May is normally a slow month for BigLaw. There’s generally no recruiting going on, as firms prepare for summer associates’ arrivals.
The highlight is Memorial Day weekend, which kicks off the start of summer and ends a long drought of holidays. Partners start thinking about readying their summer retreats over the long weekend.
It’s also a pretty tame time of year for most clients. It’s the middle of the second quarter, and there aren’t a whole lot of seasonal businesses that spike during the period. Annual reports and proxy statements have gone out, and most companies have held their annual shareholder meetings.
This is as close as it gets to “routine.”
For BigLaw, routine means malpractice allegations, billion-dollar deals, bailing out Superman, and acting like lawyers are trained to run businesses.
Details after the jump.
As we wrote last week, malpractice claims follow firms’ payment suits like night follows day, but sometimes malpractice suits spring up on their own, too.
Disappointed clients often lash out against their lawyers, and there’s not a lot firms can do. Greenberg Traurig successfully defended itself against a $10 million suit by former clients who claimed the firm had allowed patents to lapse.
Hopefully they’ll do as well in an even more-frightening suit. If there’s one case we should all be keeping an eye on, it’s the one Greenberg is facing from 2,000 investors who claim to have lost $900 million in a Ponzi scheme allegedly run by Mortgages, Ltd. The plaintiffs are trying to get over the high hurdle protecting firms under “Stoneridge,” and this case could lower that bar.
Malpractice suits aren’t exclusively a function of the US legal system, either. Linklaters is facing a $55 million claim in London from former client Levicom.
It’s not always the firms as an entity that get in trouble. Individual lawyers have their own share of problems. Last week, disciplinary authorities recommended suspension for a former Holland & Knight lawyer who was moonlighting.
At least he had several years to practice. Legal Profession Blog also drew our attention to some dummies who didn’t listen to the bar-exam proctor and were denied admission as a result.
As Hiring Partner cautions, be careful who you’re dealing with.
For all its faults, there’s one thing BigLaw has cornered the market on: documenting the biggest deals. Some of the billion-dollar-plus (or otherwise interesting) deals from the past week:
- SAP acquisition of Sybase ($5.8 billion) – Jones Day for SAP, Shearman for Sybase. While teams from the firms’ California offices handled the deal, it’s yet another example of New York firms (in Shearman’s case) continuing to steal tech deals away from California firms. (See Davis Polk getting the Palm work for an even more-recent example)
- Vale sale of aluminium assets to Norsk Hydro ($4.9 billion) – Allen & Overy for Vale, Latham & Watkins for Norsk Hydro.
- Vale investment in BSG Resources ($2.5 billion) – Clifford Chance for Vale, Skadden for BSG.
- PZU IPO ($2.7 billion) – IPOs of this size are rare in the US, and this Polish insurer’s was that country’s largest ever. Not surprisingly, it took plenty of legal assistance. Dewey & LeBoeuf represented the issuer, K&L Gates represented the Polish Treasury in its participation as a selling shareholder, White & Case represented Eureko (another selling shareholder), and Weil Gotshal represented the underwriters.
The Vale deals are interesting for a couple of reasons. It’s extremely difficult for most companies to handle two transactions like this in such a short time. Most inhouse corporate development teams just don’t have the capacity. The only way these can be done is if there won’t be any integration issues; these must be mostly passive investments (and the BSG deal clearly is). It’s also interesting that Vale didn’t use the same firm on both deals. Also, Latham got a nice double dip – they’re doing both the acquisition and a $1.6 billion offering to finance the cash portion.
Most suits never actually result in billion-dollar payments (trillion-dollar complaints seem more common), so we cast a wider net to find samples of BigLaw’s most-interesting work being handled by the firms’ litigators.
