The Supreme Court ruled that a student’s failure to show undue hardship didn’t void a bankruptcy agreement to discharge student debt. It’s a minor victory for student debtors everywhere, and Justice Clarence Thomas did all he could to limit its effect.
The decision came down today in the case of United Student Aid Funds v. Espinosa. Justice Thomas, writing the opinion for a unanimous Court, ruled that a bankruptcy judge should have required trade school student Fransisco Espinoza to show undue hardship before approving the discharge of Espinosa’s student debt. But the error was not serious enough to void the agreement.
SCOTUSblog explains that the holding is very limited:
Today’s ruling in the student loan case is confined primarily to the situation where a discharge of such a debt has become final without the creditor using its option to challenge it at the time. It makes clear that bankruptcy courts may discharge a student loan debt only if they find it is an undue hardship to require payment.
Thomas’s language upholds the notion that undue hardship must be a part of the discharge of student debt …
Despite her death back in February 2007, Anna Nicole Smith (aka Vickie Lynn Marshall) continues to make headlines. From the Ninth Circuit comes bad news for her former lawyer (and lover) Howard K. Stern, and her daughter, Daniellynn. From E! Online:
[A court] said today that the estate of Anna Nicole Smith is not entitled to the $300 million-plus judgment previously awarded from her late oil tycoon hubby’s billion-dollar estate.
The court battle over Texas oilman J. Howard Marshall II’s millions has been ongoing since 1995.
You can download the opinion from the Ninth Circuit here [PDF]. You’ll see a familiar name on the list of counsel.
Kathleen Sullivan, new name partner at Quinn Emanuel, filed an amicus brief in the case for the Washington Legal Foundation, arguing in support of the decision by the Texas probate court that originally denied Smith’s claim to Marshall’s $1.6 billion fortune.
UPDATE: Congratulations to Dechert partner G. Eric Brunstad, the veteran Supreme Court litigator who represented the victorious estate of Pierce Marshall in this case. (Brunstad was also Lat’s bankruptcy law professor at Yale.)
I spent all day yesterday trying to summon the rage, trying to figure out a way to trumpet the cause of a sixty-something, recent law school graduate who is still having trouble discharging her student loans in a bankruptcy proceeding. The National Law Journal has the tear-jerking story:
When she graduated four years ago with a law degree at the age of 61, Denise Megan Bronsdon likely did not foresee bankruptcy court in her future. But that’s where she ended up — as a debtor.
The former farmer’s wife, who operated a tractor before going to Southern New England School of Law in 2002, convinced a Massachusetts bankruptcy court in January that repaying the more than $82,000 she owed in student debt would create an undue hardship. However, the U.S. District Court in Massachusetts, considering an appeal by the lender, Educational Credit Management Corp., found on Nov. 20 that Bronsdon’s decision not to participate in a loan repayment assistance program should be part of the bankruptcy court’s undue hardship analysis.
If I was half the man I used to be, I’d take a flamethrower to this place. Hoo-Ha!
But the problem with my flamethrower is that I do not know where to point it. I could get angry at the entire system that makes student loans so difficult to discharge through bankruptcy. Or I could get mad at the law school that essentially stole this woman’s money. Or I could get angry at the woman herself — who failed the Wisconsin bar three times.
Oh, I know, let’s get pissy at all of them.
Time to resume our series of open threads covering small (or smaller) law firms, focused on different practice areas. We’ve already written about small law firms in general, insurance law, personal injury law, trusts and estates, immigration, real estate, intellectual property, ERISA / employee benefits, and family law / divorce law. Some of these threads are still active (or could be resuscitated), so do check in on them.
Today we turn to the booming field of BANKRUPTCY. This practice area might seem depressing, given its focus on financial distress, but some people find it quite sexy.
A long time ago, the field was generally shunned by large firms, so that most firms doing bankruptcy were on the smaller side. But Biglaw embraced bankruptcy years ago, and it’s probably glad it did. The bankruptcy departments of large law firms are super-busy these days, providing a partial hedge to the weakness on the transactional side.
What about bankruptcy boutiques — how are they doing? Some material to kick off the discussion, after the jump.
Like most people, I’m having trouble focusing on my duties given the perils of Balloon Boy, Falcon Heene. According to my television, the balloon is down, there is no boy in it, and as of now we don’t know where the boy is. And the parents were on Wife Swap. Here’s a write-up of the episode the Heene family was featured on. Crazy story.
Of course, multitasking is an important life skill. It’s a skill that one law student hasn’t seemed to master, at least when attractive women are around. Here’s the Craigslist ode from a law student somewhere in the D.C. area to an apparently stunning vixen:
Morally Bankrupt – m4w
I saw you in my bankruptcy class. I was so distracted by you that I could barely pay attention to the riveting lecture about the history of bankruptcy law. I imagine that you are a creditor and I am a bankrupt and I will have to work off my debt for you or risk debtor’s prison. You can have whatever you want; no state law exemptions. I want you to declare bankruptcy all over me.
