Davis Polk

Lawsuit of the Day: Cerberus v. Paul Hastings

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Cerberus Capital Management v Paul Hastings Janofsky Walker.JPG‘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.

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Associate Bonus Watch: Davis Polk & Wardwell Matches

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2009 Associate bonus watch above the law.JPGWell, here’s an early Thanksgiving present from the partnership at Davis Polk & Wardwell to their associates. Bonus news.
DPW will be putting the same meal on the table as Cravath:

We are pleased to announce that associates in good standing will receive a bonus payment as outlined below. Bonuses will be paid on December 24th, 2009 in the same manner as the regular December monthly payroll, and will be subject to proration for those who arrived after January 1, 2009 and those on part-time schedules or other special arrangements. Bonuses for counsel and other attorneys will be determined on an individual basis and will be communicated and paid according to the normal time schedule.
Class of 2008: $ 7,500
Class of 2007: $10,000
Class of 2006: $15,000
Class of 2005: $20,000
Class of 2004: $25,000
Class of 2003 and senior: $30,000
We thank you for your efforts over the past year, and wish you and your family a wonderful holiday season.
The Management Committee

In this season of thankfulness, some DPW associates feel they deserve a few more blessings than what the firm is offering.

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Legal Eagle Wedding Watch 10.4: Meet Packer

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champagne glasses small.jpgCommenters often complain that we feature too many Biglaw associates in this space — uninspiring young people who’ve drifted through college and law school and are now drones at soulless firms. We’re delighted that this week, Biglaw associates make up only one-third of our couples. Rounding out the field are a soulless-drone partner and a former associate who abandoned Biglaw for the classic refuge of the disillusioned JD: law teaching. Enjoy this foray into the unexpected!
Our couples:

1. Caroline Dougherty and Marc Packer
2. Patricia Wencelblat and Richard Cooper
3. Tania Tetlow and Gordon Stewart

Get the details on these newlyweds and vote for your favorite couple, after the jump.

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Legal Eagle Wedding Watch 9.20: Maddening

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We suppose it’s fitting that on Yom Kippur, when our Jewish friends are fasting at home, today’s Legal Eagle Wedding Watch is a total WASP-fest. (Last weekend was Rosh Hashanah, which explains the unusual dearth of Jewish nuptials in the NYT announcements.) We look forward to receiving plenty of tasteful feedback about how there are “too many gentiles” this week.
Here are your six finalists — all Biglaw associates, as it happens:

1. Elisabeth Madden and Wesley Mullen
2. Ann Parker and Robert McKeehan
3. Emily Harris and Matthew Mauney

Read all about these couples and evaluate their credentials, after the jump.

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Fall Recruiting Open Thread: Vault 1-5 (2010)

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comparing.jpgYesterday, the Vault rankings were released. It is time to dig into them.
To refresh your memory here are the top five firms according to Vault:

1. Wachtell
2. Cravath
3. Skadden
4. Sullivan & Cromwell
5. Davis Polk

As we noted yesterday, the only change in the top five is Skadden jumping over S&C. Is that fair? A lot of you opined that Skadden’s prestige score was settled before it starting deferring associates. But surprisingly few of you noted that Skadden paid out bonuses that were double what Cravath, S&C, and DPW paid.
Is twice as much bonus money worth one extra spot in the rankings? Vault’s managing editor, Brian Dalton, suggests that Skadden’s bonus carried some weight:

Skadden had a good year, climbing over Sullivan & Cromwell to take the #3 spot. Among other factors, the notion of ‘half-Skadden’ is a potent one, though not quite enough to carry the firm past Cravath. (Mildly ironic in that Cravath’s bonus decision spawned that meme.)
Truly striking is the reach of the Skadden brand: Third in the Boston regional ranking, second in Chicago, and–taking over from Latham–No. 1 in Northern and Southern California. (Vault’s regional rankings are calculated using only the votes of the survey respondents in the particular region.) By contrast, in its hometown of New York City, Skadden places fifth. (These regional rankings are coming soon to the site.)

After the jump, should any of these firms in the top five move over to make room for somebody else?

