* Stop bullying the judges on the Foreign Intelligence Surveillance Court. They don’t cave to just any government data request — they make changes to about 25 percent of them. But uh… they don’t like to talk about the other 75 percent. [Bloomberg]
* Everything’s bigger in Texas, including the number of Biglaw firms with failing grades for diversity. Hunton & Williams, Patton Boggs, and Thompson Coe are by far the worst offenders of all 19 large firms, with ZERO minority partners. [Texas Lawbook]
* A contract attorney is currently facing criminal charges for felony overbilling (which isn’t actually a real crime, but it’d be cooler if it was… plus it would make lots of lawyers from DLA Piper cry). [Radio Iowa]
* Well, at least one school got the message about the tuition being too damn high. Iowa Law is reducing tuition for out-of-state students by about $8K in the hopes of filling more seats. [Des Moines Register]
* Amanda Knox, more commonly known as Foxy Knoxy, says that she’s no “femme fatale,” but she’s being portrayed, again, as a “sex-obsessed she-devil” after already being acquitted of murder. [Reuters]
* Fashion designer Christian Louboutin was seeing red over the use of his trademark red soles in anti-Islam political messages, so he sued over it, and this time, he won. Rejoice, fashionistas! [New York Magazine]
Here’s some friendly advice: when you’re drunk, try to keep your mouth shut. Or at least keep your work-related thoughts to yourself. This is certainly true for junior lawyers, but it goes for partners as well.
According to a complaint just filed by the Securities and Exchange Commission, an IP partner at a leading law firm had a few too many drinks, then got a little “TMII” — “too much (inside) information” — with his investment adviser. That adviser then traded on the material, nonpublic information, the SEC alleges….
A Washington attorney drunkenly passed confidential information to a friend about Pfizer Inc.’s planned $3.6 billion acquisition of a pharmaceutical industry client in 2010, the U.S. Securities and Exchange Commission said in a Friday complaint.
The SEC filed an insider trading suit in Florida federal court against Tibor Klein, an investment adviser who allegedly bought shares of King Pharmaceuticals Inc. shortly before the firm was acquired by Pfizer Inc. for $3.6 billion. Klein learned about the planned acquisition in August 2010 from an attorney and investment advisory client named Robert M. Schulman, according to the SEC. Schulman, who was not named as a defendant in the suit, learned about the deal because he represented King Pharmaceuticals in separate litigation, the SEC said.
Hunton & Williams LLP employs a partner in its Washington office named Robert M. Schulman who represented King Pharmaceuticals in a patent case in Virginia federal court. That case was dismissed in August 2010 following a settlement.
You can access Robert Schulman’s bio on the Hunton website, and you can read the complaint on the SEC website. Here’s how the disclosure allegedly went down (according to paragraphs 20 and 21 of the complaint):
During a meal with Klein at their home that weekend, Schulman drank several glasses of wine and became intoxicated. He blurted out to Klein, “It would be nice to be King for a day.”
Schulman intended to imply he was a “big shot” who knew “some kind of information” about King Pharmaceuticals.
The SEC alleges that Tibor Klein then traded on the information and shared the information with a friend, Michael Shechtman, who also traded on the information. Klein and his clients, including Schulman, netted more than $300,000 in profits from their trading in King shares, and Schechtman and his wife earned more than $100,000 from their transactions, according to the SEC.
We reached out to Hunton & Williams and to Robert Schulman. We have not yet heard back; if and when we do, we’ll update this story. (But we’re not expecting comment, since Schulman previously declined to comment to Law360 (sub. req.) and the New York Post.)
On the bright side, Schulman isn’t named in the SEC complaint; perhaps he’s cooperating with law enforcement. When it comes to attorneys accused of involvement with insider trading, we’ve seen so much worse.
* Even at the top of the in-house food chain, women lawyers are still paid less than their male counterparts. But hey, at least they’re not being forced to cry poverty like their in-house staff attorney brethren. [Corporate Counsel]
* Neil Barofsky, the former King of TARP in the United States, is making the move to Jenner & Block, specifically because as opposed to all other firms, “Jenner took the side of really getting to the truth of the matter.” [Reuters]
* Luxury fashion is fun: four Biglaw firms, including Cleary Gottlieb, Cravath, Torys, and Proskauer Rose, all took Tim Gunn’s mantra to heart to make it work for the $6 billion sale of Neiman Marcus. [Am Law Daily (sub. req.)]
