‘Tis the season for… litigation between law firms and their ex-clients? What happened to the holiday spirit of peace and good will for all?
First Simpson Thacher (malpractice), then Debevoise (last item — unpaid fees), and now, Paul Hastings (malpractice). From the New York Law Journal:
A financing unit of Cerberus Capital Management L.P. has sued Paul, Hastings, Janofsky & Walker, claiming the law firm gave it bad advice in connection with a loan the private equity firm made last year to a company looking to bring retailer Steve & Barry’s out of bankruptcy.
Ableco Finance LLC, a unit of Cerberus with more than $6 billion under management, filed an amended complaint Friday in Manhattan Supreme Court against its former lawyers seeking more than $55 million it said it lost because of the $125 million loan. Ableco claims it would never have made the loan last year if the Paul Hastings team had advised it that the buyer would not have rights to all of Steve & Barry’s inventory, which Ableco understood would back the loan.
“No competent, diligent finance lawyer would have put his client in such a vulnerable position,” Ableco’s complaint reads in part.
Ouch. We agree with Ashby Jones of the WSJ Law Blog: “It’s never good for a law firm to get sued by one of its clients. But when the client is a deep-pocketed heavyweight like private-equity giant Cerberus, the news is probably especially unwelcome.”
But Paul Hastings is fighting back, with the help of high-powered counsel.
Continue reading “Lawsuit of the Day: Cerberus v. Paul Hastings”
Last month, we asked you if it was better to be laid off before the holidays, so you could adjust your holiday spending accordingly, or after the holidays, so you could bank the extra paychecks. Above the Law readers were pretty evenly split on the question: 50.8% would rather be laid off before, 49.2% wanted to hang onto their jobs through the holiday season.
Based on that poll, we can expect half of the people Sonnenschein laid off on Friday to be relatively happy with the news. The other half writes emails to Above the Law. Like this person:
Sonnenschein Nath Rosenthal laid off staff on Friday (14 days before Christmas)!
Sonnenschein confirmed the staff layoffs in a statement to Above the Law:
After an extensive and careful review of operations and staffing across the firm, we have decided to undertake a selective reduction in non-legal personnel. We have done everything possible to minimize the dislocation such a transition will make – not only on those leaving the firm, but for all our remaining employees. That includes consideration of tenure of service and other factors in determining severance and compensation continuation for those departing.
This reduction furthers our ongoing effort to right-size our workforce to best meet client needs and to achieve an appropriate attorney-staff balance.
Our restaffing will not in any way diminish our work product, business operations or our ability to deliver the highest quality service to our clients. Indeed, the firm will continue to make strategic investments in talent and professional resources. We have implemented these changes mindful that many of our clients have had to make similar adjustments in their workforce over the past 18 months.
We have great respect for all of those staff who will be moving on and are grateful for their service to Sonnenschein.
Elliott Portnoy, Chairman
David Schadler, Chief Operating Officer
No associates were affected by the staff cuts at Sonnenschein on Friday.
We can’t say the same for the next bit of news. Completely unrelated to the staff cuts, the firm has unveiled its new, non-lockstep compensation model. Let’s check it out after the jump.
Continue reading “Sonnenschein: Staff Layoffs and New Associate Compensation Model Potpourri”
Aaron Biber was a principal specializing in business law at the Minnesota law firm of Gray Plant Mooty — until yesterday. As mentioned in yesterday’s Non-Sequiturs, he’s been charged with molesting a 15-year-old boy.
His photo appears at right. We’ll let you be the judge.
Biber was a prominent member of the local bar. From the Minneapolis Business Journal:
Biber is treasurer of the Minnesota State Bar Association, and a former president of the Hennepin County Bar Association. He’s being held at the Hennepin County jail. Freeman’s office expects to ask for $1 million bail at his arraignment, scheduled for Tuesday.
South Lake Minnetonka police arrested Biber on Friday at the Eden Prairie Mall, where he had allegedly arranged to meet the boy. Authorities say Biber had previously had sex with the boy in October at Biber’s Shorewood home.
Gray Plant Mooty has put Biber “on leave” and taken down his bio. This Minnesota firm can teach Biglaw a thing or two — they’ve even eliminated the cached version.
