Archive for May, 2008

Preparing the Bar for an Innovation Economy

May 27th, 2008
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Daumier - The LawyersThe Hawaii Venture Capital Association meets on the third Thursday of each month for lunch at the Plaza Club, and this month was no exception.

Their program was entitled "What Entrepreneurs Seeking Funding Should Expect When Choosing A Lawyer". It was moderated by entrepreneurship luminary Rob Robinson. The panel was blue ribbon, and included attorneys Lori Hiraoka, Darren Nunn and Dick Sherman and entrepreneur David Watumull.

They talked about how to select attorneys to help you raise investment capital and how to deal with that attorney once you select them, and the discussion was helpful. But in my mind this raised another question - how these lawyers themselves can deal with the competition for Hawaii legal work from counsel on the mainland.

Knowing the business environment of Hawaii is undoubtedly an advantage in fund raising here. But many entrepreneurs of Hawaii companies don’t even look for counsel on Bishop Street. They go straight to the mainland on a knee jerk basis. From my observation, this is the case in many business areas, including but certainly not limited to areas involving investment capital and intellectual property.

I suppose there are a number of reasons for this, some real, some based on myth. Some clients believe mainland attorneys can read Hawaii law just as well as Hawaii lawyers – after all, the law of all American jurisdictions is freely available on the net. Some clients are not concerned with higher costs on the mainland on the notion that if it’s more expensive it must be better. And then there’s the mystique - some clients feel that if you’re a patent attorney and your office is across the street from the Patent Office, you must know something we don’t know in Hawaii.

Legally, yes the world is smaller and the mainland is closer now than it was before. So entrepreneurs are more comfortable in dealing with counsel on the mainland – what’s the difference between emailing across Bishop Street and emailing to San Francisco or New York? The long distance telephone call or fax is the same and costs the same. If you really feel you need to have a face to face, use a webcam.

And the lawyers on the mainland are increasingly bold in marketing away from their home states and all the way to Hawaii. They can contact and develop relations with local clients and prospects with very little effort and without opening an office here. The limitations on practicing law without a license do not pose the same barriers as they did before. Most mainland firms representing clients here feel free to advise those clients on Hawaii law and when they need a little local help, they’ll hire a local firm on local points but do all the heavy lifting themselves, from the mainland.

The natural progression is that the work available to the local bar is proportionately less than it was a decade or two ago, and promises to be still less going forward. But what are the underlying sea changes, for the clients, and for the local bar?

I suggest that if local clients do not use local counsel, the local bar will not be as robust as it has been during the years since Statehood. There will be fewer matters, fewer jobs, fewer lawyers and more generalists. Some people will say that’s a good thing, but it may rather be a downward spiral. There will be less incentive for local lawyers to develop specialization. Scary, since the law is more complex all the time.

If specialization is not available locally, more Hawaii businesses that need lawyers in those areas will have to get legal help from the mainland. Given the increased costs on the mainland, some, or many, of those local businesses simply won’t be able to afford the representation and the advice they need to thrive. Not a good thing.

What to do? I suppose we could encourage local clients to give preference to local lawyers, but remember this is a free market driven by business considerations. The akamai client will, and should, look for the best expertise he can find at any price he can afford, and geography is not an object. That usually translates into going to the mainland.

One approach that can address this phenomenon, and trend, is to affirmatively encourage local attorneys to greater specialization and greater expertise, so they can more effectively compete with counsel on the mainland. How do we do that?

The answer may come from our Law School. I am hoping, looking forward, to the possibility that the Law School, under Dean Avi Soifer, might include outreach programs to the downtown legal community. Programs that would go beyond traditional CLE (Continuing Legal Education) that would liberate lawyers to develop new or greater expertise to migrate their practices into the areas they like best.

In the old days, if you were a generalist and wanted to expert yourself, you would refuse all other work and put all your time into learning the new field. In the context of a law firm that has to make money, this could put your job at risk. With programs from the Law School, where law faculty come down to teach local lawyers new areas and specialties in downtown classes, that kind of learning would be much easier.