* If you want to try some lawyer, we hear that they taste great when poached this time of year. Speaking of which, Troutman Sanders just reeled in three attorneys from Hunton & Williams. [Richmond BizSense]
* Are you ready for some tax law?! The NFL and other professional sports leagues might lose their nonprofit status if new tax reform legislation makes it through the House and the Senate. [Businessweek]
* Billable hours in Biglaw are down 1.5 percent, and 15 percent of U.S. firms are planning to reduce their partnership ranks in early 2013. Thanks to Wells Fargo for bringing us the news of all this holiday cheer! [Thomson Reuters News & Insight]
* Hostess may be winding down its business and liquidating its assets, but Biglaw will always be there to clean up the crumbs. Jones Day, Venable, and Stinson Morrison Hecker obviously think money tastes better than Twinkies. [Am Law Daily]
* How’s that “don’t be evil” thing working out for you? Google’s $22.5M proposed privacy settlement with the FTC over tracking cookies planted on Safari browsers was accepted by a federal judge. [Bloomberg]
* Perhaps the third time will be the charm: ex-Mayer Brown partner Joseph Collins was convicted, again, for helping Refco steal more than $2B from investors by concealing the company’s fraud. [New York Law Journal]
* H. Warren Knight, founder of alternative dispute resolution company JAMS, RIP. [National Law Journal]
Last week, we discussed the effort by Dewey & LeBoeuf to hold on to departing partners by enforcing its 60-day notice requirement. Partners that leave without complying with the requirement can miss out on profit distributions.
Alas, the response of many partners seems to be, “So what?” Yesterday brought word of about eight partners leaving Dewey. And since our story this morning about Dewey’s tax-time troubles, even more defections have been announced.
So who are the latest lawyers to leave, and where are they going?
It’s getting hard to track all the action, but we’ll do our best. Here’s our understanding of the latest news.
Hunton & Williams just announced that it’s adding six Dewey lawyers to its global energy practice: Bud Ellis, Kevin C. Felz, Michael F. Fitzpatrick Jr., Steven C. Friend, Steve R. Loeshelle, and Peter K. O’Brien. All were partners at Dewey except for Felz, who was counsel. You can read the Hunton press release here.
Energy is a hot area (as reflected in all of the recent lateralmovement). Bud Ellis previously served as co-head of Dewey’s utilities, power and pipelines industry group.
But Dewey appears undaunted. The firm issued a statement to the WSJ Law Blog:
As we have said in the past, although the new direction that the firm is taking was approved and is supported by the overwhelming majority of the firm’s partners — as might be expected at a firm with 300 partners — some didn’t like the change… Changes we have enacted have strengthened our firm across the board and it is showing up in our finances, professionals and new business we are winning. Current departures aside, Dewey & LeBoeuf retains one of the world’s leading energy practices spanning virtually every aspect of the sector across the globe. It has been an important component of the firm’s practice for decades and remains as such.
[I]n New York, Pillsbury has grabbed former Dewey partners Catherine Hood and J. Anthony Terrell, corporate and securities lawyers who often work for energy clients….
Pillsbury chair Jim Rishwain says the new hires fit his firm’s broader plan to “build a powerhouse energy firm across all fronts.” Pillsbury lawyers have worked with and tried to recruit Hood and Terrell for “quite some time,” Rishwain adds, noting that the rash of defections from Dewey in recent months was probably a factor in the pair’s decision to finally come aboard.
Rishwain kindly refrained from gloating at greater length about Dewey’s troubles. “I’m sympathetic to what’s happening, more than anything else,” he said to Sara Randazzo of Am Law.
Today’s departures come on the heels of yesterday’s report of three energy lawyers heading over to Cozen O’Connor: former Dewey partner Michael Klein and two former Dewey associates, Ahren S. Tyron and Joshua L. Belcher. Klein and Tyron will join Cozen as members of the firm.
Today, as you probably know, is the deadline for filing your taxes. As was the case last year, the combination of April 15 falling on a weekend and the little-known holiday of Emancipation Day pushed the filing deadline back a bit.
Did you appreciate the extra time to fill out your tax return? Partners at Dewey & LeBoeuf probably did, due to some problems with their K-1 forms.