UPDATE: Actually, you can find a cached version of his 2007 bio here (gavel bang: commenter). We’ve pasted a portion of it after the jump.
More yucky allegations, and the reaction from his colleagues, after the jump.
Continue reading “Lawyer of the Day: Aaron Biber”
The Day That Lockstep Died
(to the tune of “American Pie”)
My, my, pushin’ lockstep aside,
They say merit — do they mean it? ‘Cause my raise has run dry.
But top-tier firms are not inclined to comply:
Sayin’, we’re not sure if this s**t will fly; we’re not sure if this s**t will fly.
What started out as a trickle is turning into a flood. Orrick and DLA Piper have already announced new associate compensation models for 2010 — and now WimerHale wants in on the action. The firm announced the change in a memo to all of its associates:
The Firm has decided to transition to a merit-based compensation program for associates and counsel in our U.S. offices. This afternoon we will hold local office meetings to discuss the details with you followed by an open forum for questions. Shortly you will receive a calendar invitation for this meeting, but first we wanted to provide you with background on the plan, the timing, and our thought process.
Before we lay out the details of the new model, it is important to recognize that this step is one that falls within a much larger framework. As you have heard us say before, whether at the State of the Firm address or in smaller group settings, the traditional structure and method of doing business for law firms is changing and needs to change.
The plan will be phased in through 2012 — but why wait until 2012 to address labor costs, when you can freeze associates’ salaries for 2010? Today’s WilmerHale announcement includes the news that the firm will be freezing associate salaries (except for second-year associates, who will be bumped up to $165K).
Additional details on the new compensation scheme and the full memo, after the jump.
Continue reading “WilmerHale Joins the Killing Lockstep Party”
Sometimes you have to love Biglaw. Back in March, we reported that Alston & Bird was quietly forcing out secretaries and administrative staff. Our sources report that this approach to staff cuts has been ongoing at the firm. A&B is either letting people know they have a limited amount of time to find a new job or encouraging them to take early retirement.
But that doesn’t mean the firm can’t have a party to celebrate those who have been shoved out of the door. A tipster reports:
Apparently demanding that the staff take early retirement is not enough for the “worker-friendly” Alston & Bird. To rub salt in these early (involuntary) retirees, A&B is throwing them a party! Because nothing says “Fortune 500 Best Place to Work” like a party… for people you effectively fired.
Nice. Check out the party invite after the jump.
Continue reading “Alston & Bird: A Party For Those Who Have Been Forced Out”
Dear law firms:
It is December 15th. Christmas is ten days away. January 4th is a mere 20 days away.
I bring this up because some of you seem to be having trouble with the Gregorian calendar. Some of you have incoming associates that are set to start at your firm on January 4th or soon thereafter. These incoming associates have already been deferred by your firm.
Perhaps you have the desire to defer these people again? Sorry, but you missed your chance. It’s too late. You should have deferred them (again) sooner. To do so now is just cruel. A lot of these people have signed leases, bought plane tickets, and truncated holiday plans — as you would expect of good employees.
Evidently calendar mastery is not something that can be taught on the fly. So just take my word for it. It is too late to defer January starters again. It’s time to suck it up, clear out some office space, and get your pro bono partner on the ball. Trust me.
Your friend,
Common sense and basic decency.
The above message came too late to help incoming Nixon Peabody associates, but maybe we can teach other firms that mistreating incoming associates is wrong.
Details after the jump.
Continue reading “Nixon Peabody Deferral Extension: Can Somebody Check A Calendar?”
Last night partners at Hogan & Hartson and partners at Lovells voted on the proposed merger between the two firms. According to sources, Ho-Love will be coming to an office building near you.
Here’s the report on the partner vote, from a Lovells source:
Late last night, the voting closed on our proposed merger with Hogan & Hartson. We have also heard from Warren Gorrell, Chairman of Hogan & Hartson, on the outcome of their vote.
We are delighted to report that the respective resolutions at both firms were passed and, as a result, we will be combining with Hogan & Hartson with effect from 1 May 2010.
Bang. Mega-transatlantic mergers are back.
Read the full memo after the jump.
