Usually you need to at least graduate from law school before multimillionaires come knocking for legal advice, but a fierce court battle for control of a privately held New York company prompted its CEO to conduct an unusual experiment: offering $100,000 in scholarship prizes to law students submitting the best defense of his position.
Suffolk’s own Catherine Dowie won a $25,000 prize in the Philip Shawe Scholarship Competition, tying for second place in a pool of 240 applicants who submitted briefs to the crowdsourcing contest.
Transperfect and deadlock
Contestants had a straightforward but intimidating assignment: Prepare a compelling legal brief in favor of reversing the 2015 court-ordered sale of Transperfect, a profitable, privately held translation services outfit based in New York.
The 25-year-old company, originally founded in an NYU dorm room, has since grown to bring in over half-a-billion dollars in revenue each year, with offices open in cities all over the world.
Founders and Co-CEOs Phil Shawe and Liz Elting, once engaged to be married, ended their romantic relationship in 1997. Fifteen years later, Elting turned to the courts to explore what options she might have to sell off her 50 percent ownership stake in the company, prompting a series of legal challenges from Shawe, who opposes the forced sale of his shares to facilitate a higher price for hers.
The controversy ultimately lead to a 2015 Delaware Chancery Court ruling that found the owners were legally “deadlocked” and ordered their stock to be sold at auction--a ruling normally reserved for companies facing bankruptcy or whose sale might otherwise serve a compelling public interest.
But Transperfect is not only profitable -- it’s slated to continue growing. And that fact has brought much attention to the case.
Dowie’s argument focused on what the fourth-year evening student called “a lack of a sufficient public purpose.” She contends that without such a public purpose, the ruling is unconstitutional, creating a scenario in which the government deprives an individual of beneficial use of his property without just compensation.
“If you look at the benefits that the chancery court identified, they are primarily about reputational harm to Transperfect, the fact that they’ve been deadlocked and could potentially be more profitable if they weren’t,” she said. “That doesn’t impact the economy. It doesn’t impact the industry. Generally, it really only impacts the shareholders and, potentially, the employees at Transperfect.”
She contends that if there isn’t a public benefit, the chancery cannot reasonably justify forcing a sale over the objections of the shareholders. Judges in these situations often appoint a conservator to work with the shareholders and the board to resolve the ongoing issues, she said, calling the order “unprecedented.”
Professor and media commentator Alan Dershowitz, who represents Shawe’s family in the appeal, raised similar objections when arguing in the Delaware State Supreme Court, though justices did not allow him to employ that argument in his appeal, noting it was not part of the original argument brought before the lower court. Shawe is appealing the case to the U.S. Supreme Court.
A star-studded affair
The scholarship competition was full of big names, pulled not only from the world of law, but also from sports and pop culture: A team of informal judges included Dershowitz and Melvin Schweitzer, a retired New York Supreme Court justice who presided over hearings related to the real-life case.
New York Giants Jason Pierre-Paul and Bradley Wing also were on hand, with Snoop Dogg himself making a surprise appearance to entertain attendees.
Originally, the contest’s prize structure offered a $65,000 scholarship to the winner, $25,000 to second place, and $10,000 for third. After reviewing students’ work, however, the judges decided to instead award two second-place prizes.
The cost seems substantial, but, as Dowie notes, you could argue that the event was a cost-effective way of mining the talent of bright young legal minds. Or, as Dershowitz reportedly put it when speaking to students at the contest: "Why would any client hire an expensive law firm that charges $1,500 an hour to write a brief when it can have a contest and get better briefs from students? Phil -- you got this stuff on the cheap.”
A Suffolk Law School foundation
Dowie credited close work with Suffolk Law professors and her practical learning opportunities on campus for preparing her for the competition, including her first-year judicial internship with the Massachusetts Appeals Court and the school’s Supreme Court Clinic last spring —a program which, fittingly enough, focused largely on legal writing and research related to amicus briefs in real-life appellate cases. Her time on the National Moot Court team also prepared her well for inquiries from “aggressive judges,” she said. Suffolk Law’s trial advocacy program is ranked 16th in the country by U.S. News & World Report.