And speaking of partners at Dewey, their numbers continue to decline. Let’s look at the latest defections, as well as the tax issue.
UPDATE (10:30 AM): The game of musical chairs continues. Six more Dewey departures, which we learned about shortly after publishing this post, after the jump.
We’ll start with the defections. The Dewey partner countdown continues. As we mentioned last week, when the Dewey partner losses for 2012 to date stood at around 50, about 45 more departures could create problems with respect to Dewey’s loan covenants.
That was last week’s count. Yesterday brought word of eight new partner departures. The number of partners lost by the firm in 2012 now exceeds 60, according to Am Law Daily. For those keeping track at home, another 35 to 40 defections could get Dewey in deep doo-doo with its lenders. The firm’s creditors, as you may recall, include not just banks but also bondholders. In addition to any money borrowed under its $100 million revolving credit line, which the firm is currently in the process of renegotiating with its banks, Dewey also owes an estimated $125 million in connection with a private bond issue.
UPDATE (10:30 AM): Make that another 30 or so defections. Hunton & Williams just announced that it’s adding six Dewey lawyers to its global energy practice: Bud Ellis, Kevin C. Felz, Michael F. Fitzpatrick Jr., Steven C. Friend, Steve R. Loeshelle, and Peter K. O’Brien. All were partners at Dewey except for Felz, who was counsel. You can read the Hunton press release here.
Now, on to the tax issue. Casey Sullivan had this report yesterday in the Daily Journal (sub. req.):
Some partners who have left Dewey & LeBoeuf LLP this year have recently claimed their updated K-1 tax forms, issued April 12, contain allocations of 2011 taxable income that are drastically inconsistent with what the partners were actually paid.
One ex-Dewey partner said his taxable income came in at a small fraction of the amount he was actually paid for the year of 2011, while another ex-Dewey partner said the tax form pegged his taxable income at nearly double the amount of compensation he received for last year. Two partners said they knew of several current and former Dewey partners who expressed similar concerns over their K-1 forms.
When law firm partners can’t make heads or tails of their tax forms, you know things have gotten bad. What’s behind the apparent discrepancies?
The New York firm has lost more than 50 partners since the beginning of the year, many of the defectors claiming firm leaders slashed or deferred a significant chunk of their compensation because they couldn’t afford to pay compensation guarantees owed to other high-ranking Dewey rainmakers. Now, as the firm has issued updated tax forms for the year of 2011, confusion has overcome certain partners who say they have been either under-allocated or over-allocated taxable income.
The firm did get professional help in preparing these forms. Dewey retained PricewaterhouseCoopers to help sort through “the complexity of compensation arrangements with partners and the distributions of cash in 2011.” Here’s how PWC’s cover letter for the updated K-1 forms explained matters:
“The updated 2011 estimate is likely to be different than the one provided to you in January 2012. Based on the updated allocations, partners that have guaranteed compensation generally will receive additional taxable income allocations related to the cash received for both the current and prior years if applicable, and the remaining partners generally will be allocated a reduced share of taxable income. These updated allocations provide a more equitable basis for connecting taxable income with cash received.”
One former Dewey partner said the following in an email to the Daily Journal: “All I know is I’m paying a lot of taxes for 2011, luckily I have the resources to do it, and I’ll figure out what they did down the road.” In other words, pay all your taxes now, and let God — or the IRS (same difference) — sort them out later.
One of ATL’s Dewey sources confirmed the confusion among Dewey partners, current and former, on the tax front. This tipster told us:
All of the partners are completely confused about these reports. They are not consistent with earlier estimates given to the partners in January and are not consistent with the cash actually distributed to partners. They are not consistent with the numbers reported to Am Law or even in Am Law’s restated numbers.
Younger partners are being told that the a big part of their cash distributions for 2011 were for repayment of capital. Only these partners were told they were getting profit distributions and treated them accordingly. These partners largely borrowed money for their capital accounts through lending facilities set up by Dewey. So, these folks still owe the banks on their capital notes. A bunch of celebrity chefs [?] received K 1′s that report income higher than they actually received. The covering memo says that Price Waterhouse helped the firm come up with a “more equitable” allocation of the cash actually received. Huh? Cash profit distributions should be cash profit distributions.