Continue reading “Hogan and Lovells Merger: All Systems Go”
* Elizabeth Wurtzel pens a column for the Wall Street Journal on the law firm meltdown. [Wall Street Journal]
* Not only can they not Facebook friend lawyers before them, judges need to start unfriending lawyer friends they currently have. [St. Petersburg Times]
* Elin’s talking to a divorce lawyer, if you believe Britain’s News of the World. [OK!]
* Arkansas judge rules that baby Jesus and Bill Gates can be displayed together in a state Capitol holiday scene. [Associated Press]
* Virginia Tech wrongful death lawsuits are in limbo. [Roanoke Times]
* The fate of health care hangs in the Independent hands of Joe Lieberman. [New York Times]
It is exam time, and everybody is hunkered down. Law students at the University of Oregon are undoubtedly excited about the upcoming Rose Bowl, but they’ll have to get through finals first.
One group of Oregon Law students received an unexpected surprise during study period last week. They checked their list-serve for Professor John Bonine’s administrative law class, perhaps expecting an administrative announcement about the administrative law exam. Instead, they saw the entire admin law exam, sitting right there on the list-serve. A tipster reports:
so the school emailed the admin law instructions to the admin law listserv. only problem was that instead of the instructions, they sent the actual exam. bonine is in copenhagen for the un conference. exam is supposed to be monday.
Oh, happy day! But there’s a catch:
In the spirit of the psuedo-ideal world that Oregon Law students live in, the professor replied with the comment that everyone should delete the test, and that this is a “moment in academic ethics” that will define the rest of their careers.
Wait a minute, somebody else screws up, and now it’s become a matter of professional ethics for students who were just trying to study?
According to Professor Bonine, that is precisely what is going on here. We reached out to Bonine (now in Spain) and he explained that he was using the accidental exam leak as a “teachable moment” in professional ethics.
Continue reading “Leaked Exam a ‘Teachable Moment’ on Ethical Consequences for Oregon Law Students”
* Accenture is in the market for a new sponsor, preferably one who can keep his penis on the fairway. [Going Concern]
* Speaking of penises, Jeffrey Epstein’s allegedly egg-shaped penis will remain under wraps, says a Florida judge. [UPI]
* And now for a story about the proper use for … your penis. Note, it should not be anywhere near a 15-year-old boy. [Minneapolis Star-Tribune]
* Lat finds motorcycles and leather scary. [Technolawyer]
* It’s probably a good idea for judges to avoid friending lawyers on Facebook. [Young Lawyers Blog]
* How do you like all those Facebook privacy changes? At the 19 minute mark of this following link, Kash weighs in. [BBC]
* Chanukah keeps rolling along, right into this week’s Blawg Review.
[Likelihood of Confusion via Blawg Review]
Last week, we shared with you a very interesting internal document from Simpson Thacher & Bartlett: a collection of notes or informal minutes from a June 2009 partners’ meeting. The notes discussed attorney headcount, possible layoffs, and compensation, among other subjects.
Today we have even more deliciousness for you: an internal memorandum from executive committee chairman Pete Ruegger to the executive committee, transmitting the complete minutes of the June 8 partners’ meeting. As it turns out, the version of the meeting notes that we previously published was accurate, but not complete.
Here’s an excerpt to whet your appetite. If you think that a return to the heady days of 2007 is just around the corner, as the economy improves and Wall Street strengthens, think again:
• As we dig out of the recession, hopefully with increased utilization and decreased headcount, we should do better in 2010 and beyond, but we do not think our gross revenues and premiums are going to return to 2007 levels and our net income is unlikely to return to 2007 levels in the next couple of years.
As the matrix shows, if we can get our average hours back up over 1800, we can still have a $1M+ [partnership] point at 88% realization. But, Simpson Thacher and our peer firms are going to be less profitable businesses than they were. Pricing and margins are going to continue to be challenging. At least in the short to mid-term.
Indeed. Additional analysis and the complete documents, after the jump.
Continue reading “More Internal Documents from Simpson Thacher”
Earlier this month, we mentioned that Washington and Lee Law School Dean Rodney Smolla was a candidate to become the new President of Furman University. Well, Dean Smolla got the job and he is taking it:
Dear Washington and Lee Faculty, Students, Staff, and Alumni:
This afternoon, Furman University will announce that I have been named as the next President of Furman, effective on July 1, 2010. Serving as the dean of the Washington and Lee School of Law has been a great honor and privilege. I am proud of the faculty, students, staff, and alumni, for their commitment to excellence, and their courage in forging a new direction for legal education in the United States. I am confident that through the continued dedication of the entire Washington and Lee Law School community, and the unflagging support of the University, Washington and Lee will continue to prosper as a leader in American legal education, scholarship, and public service.
