TransPerfect

TransPerfect Translations is a translation, E-Discovery and language services company based in New York City. The company serves clients in many fields, such as film, gaming, legal and healthcare fields.[3][4] As of 2012, TransPerfect is "the largest privately owned language services provider, with offices in over 100 cities worldwide" and more than 6,000 employees.[5][6][7]

TransPerfect
TypePrivate
IndustryTranslation
FoundedNew York, New York, United States (1992 (1992))
Headquarters
New York City
,
United States
Area served
Worldwide
Key people
Phil Shawe, President and CEO
RevenueUS$705,000,000 (2018)[1]
Number of employees
6,000 (2020)[2]
Divisions
Websitewww.transperfect.com

History

TransPerfect's founders Elizabeth Elting and Phil Shawe met in a New York University (NYU) dormitory room and founded the company in 1992. With no external financing, TransPerfect grew from a two-person dormitory-based operation into one of the 125 largest privately held companies in the New York area.[8]

In 1998 the firm began expanding worldwide. In 1999, TransPerfect established a technology division, launching Translations.com with several million dollars in outside investment to meet the demand for software and website translations.[9] In 2004, they bought out their investors and merged TransPerfect and Translations.com.[9]

The company grew using primarily live translation services from multilingual people all over the world. In 2003, TransPerfect acquired Wordfast, which was initially developed as a platform-independent translation memory software. While TransPerfect used the Wordfast product under license,[10] it remained a wholly separate entity that is operated by the software’s founder Yves Champollion.[11]

As its revenues grew to nearly $65 million in 2005, the firm continued making key acquisitions. TransPerfect acquired Crimson Language Services, a Boston-based medical and other highly-regulated industries translation company.[12]

Adding to its business, TransPerfect acquired Digital Reef in 2012 and entered the electronic discovery business.[13]

In 2013, the company acquired Vasont Systems, a component content management system that helps companies publish multilingual technical documentation, product manuals, and other business information.[14]

From 2015-2018, TransPerfect was involved in a legal dispute between its founders.[15][16] It closed 2016 with sales at $546 million and its sales for the full year 2017 totaled $614.8m.[17] Two months after the conclusion of three-year lawsuit that ended with Shawe becoming the sole owner, the company posted its most successful month's revenues in June 2018, at $62 million.[18] It posted $337 million for the first half of 2018, which was up nearly 20% from 2017.[19]

In 2019 the company made acquisitions of media localization companies in the areas gaming and streaming services, and opened a new 900-seat facility in Arizona.[20][21][22] In December, Shawe signed a six year agreement with the Nashville Music City Bowl for the naming rights to the college football game.[5][23]

Founders Dispute

Following an apparent difficulty in communications between one another, Elting considered her options regarding her 50% ownership of the company. Among the issues she was concerned with was the value of her 50% ownership share.[24] Elting sought relief from the legal system. Shawe saw that as an attempt by Elting to use the courts to help her negotiate an exit policy.[25] In 2014, Elting sought to remove Shawe as an officer of TransPerfect Translations International, Inc. (TPI). Elting sought an injunction barring Shawe from conducting any managerial activity related to TransPerfect and sought the dissolution of TransPerfect, alleging that Shawe had engaged in "erratic and abusive behavior".[26][27] New York State Supreme Court Justice Melvin Schweitzer dismissed the case, suggesting the two needed to work it out privately and not seek remedy from a court.[28]

Forced Sale

The suit was then taken to the Delaware Chancery where Elting reissued her complaint, and Shawe alleged that Elting had breached her fiduciary duties by not moving ahead with certain business-related opportunities, such as leases, acquisitions, and diverting funds for her own personal use.[29] In August 2015, The Chancellor of the Delaware Chancery Court, Andre Bouchard, decided to have a third-party sell the shares of the company in a public auction.[30]

Former New York Mayor Rudolph Giuliani chimed in and suggested that the court decision in Delaware would harm Delaware's status as a popular business incorporation state.[31][32] NY Justice Schweitzer also publicly commented on the case in Delaware, saying, "I was kind of shocked at how extreme the result was... The company is still doing phenomenally well and I thought there were steps that should have been taken short of ordering a sale. That's what I would have done if I still had the case."[33]

The argument against the Chancellor has been the misapplication of Delaware General Corporation Law,[34] clause 226 that authorizes the sale of a company when it faces financial default and other catastrophic issues. Here, as the company has only proven to do even better each year, even during this lawsuit period.[35] The defendants have argued that the company has not suffered and that the only remedy is the appointment of tie-breaking board member to help move issues along.[36] Following Bouchard's decision, Shawe sought an appeal of the ruling and the oral argument was held on January 18, 2017.[37]