Here’s what this source suspects might be going on:
There is a lot of confusion and some anger as to what this is all about. Some folks think that the firm is setting up the partners for an additional capital call. Some partners think that the firm is in trouble with its lenders, [both] for the debentures and the banks. Apparently, the debentures have limitations on profit distributions if revenue falls below a certain number and this may be a subterfuge for the money actually paid out. There is a lot of confusion and mistrust and almost no information given to the partners. The fact that returns need to be filed [today] adds to the bedlam.
This could be the straw that breaks the camel’s back for a lot of fence sitters.
Some observers — such as Steven Harper, over at The Belly of the Beast — have questioned the wisdom or propriety of former Dewey partner John Altorelli’s pessimistic comments to the media about Dewey’s future. His remarks might not have been politic, but whether they’ll be proven wrong is another story.
Our hazing shenanigans are cheeky and fun! Your shenanigans are cruel and tragic.
* There is a woman on my block who walks her inconceivably yappy dogs every damn day at 4:45 PM. Do I routinely go outside and yell at her to shut her dogs up? Yes. Do I pepper spray her pitiful excuses for K-9 companions, like this Hunton & Williams partner allegedly did? No. At least not yet… [Gossip Extra]
* As a Dartmouth undergrad, this current UVA Law student oversaw fraternity initiation rituals, which allegedly involved “chugging ass beers, eating vomelettes, and consuming pure vinegar.” Jesus. That might even be worse than the elephant walk. [Ivy Gate]
* The gospel of Elie Mystal is officially snowballing. Next, I think he needs about a dozen disciples, some flowy robes, and a good set of sandals. [Gawker]
* As a lifelong baseball fan, I’m honestly kind of glad that American football is now on the national hotseat. Yeah, steroids are bad, mmkay. But at least Bruce Bochy doesn’t reward his players for putting the visiting team in the hospital. [ESPN]
* Ponzi schemer extraordinaire Allen Stanford bravely faces the music. [Dealbreaker]
* Who said it’s tough to get a lawyer job these days? Clearly, all you need is a father in the state Senate willing to trade political favors for your employment opportunities. [Press Connects]
* Hopefully the Skadden clerk responsible for botching work for Las Vegas mogul Steve Wynn doesn’t end up up like Joe Pesci at the end of Casino. [Am Law Daily]
* All you lonely Manhattan Biglaw attorneys will now have to find somewhere else to find buy your “Dream Girl” or “Ultimate Elite Model.” [Dealbreaker]
This year, seven law firms made Crain’s list, and as we told you back in January, only four made Fortune’s. Three firms are new to Crain’s list, while the other four moved up or down in the rankings. Just two of those firms overlap between Crain’s and Fortune’s lists.
It appears that congratulations and condolences are both in order. So, which law firms are considered the cream of the crop in New York City?
Before we get to New York City’s top law firms to work for, let’s check out Crain’s rankings methodology:
To identify the Best Places to Work, Crain’s partnered with Best Companies Group, an independent research firm, which conducted 12,494 surveys of employees in New York City.
To be eligible, businesses had to employ 25 or more workers in the city. Scores from employees, who answered a confidential 72-question survey, were combined with scores from an 80-question survey of employers. Questions focused on everything from benefits and policies to opportunities for advancement and corporate culture. Results from the employee surveys made up 75% of the total score; results from the employer surveys made up 25%.
Yup, that sounds like a great way to determine if a Biglaw firm is a better place to work than the local bar or bakery.
That being said, the seven law firms on Crain’s 2011 Best Places to Work in NYC list are:
But what happened at Alston & Bird? Why did so many A&B employees in the New York office decide to flip the firm the bird? Alston & Bird was one of the firms that made both Crain’s list and Fortune’s list (along with Bingham). Keeping that in mind, it seems strange that the firm would take such a big hit. If you’ve got any information, please email us or text us at (646) 820-TIPS.
So, readers, have these rankings actually been earned? Can you think of a law firm that deserves to be recognized, but hasn’t been? Please give us your thoughts.
The cutting-edge information and security practice of Hunton & Williams is getting the firm lots of media attention these days — but not of the positive variety. The firm’s lawyers are getting coverage due to their information becoming insecure after a hacktivist group leaked emails they exchanged with security firm HBGary.