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Summer Offer Rate Open Thread: Are We Back to 100%?

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summer associate program offer rate no offer.jpgSummer programs at many firms are shorter this year than last year. That means the summer is over at a lot of places, and summer associates are starting to learn their fates.
So far, there is some surprising news. Summers are getting offers. Many people have reported that their firm has given full, 100% offers to 2009 summer associates. Summers at Sullivan & Cromwell and Davis Polk are just some of the people reporting good news:

Davis Polk & Wardwell and Sullivan & Cromwell have extended offers to all of their summer associates.

Update (12:35): Additional tipsters inform us that Davis Polk has only given 100% offers to the summers that have already left. That is about half of the summer associates. The rest of the SAs leave on Friday, so we’ll see.
We also have received word that Cravath is making 100% offers.
After the jump, let’s look at a few more firms that we believe are making full offers to this year’s summer associates.

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Legal Eagle Wedding Watch 7.19: Editorial Indiscretion

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The current online front page of the NYT weddings section is worth a click. The head blurb leads with “Despite their differences in age . . . ” underneath a picture of a 20-something bride embracing a “groom” who appears to be about nine years old. “Differences in age,” indeed. Somebody alert Morality in Media! (Of course, when you click on the link, you learn that the real groom is 40-something. Still yucky, but not illegal.)
Our spotlighted weddings this week feature couples who are well-matched not only in age, but in accomplishments. Here they are:

1. Robyn Maslynsky and Paul Goldschmid
2. Stacy Humes-Schulz and Matthew Frazier
3. Courtney Dankworth and Russell Capone Jr.

Read more about these couples, after the jump.

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Davis Polk’s Website Makeover: Now With 100 Percent Way More Hotties!

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Back in March, we reported on stealth layoffs at Davis Polk & Wardwell. Stealth layoffs are usually seen as an effort to maintain high attorney utilization rates — and high partner profits. But at genteel, WASPy DPW, long known for its passive-aggressive kinder and gentler firm culture, profits come second to pulchritude.

Everything is beautiful at 450 Lexington — the offices, the stationery, and yes, the attorneys. DPW has long been known for hiring based on beauty as well as brains. So we suspect that their recent stealth layoffs were just an “office beautification” project: lay off the less attractive associates, to increase the average hotness of the remaining lawyers. (Lord only knows what the denizens of the recently closed Frankfurt office looked like.)

A few years ago, we wrote about Davis Polk’s reputation for hiring aesthetically appealing attorneys in the New York Observer:

Bar Belles: According to Rob, a 2L at NYU, one firm that’s in demand this season is Davis Polk & Wardwell. Why? “I’ve heard they have good-looking associates.”

Some things never change. When I interviewed a decade ago, Davis was already known as a bastion of beauty on aesthetically challenged Lexington Avenue. It was the firm of choice for the prom queen and king of my law school class — the editor in chief of the law journal, a luminous doll-like beauty with a vast family fortune, and her Abercrombie-handsome future husband. They were joined at Davis by enough comely Asian females to cast Memoirs of a Geisha.

And hotness matters more at Davis Polk these days, now that their redesigned website features attorney photos (for some, but not all, of the lawyers — perhaps it was an “opt in” regime?). From an observant tipster:

Have you noticed that Davis Polk’s new website has pictures of attorneys? Weren’t they once afraid of stalkers? Glad they’ve gotten over that. Or perhaps their associate corps is simply uglier now.

We think not. If you visit the Davis Polk — er, DavisPolk — website, and surf through the attorney profiles, you’ll still find hotties to spare.

Evidence of hotness, plus additional analysis, after the jump.

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Legal Eagle Wedding Watch 6.14: Chemistry Lesson

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We’ll bottom-line this week’s contest, folks: The SCOTUS clerk wins. Yep, after a long absence, LEWW’s favorite credential makes a welcome appearance in the NYT weddings section, and we’ve got the details for you.
But first, congratulations to Sabrina Charles and Jamie Dycus, who readers overwhelmingly voted Legal Eagle Couple of the Month for May, demonstrating that — in the words of one commenter (and apparently, in the minds of ATL readers) — “Wachtell > Sotomayor > Olympic medal.”
Here are our finalists:

1. Kathryn Whitfield and Adam Fotiades
2. Christina Krause and Peter Henderson
3. Pamela Bookman and Jeffrey Perlman

More about these couples, after the jump.