For the appeal, Professor Alan Dershowitz argued for Shirley Shawe, a 1% owner in the company.[38] Dershowitz argued that Chancellor Bouchard's decision was tantamount to an illegal constitutional taking.[38] Delaware Chief justice Leo Strine argued back to Dershowitz that he had no right to bring that up since it was not in the initial case, and the two argued over the law.[39] The appeal affirmed Bouchard's decision.[40] Shawe and Dershowitz then suggested that they will petition the U.S. Supreme Court for certiorari.[41] In March 2017, Shirley Shawe announced that she would attempt to break the manufactured corporate deadlock to end the legal case and stop the court imposed sale,[42] and laid out a plan to vote her single share with Elting's 50%, giving Elting control to appoint five board members with staggered terms, making it mathematically improbable for deadlock to ensue.[43][44] Elting's team rejected that offer, advising that there was already a sale order in place.[45][46] On June 2, 2017, the Delaware Chancellor heard the case of Shirley Shawe's proposal to grant the votes of her 1% to Elting to cede control, and simultaneously heard the motion by Elting to sanction Mrs. Shawe for trying to settle the case without the public sale.[47] Bouchard appeared unsettled by the amount of media that this case has garnered,[48][49] and stated that this case should settle out of court.[47] During the hearing, he challenged Elting asking her why she would not accept control of the company as she has stated she wanted during the initial case and the appeal,[50] and her attorney intervened and stated that she would not run a company where Philip Shawe owned 49%.[50][51]

Judge Bouchard chose to order mediation while still pursuing the public sale order.,[50][51][47] and stated that he had appointed former Chancellor Bill Chandler to mediate, and would not rule on either motion for at least 30 days.[51]

After the final round of bidding for the company on November 10 passed, late in the evening on November 14, 2017, Delaware State Senator Colin Bonini wrote an email to Chancellor Andre Bouchard asking to be permitted to oversee the review of bids. Bonini cited questions of "conflicts that would make the auction process appear 'rigged or invalid,'" dealing with Credit Suisse, the investment bank running the TransPerfect auction, and the law firm Skadden Arps, and one of the bidders that was allegedly intertwined with both.[52] Bouchard notified the parties that he would not take any action on the letter, but entered it into the public record; several media then reported the letter and the allegations.[53]

With more than two years of litigation and legal questions over whether a court can order the auction of a successful private company that is not in distress or bankruptcy,[54] the court appointed custodian, Robert Pincus, a partner at Skadden Arps, announced in a November 20, 2017 email to the employees of the company, that Philip Shawe was the successful bidder in the public auction, and that he was in final talks to bring this matter to an end.[55]

Billing Disputes

The company has since been contending that Pincus has continued to submit legal bills more than one year after his role ended in 2018, and attorneys for the company are seeking to have the legal bills itemized and explained, which Bouchard has continuously denied.[56][57]

On July 10, 2019, one last issue of TransPerfect was raised before the Chancery court. Elting sued one more time for legal bills that she claimed were owed to her by the company under her indemnification clause, while the company maintained that it paid what was due and that these expenses fell outside of the agreement. [58]

Another set of legal disputes rising from issues related to the protracted sale order case in Delaware, TransPerfect and Shawe had claimed that Skadden Arps had been billing excessively for work it would not explain, and the Chancellor granted the law firm's fee requests without Transperfect having an opportunity to review it.[59] Chancellor Bouchard had sided with the law firm and continued to permit it to submit invoices for unspecified work.[60] Shawe contended that the invoices be itemized and made public, but the Chancellor agreed with Skadden that by requiring a law firm to disclose what it was billing in a public forum could harm the ability for companies registered in Delaware to protect its interests.[61] The Chancellor agreed and mandated that the invoices must remain hidden, but lawyers for Shawe and TransPerfect could view limited details and then, within a certain time frame, submit disputes to items it takes issue with. As a result, Skadden Arps has included in its billing to TransPerfect, charges to defend its interests against Shawe's requests to see itemized invoices.[62][63]

Employee group forms to protect company

Included in this case has been a campaign waged by a group that calls itself Citizens for a Pro-Business Delaware[64] to lobby the legislature to change the chancery rules regarding the forced sale of a private, well performing company.[65] The group claims over 1200 members.[66] "Citizens " built a website, has run television commercials,[67] taken billboard and newspaper ads, petitioned elected leaders[68] and held press conferences to press the issue of their concern for the jobs that may be lost[66] and the impact this decision would have on Delaware's ability to continue attracting new companies to incorporate in the state.[69]

There have been charges of unethical actions by Elting's law firm Kramer Levin Naftalis & Frankel,[70] which was sanctioned by the Chancery Court for "repeatedly instruct[ing] a witness not to answer questions.[71]

A defamation suit was filed by Shirley Shawe against Kramer Levin, claiming that its lead attorney on the case “crossed the line” by making false statements in connection with the Delaware sale case that “were intended to damage Shawe’s business and personal reputation,” while talking to a reporter about the case.[72] Citing that same interview, attorney Philip Kaufman was also accused of contradicting himself when he argued before the appeal court from what he claimed to the reporter.[73] Ms. Shawe ran a series of TV ads highlighting the varying sets of comments made by Kaufman and the video was posted to YouTube.[74]

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