If I’m a real estate lawyer and I really want to be an investment capital lawyer, on the job training will probably not be available for me. I could learn this new area by candlelight, but that’s hard to do if you’re working every day. Wouldn’t it be great if I could learn it as in law school, from someone very knowledgeable and dedicated to opening that door for me and bringing me up to marketable competence. This would be a kindness not otherwise available to many lawyers in the community, and would improve their prospects, their careers and their professional quality of life.

So I’m hoping the Law School will do this, and that they will have an enthusiastic response from the bar. If you get a chance to support them on this, please do, not only for the educational ideal but also because over time this kind of program is likely to build greater expertise, greater legal infrastructure, and greater confidence by local clients in local lawyers. All good things for Hawaii.

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There's something beautiful in your storage room

May 24th, 2008
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90km Bikeway Network in Mexico CityWhen it came up, my Neighborhood Board voted down a resolution supporting cycling in Honolulu.  I couldn’t believe it.  Then, after an embarrassing discussion the resolution squeaked through by one vote. Kind of sad, don't you think.

What is it about bicycles that bothers people so much?  Years ago I recall a jury trial where the voir dire revealed early on that the panel did not think there was a place for cyclists on either the streets or sidewalks of Honolulu.  The injured cyclist settled at first opportunity.

In fairness, I would have to add that Frank Fasi built some marginal bike lanes on University Avenue and on Kalanianaole, but then lost interest and no mayor has done anything much since.  Tell me it isn’t so. 

In Fasi’s day, you could commute on Kapiolani or Beretania or even Ala Moana.  You could ride to Waimanalo or even to Waianae in reasonable safety.  Try that now.  They’d say you were crazy. And they’d be right. 

What is it that makes so many people reject cyclists and the use of bicycles as serious transportation.  They don’t use bicycles, they don’t give way for cyclists and in fact many of them want bicycles to go away, to disappear.  Some even shout epithets and run cyclists off the road. 

As far as I can see, the city doesn’t plan for cyclists in any way or do the slightest thing to encourage them or make room for them.  Au contraire, the city wants them off the road too.  Witness the recent contentions between HPD and groups of cyclists trying to popularize cycling. 

Beyond bad temper, isn’t this a huge squander of a perfect opportunity?  Aren’t we supposed to be a tropical outdoor sports paradise?  I guess not.  It’s not only my Neighborhood Board that’s conflicted about this issue.

If we had bikeways and bike lanes on the highways, thousands of people would ride bike.  They would have fun, they would be healthier, and they would enjoy life more.  They wouldn’t be on the freeway using fossil fuels.  But they’d get where they’re going, and given the traffic sometimes faster.

Cycling is certainly high tech, thrilling us with its leverage and near perfect efficiency, offering us the personal zen of bicycle maintenance.  What a fabulous statement to innovation – a machine that can take you anywhere, but requires no fuel or engine other than the human body. 

A couple of years ago the people voted for a charter amendment to make Honolulu more bike friendly.  A terrific idea, and well supported.  But not one thing has been done since then.  The amendment and the people were ignored and are being ignored on this issue.  Tell me I’m wrong.

Bikes - what could be a more obvious solution to so many issues, fossil fuel, traffic, public health and environment?  And what could be so easy.  We already have these magic carpets waiting in our garages and storage rooms.  All we need to do is pump them up and ride them.  Voila.

We could of course wait around in hopes the government will implement the charter amendment, but frankly that would be a miracle for which none of us can wait.  Instead, I’ll just suggest that everyone get out there and ride.  Ride, Sally, ride.  If we all do that, things will be better. 

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What do the Italians know that we don't

May 24th, 2008
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Nuclear Power PlantThe Italians are resuming nuclear power as a way to deal with the energy crisis.  They had given it up by referendum 20 years ago, but now they’re back, driven by the high price of fossil fuel, much higher there than here.  And they’re joined by a number of other countries in Europe, a dramatic sign of changing times.

How far behind are we?  How long will it be before the combination of recession, the loss of airline seats, the deterioration of our hospitality industry and the consumer inflation of escalating shipping costs, push our economy over the side, sending our citizens to live on the beach and our remaining progeny to live on the mainland.

What great ideas we have – biofuels, hydrogen, solar heat and light, geothermal, ocean thermal, ocean energy and wind.  All visionary but not yet really happening in Hawaii for so many reasons rooted in political diffusion and lack of public understanding about the realities and the options.  Progress is sporadic at best, despite universal rhetoric.