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Senator Gillibrand Worked on the Big Tobacco Cases While At DPW

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Gillibrand Senator.jpgYesterday, the New York Times published a story about New York Senator Kirsten Gillibrand’s ties to “big tobacco.” As an associate at Davis Polk & Wardwell, Gillibrand — who replaced Hillary Clinton as New York’s junior Senator — represented Phillip Morris.

For most people who understand how law is practiced at the top firms in the country, the interesting part of the NYT article pretty much ends there. As an associate, especially a “superstar” associate as Gillibrand appears to have been, you work for the partners and represent the clients they tell you to represent. It’s really not that complicated.

But since Gillibrand is now a Senator and tobacco is “evil,” neither the Times nor Gillibrand could just leave well enough alone. The Times takes the first shot:

But a review of thousands of documents and interviews with dozens of lawyers and industry experts indicate that Ms. Gillibrand was involved in some of the most sensitive matters related to the defense of the tobacco giant as it confronted pivotal legal battles beginning in the mid-1990s.

Gillibrand was at DPW from 1991 to 2000. And she was really good at it. Wouldn’t one expect that a superstar mid-level would be involved in “sensitive matters” relating to a huge firm client? But hey, the Times reports that Gillibrand is a “former smoker.” Ah-ha. She clearly wants to hand out free cigarettes in elementary school.

But Gillibrand does slightly overplay her hand. We’ll get into it after I take a smoke break.

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Stealth Layoff Watch: Davis Polk & Wardwell Bring Layoffs into the Vault 5

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Davis Polk Wardwell DPW Above the Law blog.jpgLast week, we mentioned that it doesn’t look like top Manhattan firms are immune to the layoff bug. Today, we can report some of the things that have been happening at Davis Polk & Wardwell over the past few months.

Stealth layoffs started happening at DPW in December. Corporate associates (notably, associates in Capital Markets, Credit, and M&A) were laid off the way it used to work in Biglaw. Laid off associates were told that their performance was not up to standards and given three months “notice” to find a new job.

That will put people out on the street by the end of this month, unless they have already secured a job by then. How do you think that is going in this market? This tipster neatly summarizes some details we’ve received over the past couple of months:

[T]he people who got hit by the (stealth) layoffs have to work their a**off for the three months, i.e. they bill almost regular hours…. nobody knows how many people will have to leave (at DPW “we” don’t talk about things like that…) but it’s at least a dozen or more in the corporate department alone.

We believe that 20 – 30 attorneys have been laid off from DPW in this manner since December, and we believe that those people only account for New York City cuts.

Remember, DPW suffered a significant drop in profits per partner. AmLaw reported that the firm’s PPP was down 17% in 2008.

The firm responds and tipsters weigh in after the jump.

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Did Harvard Law School Take Your Bonus?

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debt relief pill.JPGAs many people have pointed out, being angry over “only” a $20,000 bonus is something that most of the working world finds appalling. We get it: “spoiled whiners,” “real people are losing their jobs,” “nobody should complain about a six-figure salary,” yada, yada, yada.

But other people have pointed out that most of the working world doesn’t have $150,000 plus in educational debt to pay off before Biglaw lets you out of white-collar indentured servitude. Most associates don’t blow their bonuses on hookers and coke. (Fools!) Sadly, paying off debt is the final destination for most of the bonus cash.

So, in a way, law schools always take your bonus — at least a significant chunk of it. But maybe this year those schools got an additional tap into your bonus cash. Last week Harvard Law school released its 2007-2008 Report of Gifts. According to a tipster (I didn’t receive the report personally because I try to stay off the HLS grid; it has a lot to do with my hooker/coke/debt decisions), Half-Skadden and Skadden-Mart donated quite a lot to HLS. The report lists those two firms in the $1 million to $3 million range.

Putting some figures together, after the jump.

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