legal issues that arise no matter which industry you operate within. For the most part, legal departments in Corporate America advise on employment matters, handle IP matters, negotiate agreements, counsel the Board of Directors on corporate governance matters, work with regulators (although may be different regulators depending on the industry), oversee litigation and assist in mergers and acquisitions. It really comes down to the fact that a General Counsel is a legal generalist and acquires knowledge about the many different areas of law. I believe the skills you acquire as a General Counsel are transferable to other industries. You can learn a lot by comparing notes with other in-house counsel.

JSEL What drew you to join Travelzoo?

RB: The people. Travelzoo has an entrepreneurial culture that brings together a diverse group of global professionals who are excited, passionate, smart, creative and have a thirst for travel. While at Skadden, I worked on a variety of legal issues for Travelzoo and had first-hand experience with the company’s executive team and culture. I was confident when I joined Travelzoo that I would have the support from the leadership team, be empowered to develop the legal department, and be surrounded by a positive and challenging working environment. I also believe in the Travelzoo product and its mission to recommend the best travel deals to its members.

JSEL: What advice would you give law students interested in pursuing in-house careers? 

RB: I would recommend that law students who want to pursue in-house careers to first get deep, technical experience at a law firm. A firm will teach you the skills you need to analyze legal problems and advise the client. However, when you are at the law firm, make sure to get out from behind your desk and form relationships with others. Try not to spend every day in front of a computer during lunchtime. The work will get done – it always does, and the meeting or event you missed could have led to a life-changing relationship.