Superhero involvement usually catches our eye. But when a big firm is accused of “gutter tactics,” it’s clear we’ve got to dig in. O’Melveny & Myers was brought in to salvage Warner Bros.’ interest in the Superman franchise, and the Dan Petrocelli-led team promptly dove deep into the muck, suing the plaintiffs’ lawyer, which set off a nice back-and-forth of namecalling.
iPhones aren’t as cool as superheroes, but Apple inspires almost as much loyalty as the Justice League of America. The company also attracts lots of legal attention (and can’t keep its GCs around for very long). The firm recently retained Kirkland & Ellis to bring suits against HTC over multitouch and some other technologies. HTC responded this week by filing complaints of its own, penned by Finnegan Henderson and Keker & Van Nest. Our favorite part of these developments is that HTC is basing its claims on five patents, three of which it just acquired last year in a settlement with a troll, and another issued just last week.
Investment banks aren’t cool at all, but they spin off plenty of work. That pace is going to pick up fast, and not in a good way. Goldman Sachs is already out rounding up scores of lawyers, and it looks like more banks will be doing the same. The WSJ is reporting that federal prosecutors and securities regulators are going to be stepping up investigations into “whether pretty much the rest of Wall Street misled investors about their roles in mortgage-bond deals.”
Comings & Goings
May is also often a relatively quiet month for laterals, but there was one move that was particularly interesting due in no small part to its quietness. Bankruptcy partner Ken Ziman moved from Simpson Thacher (whence few lawyers come anyway) to Skadden to get some more debtor-side work. Neither firm issued a press release – unlike the vast majority of firms, which tout their acquisitions to anyone who will listen.
Another interesting move was Quinn Emanuel’s hiring of Alex Gerbi from Olswang. The California-based, litigation-only shop is aggressively beefing up its London practice.
Howrey, meanwhile, is starting to get a taste of the stupidity of its announcement that it was letting partners go. Not only are they needlessly harming public perception about the circumstances of partners’ departures, but they also appear to have opened the gates a bit as people the firm obviously would have wanted to retain are also leaving. It’s apparently gotten so bad that secretaries have been instructed to screen out recruiters’ calls.
AOL, fresh from its spinoff out of Time Warner, promoted former Milbank lawyer Julie Jacobs to GC. She’s hoping to do as well as her predecessor, who was one of the highest-paid GCs in 2008.
The Yang to Ms. Jacob’s Yin is provided by Jared Bartie, the Proskauer alum who is out of his job as general counsel of World Wrestling Entertainment, amid sexual harassment allegations involving a woman who has a separate, sordid tale of her own.
Those of you thinking about making the move inhouse will want to check out the new Law Shucks column “Jumping In(House),” in which we provide the inside scoop on that particular type of move.
If there’s one thing firms love to do, it’s keep score.
Well, most firms anyway. Orrick Herrington & Sutcliffe has decided to take its ball and go home. The firm will no longer be publicizing its profits per partner.
Elie is scared that there’s a “too big to fail” mentality about BigLaw, which means nothing will change (although he wrote that before Orrick’s announcement), while Bruce MacEwen hopes 199 firms follow Orrick’s example and ditch the grossly manipulated measure.
How do you reconcile those two things? Maybe by cutting back on the pro-bono year? How about outsourcing the backoffice? Layoffs have been an obvious answer, and fear of them was the impetus for three former Paul Hastings lawyers to set off on their own.
Howrey, which already fumbled the publicity on cutting partners, is also doing a lousy job with the messaging on its own poor results last year.
Firms (other than Howrey) have mastered manipulating the rankings, but one ranking they can’t tinker with is the Corporate Board Member survey and ranking. New York reigned supreme, with Skadden and Wachtell leading an all-212 top 5.
Plagiarism, which is almost completely absent in (or, to the more cynical, a foundation of) BigLaw practice showed up twice this week.
A former Cravath lawyer has been accused of plagiarism in a book he wrote about the Kennedy assassination; he hired a lawyer who has previously written on the subject and reached an opposite conclusion.
A high-profile plagiarism did not impede Kaavya Viswanathan from getting into GULC or obtaining the even more difficult BigLaw summer job. The disgraced chick-lit writer(?) will be summering at Sullivan & Cromwell.