I am sick of ending my nights pro se. I promise if you entertain my claim that you will have a huge judgment entered in your favor over and over again. We can even violate the Model Rule of Professional Responsibility and engage in a 108(j).
My interests include hilarious law-based puns; and mocking others. If you think we are a match, let’s grab a drink after class. I know it’s a weeknight but my parents let me stay out as late as I want to as long as I call by 11pm to check in with them.
P.S. I am neither the ginger nor the weird guy next to you.
Beautiful bankruptcy babe — you know who you are — it looks like you have a not-so-secret admirer. Let us know if it works out. Morally Bankrupt [Craigslist]
It’s been a long time since we checked in on the ruins of Heller Ehrman. It seems strange that it’s been over a year since Heller Ehrman announced that it was closing its doors.
Everybody that was going to land on their feet after Heller collapsed has presumably landed. Those who never did get a job back in Biglaw post-Heller have hopefully moved on to other lucrative and rewarding careers.
While most of Heller’s employees have moved on, it looks like some of Heller’s things are still looking for new owners. One tipster reports that you can purchase your own little piece of Heller if you want to:
FYI the art from the Heller Ehrman art collection is up for sale at Bonhams New York:
Sale 17421 – Contemporary and Modern Art
Let’s take a look at what fine pieces of art you can score from the demise of Heller Ehrman.
The Texas judge who ordered Microsoft to pay $290 million for infringing a patent included a $40 million enhancement that he said was partly justified because of alleged trial misconduct by a lawyer from Weil, Gotshal & Manges.
U.S. District Judge Leonard Davis tacked on the $40 million penalty because of evidence of willful infringement. But also “favoring enhancement,” he said in an opinion, was trial conduct by lawyer Matthew Douglas Powers, a Weil Gotshal partner.
Matthew Douglas Powers is a big name in IP circles. And he’s the co-chair of Weil’s litigation department. But he’s not going to comment on Judge Davis’s $40 million critique of his trial performance.
What were the judge’s reasons for admonishing Powers? Check after the jump.
Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.
The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28. Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.
Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.
Of course they don’t admit liability. Still, $20 million is a lot of dough. Who’s on the hook for that?
* Justice Clarence Thomas cut SCOTUS to go speak to a high school’s graduating class. [NBC Washington]
* The Second Circuit puts the brake on the Chrysler bankruptcy proceedings. [Washington Post]
* Nationwide Pay Raise Watch: New York judges get a vote ruling of confidence in their request for a salary increase. [New York Law Journal]
* Dan Slater wonders whether Morgan & Finnegan’s dissolution is proof that the end is nigh for IP boutique firms. [IP Law & Business]
* The mark of Rove in the DOJ? [True/Slant]
* Delivery woman brings a Miami-Dade prosecutor a pizza. Prosecutor greets her with a knuckle sandwich. [NBC Miami]
The big news story for today, as noted in Morning Docket, is the bankruptcy filing of General Motors. Developments on the GM front are being closely covered over at our sister site, Dealbreaker (which also welcomes a new writer today).
There are some legal angles to the GM story, of course. The bankruptcy will generate lots of work for several top firms, as noted by the WSJ Law Blog and Am Law Daily.
But you don’t need a law degree to play a major role in this drama. From the New York Times:
It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism. But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry….
“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”
Maybe more than a little scary. But YLS grads students can do anything, right?
Find out how Brian Deese landed this gig, and take our reader poll asking what should be done with GM, after the jump.
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When Chintan Panchal decided to leave a global BigLaw partnership to start his own firm, he could only hope that he would face the high-quality problem of firm building that many had cautioned him about. Focused on the uncertainty surrounding of a new firm launch, he decided to tackle staffing needs, IT challenges, and financial planning requirements after he had built up his legal practice.
Panchal Associates LLP–a corporate/finance and outside general counsel boutique–was quickly off to a great start. Clients and matters were flying in the door, and Chintan soon had a team of lawyers and staff with a variety of operational needs. To continue building an excellent team and provide them with a competitive benefits package, to expand his physical presence to include a European practice and additional partners, and to scale his operations and IT capabilities to support this growing enterprise brought with it demands of time, money, and expertise. Chintan knew he needed help.
“With the assistance of NexFirm, we have upgraded the capabilities of our firm to meet, and in some cases exceed, the standards we were used to at our former BigLaw firms. Operationally, we can now attract and service clients we didn’t have the bandwidth to support in the past, and continue to build our team with the best and brightest legal talent in the industry,” said Chintan Panchal, adding “It has worked out quite well in our case; NexFirm is an essential partner for us.”
The holiday season is upon us, and yet again, you have no idea what to get for the fickle lawyer in your life. We’re here to help. Even if your bonus check hasn’t arrived yet, any one of the gifts we’ve highlighted here could be a worthy substitute until your employer decides to make it rain.
We’ve got an eclectic selection for you to choose from, so settle in by that stack of documents yet to be reviewed and dig in…
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