Last night, the firm’s logo was flashed several times on the Colbert Report, as Stephen Colbert named the firm as the link between the DOJ, HBGary, and Bank of America, in coming up with questionable tactics for undermining liberal activists. (See our prior post, Hunton & Williams Gets WikiLeaked.)
What is most significant here is that you have these plans that are clearly crossing a legal line, with very serious players involved. Law firms like Hunton & Williams are the most powerful in D.C. And no one at any point said, “Maybe this goes a little too far, maybe we shouldn’t be doing this.” So willing to cavalierly to put a plan like this that clearly proposes illegal steps down on paper. It clearly shows that this sort of stuff in this world of corporate and government consortium of power is pretty normal, is par for the course.
Moral of the show: BigLaw + BigGov = Evil. Check out Colbert’s telling of the “techno thriller” tale (after the jump). Think Star Wars, with Bank of America as Darth Vader, HBGary and Hunton & Williams as commanders of the Imperial Forces, WikiLeaks as Princess Leia, and Anonymous as Han Solo….
Hunton & Williams info and security practice partners Robert Quackenboss, John Woods, and Richard Wyatt Jr. aren’t just dealing with bad press. This week, one of the liberal activist groups that HBGary hoped to undermine — Stop the Chamber — filed an ethics complaint against the three with the D.C. Bar.
Hunton & Williams is having an uncomfortable week, and will get its very own page in the WikiLeaks saga. Thanks to a feud between hacktivist group Anonymous and a security firm, emails that Hunton lawyers exchanged with that security firm were leaked in a major document dump last week.
Journalist (and lawyer) Glenn Greenwald of Salon is now calling the firm’s lawyers the “central cogs” in a devious plot to take down WikiLeaks and its supporters (he’s especially miffed as he was named in a secret PowerPoint as one of those supporters). The New York Times named Hunton as the intermediary between security firms offering up unseemly sabotage tactics and clients like Bank of America and the U.S. Chamber of Commerce.
So how unseemly were these alleged tactics, and which Hunton partners are getting blasted by the press?
According to a report at the tech news site Tech Herald, data intelligence firms including Palantir, Berico and HBGary were all recruited by the law firm Hunton & Williams to propose ways of subverting or sabotaging WikiLeaks on behalf of Bank of America. Those plans were found in the hacked email account of HBGary executive Aaron Barr, after he was targeted by the loose hacker group Anonymous in retaliation for what the group believed was an attempt to infiltrate its ranks and identify members to the FBI.
WikiLeaks supporters were not the only targets of a possible smear campaign. ChamberWatch, an anti-business-lobby group, was also on the hit list. Slate sums up the leak of internal emails between HBGary and Hunton well:
Emails reveal that lobbying firm Hunton & Williams reached out to three security contractors to investigate the U.S. Chamber of Commerce’s political opponents, meeting with representatives and taking proposals for a $2 million contract. (Nobody was ever hired, but the project was nicknamed “Themis” after the Roman goddess of law and order).
Greek titan, actually. Though it seems like this would have been more aptly named Project Nemesis.
“The proposals included distributing fake documents and launching cyber-attacks,” and creating “fake insider personas” on social media sites attributed to activists, the Washington Post writes.
Based on what we know now, it doesn’t seem like Hunton actually accepted or endorsed any of these tactics, nor does it seem that Bank of America or the Chamber of Commerce knew about or signed off on “Project Themis,” protecting them from legal fall-out.
But what about PR fall-out? Hunton & Williams is not commenting to the press so far.
Salon’s Greenwald has posted a screenshot of partner John Wood’s firm bio and is calling for his head. Or at least, calling for lots of phone calls. Greenwald writes:
Perhaps some polite email and telephone encouragement from the public is needed for Woods to account for what he and his firm have done. In exchange for the privileges lawyers receive (including the exclusive right to furnish legal advice, represent others, and act as officers of the court), members of the Bar have particular ethical obligations to the public. At the very least, the spirit — if not the letter — of those obligations is being seriously breached by a lawyer who appears to be at the center of these kinds of pernicious, lawless plots and then refuses to account to the public for what he did.
The firm’s getting lots of bad press… unless it actually turns out to be good press. Hunton has a noted privacy and information security practice, with its own blog and Twitter feed. Perhaps potential clients will come away from this impressed by the Hunton’s devious ways.