Law School deans leave for other opportunities all the time. But based on the Above the Law inbox, you’d think Dean Smolla pulled a Brian Kelly and abandoned his students just a few weeks before the biggest game of the year.
Students wring their hands after the jump.
Continue reading “Washington & Lee Law Dean Leaves School (And Unfinished Business) Behind.”
Quinn Emanuel was instrumental in clarifying the New York State Constitution to allow Governor David Paterson the power to appoint a Lieutenant Governor — the post now being filled by Richard Ravitch. The firm would like $1 million for its counsel.
For those of you not steeped in the murky underworld of New York state politics, here’s a quick recap. Then-Governor Eliot Spitzer banged a prostitute. Lieutenant Governor David Paterson ascended to the top spot, and longtime Republican leader Joseph Bruno became acting Lieutenant Governor. That didn’t last long as the Democrats took control of the state senate by a slim majority, and Bruno resigned under the cloud of scandal (Bruno has since been convicted on charges of corruption). The New York State Senate exploded when two Democrats — Pedro Espada Jr and Hiram Monserrate — switched sides to join the Republicans and their new leader, Dean Skelos. At the time, Monserrate was facing charges of slashing his girlfriend’s face after spying another man’s business card in her purse. He was later convicted of misdemeanor assault, but cleared of the felony charges. In any event, Monserrat changed his mind and went back to the Dems, leaving the state senate deadlocked with 31 democrats and 30 republicans plus Pedro Espada. Espada was elevated to president of the Senate (turncoats gotta eat) and claimed that as president of the Senate he was acting Lieutenant Governor. Alright guys, I’m not gonna lie to you. This is gonna get kinda weird: Espada claimed he should have two votes.
In New York, Concrete jungle where dreams are made of, There’s nothing you can’t do,
Now you’re in New York, These streets will make you feel brand new, Big lights will inspire you,
Lets hear it for New York, New York, New York
Paterson announced he would be appointing a Lieutenant Governor. And that’s where Quinn Emanuel steps into this morass of prostitute banging corrupt girlfriend beaters.
Continue reading “How Much Does It Cost to Install a Lieutenant Governor?”
As we mentioned in Morning Docket, late last week the University of Massachusetts board of trustees approved the plan to convert the Southern New England School of Law into the state’s first public law school. The vote went 14 to 4. The Boston Globe reports:
“A public law program will fill a conspicuous gap in the Commonwealth’s public higher education curriculum,” said UMass president Jack Wilson. “It will give our students the public law option that exists in 44 other states. . . . This is about students and about educational opportunity. It is not about which private law school may face more competition.”
Oh please. This is not about the students. And it’s certainly not about educational opportunity — unless by “opportunity” you mean the invitation to saddle yourself with tens of thousands of dollars of debt in exchange for a degree from an unaccredited law school in the midst of the worst market for legal jobs anybody can remember.
We all know what this is about: money. Lenders have it, the state wants it, the financial future of citizens of the Commonwealth be damned.
After the jump, we don’t even have to read between the lines to see the true motives in Massachusetts.
Continue reading “Umass Trustees Approve Plan for Public Law School”
There have not been many bonus surprises this holiday season. Many associates have been disappointed by the meager payouts in comparison to years past. But, truly, the best bonus this year is still having a job.
As far as we know, Latham & Watkins has not yet announced its bonus. An ATL reader spotted a recent Los Angeles Times article that might give Lathamites hope. The article is about luxury shoppers cutting back this year: Rodeo Drive is deserted. The Louis Vuitton and Tiffany & Co. salesclerks are lonely. But there’s at least one big spender doing what he can to support the consumer economy:
“There’s no holding back this season,” said Barneys shopper Mark Flagel, a partner at law firm Latham & Watkins in Los Angeles. “I’m personally hopeful that the mood is better and the economy is better. Because what is there if there isn’t hope?”
Perhaps this philosophy will hold true at the Latham partner meeting to set bonuses this year.