Talk is cheap.  There is no substitute for action and with the technologies of the 21st Century.  Yes, there are transformational things we can do.  There are ways we can implement working solutions in time for them to be useful.  Now, not 50 theoretical years from now.  Is there really a choice about this?

Section 8 of Article XI of our State Constitution (adopted after the 1978 Constitutional Convention) provides that “[n]o nuclear fission power plant shall be constructed or radioactive material disposed of in the State without the prior approval by a two-thirds vote in each house of the legislature.”  One way or the other, this can be changed.

France has used nuclear power for some time.  If Italy as well as Holland, Belgium, Sweden, Germany and Bulgaria for that matter, can find a way to implement nuclear power, we might want to consider it too.  First step, then, all we need to do is strike that provision and get about the business of building a plant.  If they can do it, so can we.

Challenges could be daunting, including environmental resistance (perhaps we’d prefer fossil fuels and climate change), safety (“fourth-generation” nuclear plant technology is designed to be safer and minimize waste), NIMBY and the need for a margin of land around the plant (location, location, location and maybe a little condemnation too), costs (wouldn’t this be more important to us than a limited rail system), the risk of terrorism (as in Europe, one has to balance this against a lack of energy security), and so on.  We can get there from here, and perhaps we must.

In the end, oil is going to get more expensive at a faster rate than the conventional new energy technologies get ironed out, sorted out and scaled up.  Unless we do something, the lights and the economy could in fact go out.  Nuclear energy must be considered, not after the fact, but now, as we proceed, hopefully, to a Constitutional Convention. 

I’m going to be covering this subject in greater detail in my column in the Sunday Business Section in the next few weeks, so stay tuned.

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The Sad Tale of the Ehime Maru - Seven Years After the Mast

May 19th, 2008
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Scott Waddle in 2001Navy commander Scott Waddle went to mast, i.e., he received non-judicial punishment, on April 24, 2001, just seven years ago.  If you remember, Waddle was the commanding officer of the Nuclear Submarine Greeneville, a Los Angeles Class Fast Attack submarine out of Pearl Harbor, which sunk the Ehime Maru, a Japan high school training ship, off Waikiki, killing nine on board, including four high school students.

The collision took place on February 9th, 2001.  Somehow, it touched all the icons, Japan, Waikiki and Pearl Harbor.  It made us look at the Navy and the relationship of Hawaii and the U.S. with Japan.  It made us examine the “apology practice” - when Scott Waddle apologized people wondered if it was sincere, so he apologized again, and after a while some people felt he was getting closer to sincerity.

The Navy Court of inquiry, which I covered for PBS, was high ranking.  It was designed to respond to pubic opinion and concerns about why an American nuclear submarine could be so clueless as to sink a surface vessel off Waikiki.  Isn't our technology better than that?  Didn't we have the systems that could have avoided that?  Is the nuclear Navy as good as we thought?  For some people, it was a turning point on that question.

The biggest issue was the Distinguished Visitor ("DV") program. Some fourteen DV's were on board that day.  The trip off Waikiki was a grandstand for them, organized on short notice and at the behest of someone big in Washington. In fact, many of the crew were off the vessel in class that day, leaving the vessel shorthanded in the sonar department.

At the moment of truth, the DV's were crammed into the tiny control room, effectively obstructing the crew.  A Fire Control Technician (First Class Petty Officer Seacrest) had been tracking the Ehime Maru.  Scott Waddle was grandstanding for the DV's - he took the periscope, and in so doing took the "con" from the officer of the deck, and he swept the horizon only once (twice would have been better) at a depth that wasn't clear of the waves.

He didn't see the Ehime Maru, even though it was certainly there.  He announced that there were "no close contacts".  He ordered the submarine to dive and then come up in an "emergency ballast blow" calculated to impress the DVs.  Impressive, yes, but the Greeneville came up right under the Ehime Maru at breakneck speed and sank her immediately.

