Dallas Mavericks owner and TV star Mark Cuban is worth billions of dollars, so it made sense when he hired Texas attorney Tom Melsheimer—described by D magazine as “a man Tom Wolfe might have dubbed a Master of the Universe”—to represent him for several legal matters, including his 2013 insider trading case. Last week, Melsheimer, a principal in Fish & Richardson, reflected on this experience during the Antitrust and Business Section’s panel “Inside the Insider Trading Trial of Mark Cuban,” held at the State Bar of Texas 2015 Annual Meeting in San Antonio. Melsheimer dished advice on representing high-profile clients, tips on how to run an effective trial, and several funny Mark Cuban-isms.
From 2004 until the end of the trial in October 2013, the U.S. Securities and Exchange Commission accused Cuban of insider trading when he sold his stock in Mamma.com after learning that the company would soon be privately offering shares. They based this on testimony from the company’s CEO, who said that he had a phone conversation with Cuban in which he told Cuban of the plan and Cuban responded with “I can’t sell,” in reference to his having insider information.
“Mark Cuban is somewhat of a polarizing figure—down here in San Antonio maybe even more so,” Melsheimer said in reference to the long-standing rivalry between the Mavericks and the San Antonio Spurs. He also noted that Cuban has a big personality and stubbornness seen with many powerful CEOs. Cuban’s on-edge behavior came out before, during, and after the trial, which Melsheimer noted was funny because he would later learn that Cuban has three-quarters of his money in tax-free municipal bonds. “He’s an incredibly conservative investor and not a brash risk-taker,” Melsheimer said.
Melsheimer and his team didn’t begin representing Cuban on this matter until six months before the case went to trial—which was after Cuban had given somewhat harmful preliminary depositions to the SEC. Even once Melsheimer was on board, he said, Cuban continued to exhibit behavior and language that wasn’t particularly good for his image, and he seemed to—at least initially—not fully grasp the weight of the situation.
“We hear from clients a lot that they didn’t take something seriously,” Melsheimer said. “If [Cuban] had taken it seriously, the trial might not have been brought. His defense was initially, ‘I don’t remember this, so it doesn’t matter.’”
Melsheimer’s first tip for attorneys was to prioritize advising clients on how to proceed—from what they say in depositions and interviews to their body language and attitude to the trial in general. Cuban had been interviewed by the SEC without a lawyer present and had answered many of the preliminary questions with “I don’t know” in addition to other missteps like telling an investigator he was handsome and asking if he could answer an important question with an analogy. By the time Melsheimer’s team came on board, they were stuck with these comments. “That’s just not credible—especially to answer the question of ‘Are you lying?’ We were very worried that this was going to be the Mark Cuban that showed up at the trial.”
Once voir dire began, Melsheimer’s expectations for the trial continued to be cautious. When asking potential jurors what one word came to mind when thinking of Mark Cuban, he got responses like “arrogant,” “brutal,” “abrasive,” “crazy,” “pompous,” and “careless.” “This was not an encouraging set of data,” he said. But at the panel, Melsheimer encouraged attorneys to use voir dire to ask the hard questions—even those relating to a client’s bad reputation and his or her wealth—and to question your own assumptions even if the feedback is hard to swallow. “Get it out there, get people talking. That’s what voir dire is about. It’s not about selling your case.”
Melsheimer also recommended having “an open and provocative mock trial to get to the heart of weaknesses” in the case and to study jury research. Once his team had finished its mock trial of the Cuban case, they were delighted—although somewhat skeptical—to learn that not one of 35 mock jurors would go for the SEC’s case. “We realized that the image of Mark Cuban had changed over the years,” Melsheimer said. “Most people today know Mark Cuban for one reason—and it’s not basketball. It’s all Shark Tank.”
Once the trial got underway, Melsheimer offered to fly the former Mamma.com CEO to Dallas for the trial because he knew that the French Canadian’s persona would not sit well with the group of Texan jurors. Most of all, he focused on preparing Cuban for his cross-examination by SEC attorneys. In fact, Melsheimer recommended to the panel attendees that they spend five times more effort on this than on preparing clients for their witness testimony. They had people preparing Cuban for hours, he said, sometimes until late in the night when he was fatigued, and they encouraged Cuban to smile on the witness stand and present his whole person. Melsheimer noted that this was particularly effective in comparison with the SEC’s focus on one day from many years ago and its failure to examine who Mark Cuban was.
When Cuban and his counsel were waiting for the jury verdict, Melsheimer caught the billionaire jotting down notes for what he’d say in his speech when they won. Melsheimer made him stop, saying, “You’re going to violate every trial lawyer’s superstition if you do that.” But then once they did win, Cuban went on a 10-minute unscripted rant to reporters in front of the courthouse. While this wasn’t ideal, Melsheimer said, it helped him realize that even clients in big cases have their emotions involved and reputations at stake.
“They take it personally,” he said. “They do lose sleep over it. It’s easy to lose sight of that with Mark because he’s so successful—he’s on Shark Tank, he’s at basketball games. We do our clients a disservice by losing sight of the personal side to it. He told me that the reason why he went through this whole thing [when he could have settled for much less than his reported $20 million attorneys’ fees] was because he didn’t want his kids to look him up in Wikipedia and read an entry about Mark Cuban’s fraud.”