Latham partners like to live large… and tell newspapers about it. Resentful associates might be turned off by this, but isn’t it better to see conspicuous consumption from partners than conspicuous layoffs?
Luxury shoppers still spending, but shelling out less [Los Angeles Times]
Earlier: Lawyerly Lairs: Latham Partner Gives His Wife a Fabulous Paris Pad for Her Birthday
We know how you love caption contests. Just like our last one, which was holiday-themed, this one is also timely.
It goes out to law students in the midst of studying for or taking final exams. Here’s the pic:
Same rules as always: Submit possible captions in the comments. We’ll choose our favorites — with preference given to those with a legal bent — and then let you vote for the best one.
Please submit your entries by TUESDAY, DECEMBER 15, at 11:59 PM. Thanks!
UPDATE: Check out the finalists here.
A funny thing happened on the way to Cravath setting the 2009 Biglaw associate bonus. They didn’t. When Cleary matched Cravath’s bonus, 83% of Above the Law readers said that all other large New York firms would follow Cravath. But 83% of our readers were wrong.
Sullivan & Cromwell topped Cravath’s bonus by $5,000 for senior associates (class of 2002). Sure, it’s only $5,000. But that is $5,000 more than senior associates get for staying at Cravath. Call it a $5,000 retention bonus.
Does Cravath — and all the firms that rushed to follow Cravath — need to go back in and up the bonus payout to its senior people?
More discussion after the jump.
Continue reading “Does Cravath Need to Match Sullivan & Cromwell?”
* Jurors friending each other on Facebook and doing Wikipedia research cause mistrials in Maryland. [ABA Journal]
* A candid conversation with Elie Mystal. Bonus: a slideshow! [Legal Broadcast Network]
* University of Massachusetts board ignores Elie’s warning and approves first public law school. [Telegram]
* Blago’s defense attorney gets his stolen laptops back. [Chicagoist]
* “How can we help a 47-year-old female lawyer who is still living with her parents and cannot go anywhere without her mother?” [Boston Globe]
* Freshfields warns that hedge funds will flee Europe. [Financial Times]
Ed. note: Above the Law has teamed up with Law Shucks, which has done excellent work translating all of the layoff news into user-friendly charts and graphs: the Layoff Tracker.
This recession is turning out to have all of the unemployment and none of the rebound of the recession in the early 1980s. Unemployment is expected to average 10% through the first half of the year, which will stifle any recovery rooted in consumer spending or economic growth.
Still, technical signals indicate the recession is ending, as the US economy grew by 2.8% last quarter and is gaining at a 3% clip this quarter. That rate is also expected to continue through the first half. Fortunately for transactional lawyers, a cause (or effect, depending on whom you ask) for that moderate growth is that lending has started to loosen, which is allowing more deals to get funded. President Obama is also meeting with executives of 12 major banks to see how he can get them to increase lending to small businesses.
Unfortunately, the catalyst for recovery from that early 80s recession isn’t available anymore. Paul Volcker, Chairman of the Federal Reserve Board under Presidents Carter and Reagan, had raised the federal funds rate from 11.2% in 1979 to 20% in June 1981. As he started chopping the rate back down, recovery followed (albeit two years later). Through the first half of 1983, the economy grew by 7.2% and unemployment dropped over all of 1983 from 10.8% to 8.3%.
Bernanke doesn’t have that tool in his toolbox: the current target rate is 0.00-0.25%
Law firms continue to meander along behind the broader economy. After the jump, we highlight their economic efforts over the past week.
Continue reading “This Week in Layoffs: 12.12.09″
Earlier today, we reported on a mystery meeting taking place at K&L Gates next week. Apparently K&L is not alone. Seyfarth Shaw is also calling all of its associates together just before the holidays. Yuletide cheer is sure to follow:
Please join Steve Poor for a national videoconference with all Seyfarth associates on Monday, December 14 at 1p Pacific/3p Central/4p Eastern. Following the videoconference, your Office Managing Partner will facilitate a local discussion to address issues and questions you may have. Please make plans to attend; the total time commitment will be no more than an hour.
Seyfarth gave its associates a little more information about what will go down at the meeting. Details after the jump.
Continue reading “‘Tis the Season for Mystery Meetings”