Waddle said as commanding officer he "accepted" responsibility for what had happened.  But in his testimony, he laid the blame on a number of his crew, saying they had let him down.  Seacrest, of course, could have warned him, but was intimidated by all those DV's.  Was he to disagree with the captain in front of all those DV's? Instead of contradicting the captain, Seacrest just reset the fire control system and took the Ehime Maru off the screen.  The tragedy then followed.

Amidst cries for court martial, Admiral Thomas Fargo (now himself retired and CEO of the Hawaii Superferry) let Waddle off with a rap on the knuckles.  The net effect of it was only that Waddle was forced to retire, and retire he did, with full pay and benefits and then the royalties he earned from the book he wrote to justify his actions and bemoan his travails following the incident.

Today he's a professional speaker and gets as much as $15,000 for speaking engagements on the subject - see http://www.speakersrus.com/espeakers/5150/ScottWaddle.html?gclid=CJOY4pqNs5MCFScuagodcSGVog and http://www.goldstars.com/speakers/waddle_scott.html.

How did Scott Waddle avoid the general court martial that the New York Times and so many others had called for?  I think he got off because, through his attorney Charlie Gittens, he made the Navy believe that if a court martial were ordered, the DV program itself would go on trial.  The Navy didn't want to take that chance, and the rest of course is history.

The bottom line for many people is that Scott Waddle did not meet the standards of the Navy in his command or in the inquiry.  Many people feel that justice was never done.  But the DV program goes on, Scott Waddle draws his retirement and his royalties, and the incident has slid under the waves along with its victims.  All we can say now on the seventh anniversary of his mast is that he was lucky to walk away.  Nine others weren't so lucky.

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Reaching out to the Frontiers of Solar Power

May 13th, 2008
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sopogy.com - the website for Sopogy

Darren Kimura - an amazing young man, who keeps going and going with local style and global courage.

He founded Sopogy, an alternative energy company, only a few years ago, and it has been going gangbusters ever since. You need to know about it, so you probably want to check out its site, sopogy.com.

Not only has Darren developed innovative use of his favorite solar collection technology, which will have a great place at the energy table in years to come, but he's ridden the very crest of the energy wave in Hawaii and for that matter set up a number of offices on the mainland and in Asia too, one after the other, easy as falling off a log.

Leadership is so important, and in him so recognizable. In the clever concepts he's used to build his company, develop and leverage his IP, design his corporate culture, and light up his staff (now 40). And in his early pay-back to the community. He sits on the Energy Policy Forum and the Innovation Council with people twice his age.

It gets better. Darren has extended himself to the national energy industry as an advocate for federal policy. He threw himself in with a group of energy companies working to extend solar tax credits in Congress. They tried to beat a veto by George Bush (based on big oil) with a filibuster strategy, but it failed for one vote (John McCain). The bill was then vetoed, and for now there is no extension of the credit. Thank you, Mr. President, but this doesn't bode well for alternative energy when oil has already gone north of $125.

Undaunted, Darren trundled off to Europe, where there's lots of solar power in the sunbelt, all the way from Portugal to the underbelly, as well as greater access to the grid and better development incentives. In no time at all, he cold-called his way into deals with an impressive array of European strategic partners, and set up a network of sales offices, and voila, he is selling his technology all over the Continent. Go Darren!

 He does all this unhesitatingly, and with panache, as if he was born for every step of it. It's all about making friends and building relationships, he says. Meanwhile, here's a 30-something Hilo boy who took a BA from Manoa and studied Electrical Engineering at Portland State University, and who now has an empire on which the sun only sets once in a while, ranging from Asia to Hawaii to the mainland to Europe. And who does in fact refreshingly want to help the world on the way to his IPO.

At home, Sopogy is building a "power plant" at NELHA, the first of its kind in Hawaii, with acres of Darren's solar collection devices pumping megawatts out to the grid without using a drop of fossil fuel. This plant should be operating in the next few months. It will be a magnificent showing of Sopogy's prowess and clear proof of concept for Hawaii's energy future. Hopefully, Hawaii will recognize the concept and the company, and hold on to both.

I interviewed Darren on these things this past week, and took great video of his comments. When I'm done editing that video, I'll post a part of it on my Advertiser video blog, and the whole of it on Olelo and ThinkTechHawaii.com, so stay tuned to hear more about Darren and about Sopogy.

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