Bernie Madoff, Biglaw, Divorce Train Wrecks, Family Law, Money, Partner Issues

New York Court Rules on Biglaw Partner's Request for a Divorce Deal Do-Over

New York's highest court has ruled on a wealthy Paul Weiss partner's request to make his ex-wife share in his Madoff-related losses. What did the court have to say?

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Remember Steven Simkin, the prominent Paul Weiss partner who sued his ex-wife for a better divorce deal? Simkin argued that even though he negotiated for and obtained the couple’s investment account with one Bernard Madoff as part of their 2006 separation agreement, his former wife should now pay him more money — since it was subsequently revealed, years later, that Madoff was running a huge Ponzi scheme.

As you may recall, I was not terribly sympathetic to Simkin. In my view, an expert negotiator like Simkin — the head of PW’s real estate practice, who was also represented by separate counsel in the divorce — should be required to live with the bargain he struck. In negotiating for and taking on the Madoff account, he also took on the risks associated with that investment.

An intermediate appeals court sided with Simkin. But now New York’s highest court, the Court of Appeals, has spoken….

Here’s how the court ruled, as reported by the New York Law Journal:

The 6-0 court reversed an Appellate Division, First Department, ruling and held that Steven Simkin cannot argue that he is entitled to reopen the terms of his 2006 settlement with Laura Blank based on the “mutual mistake” he maintained had occurred over the perceived value of his Madoff account when the couple was working through their divorce agreement.

A unanimous smackdown. Here’s the reasoning of the court’s opinion (fun stuff for those of you preparing for a Contracts final in a few weeks):

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[A] mutual mistake must be “so material…that it goes to the foundation of the agreement” and that court-ordered relief has to be reserved only for “exceptional situations.” Neither condition was present in the Simkin-Blank dispute, the court said.

“As an initial matter, husband’s claim that the alleged mutual mistake undermined the foundation of the settlement agreement, a precondition to relief under our precedents, is belied by the terms of the agreement itself,” Judge Victoria Graffeo wrote for the court.

Neither the Madoff investment fund nor its estimated value are identified in the divorce settlement, the court said, nor is there explicit language in the settlement that every asset held by the wealthy couple was to be divided 50-50.

“Given the extensive and carefully negotiated nature of the settlement agreement, we do not believe that this presents one of those ‘exceptional situations’ [citing Da Silva] warranting reformation or rescission of a divorce settlement after all marital assets have been distributed,” Graffeo wrote.

Exactly. If anything is “exceptional” about this situation, it’s that a world-class dealmaker is having negotiator’s remorse.

Simkin’s ex-wife, Laura Blank, works for the City University of New York. She probably doesn’t earn a huge salary from CUNY. Meanwhile, Simkin continues to practice as a partner at Paul Weiss, which enjoyed record profits in 2011 — $3.1 million in profits per partner, to be precise.

Partners at Biglaw firms are sometimes stereotyped as a bunch of greedy a**holes. These stereotypes are often unfair. Many of the partners I know are good and generous people who happily share their wealth with the less fortunate. But Steve Simkin just wants to share his misfortune.

If you’re in the running to be the next Mrs. Steven Simkin, consider yourself warned: when you marry this man, “for better or worse” just means “for worse.”

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P.S. Congrats to Laura Blank and her lawyer, Richard Emery of Emery Celli Brinckerhoff & Abady, on this well-deserved victory.

Madoff Victim Can’t Revise Divorce Deal, Appeals Court Says [Bloomberg]
Ex-Husband Cannot Revisit Divorce Settlement Due to Madoff Fraud [New York Law Journal]

Earlier: A Millionaire Paul Weiss Partner Might Get Money from His Ex-Wife — Thanks to Bernie Madoff

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