Benchslaps, Biglaw

Judge Questions The Integrity Of Biglaw Firm In Epic Benchslap

This benchslap is painful even before the judge turns into a 'disappointed dad.'

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'You cannot be serious with this sh*t.'“Evidently I have an entirely different view of integrity and honor than you do.”

That’s the money line right there in yesterday’s brutal benchslap from Southern District of Texas Bankruptcy Judge David Jones, who’s presiding over the bankruptcy of Midstates Petroleum. Squire Patton Boggs is counsel to the Official Committee of Unsecured Creditors (UCC), and Judge Jones is none too pleased with their behavior.

As Debtwire reports:

The judge was upset with UCC counsel Squire Patton Boggs, which had raised questions about the conduct of Midstates executives and their lawyers at Kirkland & Ellis, then negotiated a UCC settlement while simultaneously reaching a deal on its fees.

Only problem is, the actions of Kirkland and its clients have all been aboveboard, and it’s Squire’s simultaneous settlement and fee arrangement that strikes the judge as potentially problematic:

“I will tell you, I’ll be interested to see how this is implemented because I don’t understand a lot of it,” Judge Jones said yesterday. “I’m going to need a real good understanding of how this was accomplished at arm’s length. I don’t understand how counsel for the committee can negotiate for the UCC while negotiating its own fees. But perhaps that’s an issue for another day. And I certainly hope we haven’t hit three strikes,” he said.

Judge Jones’s reference to three strikes is building on what has become a theme. Back at a hearing in August, Squire partner Norman Kinel alleged a proposed settlement was based on a “patently false” claim and that there were serious concerns about the behavior of Midstates and Kirkland. At the time, Judge Jones warned Kinel that he did’t feel like he was being given the full truth. And at yesterday’s hearing, when Squire dropped these complaints and supported a newly negotiated settlement and fee arrangement, Judge Jones decided he’d had it with the Biglaw firm:

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“The way you’ve handled things, you’ve got a lot of growing up to do,” the judge told a Squire attorney. “You don’t have a skillset that will let you talk your way out of this. You were wrong. Try to learn a lesson out of this, because if it happens again – and your performance in this court will be known to every judge in the Southern District [of Texas] – if it happens again, there’s an unfortunate result in store for you.”

The feeling that there were machinations behind the scenes not disclosed to the judge is a recurring theme in his comments. The tongue lashing was so intense that multiple tipsters wrote to Above the Law, calling it a “huge bench slap,” “extreme,” and “a total beat-down.”

“The one thing I demand more than anything is transparency,” Jones said. “And I do that for a number of reasons. Folks who hire the lawyers of the caliber that are in this courtroom, they have somewhere to go they can ask questions about the process. The great majority of folks affected by these cases do not. And it is those people I have a special focus for, and for the guy whose – and I hope I’m not referring to anyone in particular – the guy who runs a small water truck in Oklahoma who isn’t gonna get paid on his last three invoices and is gonna run his truck on bare tires or can’t afford braces for his daughter, that’s the guy who matters most to me when it comes to transparency.”

Then he went all “disappointed dad” on Squire:

“And today I’m sad, I am,” he went on. “In the court of public opinion, we are all judged by the lowest common denominator. And we’ve all taken a black eye today, we all have. I didn’t sleep a lot last night thinking of this issue and what I could’ve done differently to have the standard that I require met. And I’m gonna agonize over that for a long time. So today’s proceeding is hard for me, because I haven’t given the public what I think they deserve in terms of the process. So it’s with a heavy heart that I proceed forward on confirmation of the debtor’s amended plan.”

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Ouch.

COURT: Midstates plan confirmed after Texas judge excoriates UCC counsel, questioning law firm’s ‘view of integrity and honor’ – Correction [Debtwire (sub. req.)]

Kathryn Rubino is an editor at Above the Law. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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