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Kaufman logo.JPGThe effects of the global economic crisis continue to trickle through all aspects of the legal industry. Many firms simply aren’t willing to share the profits with associates as has been done in years past.

While we tend to focus on the Biglaw view of this crisis, it’s important to remember that associates as smaller firms are getting hit just as hard or worse from a dollars-per-hour perspective.

Last year we brought you a series of posts on law firm life outside of the top teir. One of the firms we highlighted was Kaufman Borgeest Ryan, a boutique insurance coverage firm with offices in New York, New Jersey, and California. Starting salaries there are about $90K while senior associates make just under what Biglaw first-years pull down.

In the past, associates have been eligible to receive around a $10K bonus, if they meet the minimum billable hours requirement of 2100.

Imagine being a lawyer, living in New York City, billing over 2000 hours a year, and making less than six-figures. Calgon take me away.

This year, associates at Kaufman should still receive their bonus, but it’s complicated. More after the jump.

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michigan law school strikes back.jpgWe have been following the sad tale of a University of Michigan 2L and a U-M professor who got caught up in a prostitution scandal. Yesterday, the Michigan 2L responded to some of the comments that have been made about her.

Today, the professor involved asked ATL for equal time and an opportunity to tell his side of the story. In a letter entitled: “Have you considered whether she may be simply lying?” and sent to the entire law school, the professor says:

I wish to raise with you the claim that, for whatever reasons, your student is simply lying. Allegations must be substantiated with facts; here are the facts as they emerge from the police report (which, as I am sure many of you know, anyone is entitled to get from the police).

We reprint the letter in full after the jump.

And just to be clear, this will conclude our coverage of these events. Both parties have had an opportunity to say their piece, and we’d like to leave it at that.

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Mos Def sued by Blank Rome.jpgWe’ve previously reported on law firms having difficulty getting clients to pay their bills. It’s not just happening to firms working on deals that go bust; it has also happened to a firm representing a celeb after his marriage went bust. From Am Law Daily:

Blank Rome is suing rapper/actor/activist Mos Def for over $60,000 in unpaid legal bills stemming from his 2006 divorce from Maria Yepes.

The couple ended their 10-year marriage that year in a Brooklyn court, with Judge Sarah Krauss pleading with them to settle their differences outside her courtroom.

Reports say that the Brooklyn-born Mos Def (real name: Dante Smith) owes the money to Blank Rome in the form of unpaid fees and retainers. The Emmy, Golden Globe, and Grammy award-nominated entertainer retained lawyers from the firm’s well-regarded matrimonial practice, which advises high-end clients on divorce, mediation, property distribution, paternity, visitation rights, and trusts and estates.

This is Mos Def’s second month in a row of legal troubles. In November, Las Vegas police issued an arrest warrant after Mos got in a scuffle with a photographer. In more bad news, his portrayal of Chuck Berry in the recently released music biopic extravaganza Cadillac Records was panned by the Los Angeles Times.

We wonder if this will make him rethink the title of his upcoming album, rumored to be titled Ecstatic.

Some good news for Mos Def, after the jump.

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services rendered.jpgLet’s say you meet a woman. You like her, she likes you, and eventually you move in together. She helps around the house and, you know, “helps” with other things too. Let’s say that over the course of a year, you “spend” $10,500 on that woman.

How would you explain where that money went, to say an account or on your tax forms?

Well, if you are Mr. Howard Shih of California, you call the $10,500 “wages” and try to get a tax deduction.

That is the situation that the U.S. Tax Court recently wrestled with. Except the proceeding was not directed at Mr. Shih for claiming a deduction, instead the case was about whether the woman (Ms. Jue-Ya Yang) should have reported the $10,500 as “income.”

(Dear God: That whole “The Law” idea you had is brilliant. What a great premise for your “Earth” sitcom. Don’t change a thing! It’s comedy gold.)

After the jump, TaxProf Blog walks us through the difference between wages, gifts, and illicit prostitution.

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law firm associate bonus watch 2008 biglaw bonuses.jpgFollowing up on its inspirational holiday card, yesterday Cadwalader announced the NYC-standard crappy Cravathy bonuses. The transmittal memo, which included the familiar numerical table, was short and sweet:

We are pleased to announce that the Firm will award year-end bonuses to associates and counsel as follows. Bonuses will be based on previously communicated criteria and are expected to be paid in January 2009. Associates who joined the Firm subsequent to January 1, 2008 and prior to October 1, 2008 will receive a pro-rated portion of the bonus.

The reference to “previously communicated criteria,” we’re told, is a reference to CWT’s hours requirement.

Full memo after the jump.

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wine glass.jpg

* A couple is suing United Airlines for “overserving” the husband by serving him red wine every 20 minutes on the flight. They say this is what caused him to beat his wife on the way to customs. [Chicago Tribune]

* “Federal judges in some parts of the United States are delaying the swearing-in of new citizens, apparently so that courts can keep millions of dollars in naturalization fees paid by immigrants, according to a new government report.” [The Washington Post]

* A Rhode Island family sued their cable provider for hooking up the Playboy channel, which plays hardcore porn. [Courthouse News Service]

* Investors in Madoff’s ponzi scheme might be able to get back some of their money by filing for a U.S. tax refund. As if the U.S. government isn’t paying out enough money these days…[]

* The high court in Europe says a UK couple should be bound by the ruling of judge in southern Cyprus that they demolish their vacation home. The house is built on land that belongs to a Greek Cypriot who claims it was taken from him during the Turkish invasion in 1974. [BBC News]

gunderson dettmer logo.jpgTo balance out word of the robust O’Melveny bonuses, here’s some bad news out of California. Earlier this week, Gunderson Dettmer (boy I miss “ad”venture capital) laid off a number of junior associates. As veterans of the heady dot-com days may recall, Gunderson put itself on the map back in 1999 by leading the charge to $125,000 starting salaries.

Gunderson did not respond to multiple requests for comment, made yesterday and today, so we don’t have an official number of new people looking for work. But two sources claim that the firm laid off half of its first-year class (five out of ten associates) on Monday, plus an additional but unknown number of more senior attorneys. These layoffs are, according to a tipster, “on top of performance-related attrition / dismissals throughout the fall.”

Some of those laid off this week were stub first-years, i.e., class of 2008 from law school. As Chris Rock might say, “here today, gone today.”

More after the jump.

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  • 17 Dec 2008 at 6:15 PM
  • Dreier

Dreier LLP, RIP

This should not come as a great surprise, but let’s go ahead and close the loop. From the WSJ Law Blog:

Dreier LLP Marc Dreier Marc S Dreier Mark Dreier Drier Dryer.jpgNearly two weeks ago, mere hours after Marc Dreier was arrested up in Canada for allegedly impersonating an in-house lawyer at a pension fund, lawyers at the eponymous law firm were heralding its doom. “It’s over,” said one litigation partner at the time.

On Tuesday, the predictions came true; Dreier LLP filed for Chapter 11 protection in bankruptcy court in Manhattan. In its petition, filed by Stephen Shimshak and Brian Hermann at Paul Weiss — where the receiver in the case, Mark Pomerantz, also hangs his hat — Dreier claims to have liabilities tallying between $10 million and $50 million.

The best reading in the petition is the list of creditors. Seems Mr. Dreier hadn’t been keeping up with the firm’s bills. Among those allegedly owed: the landlord of 499 Park Ave. ($908k); West Publishing ($441k); American Express ($323k); PR firm Van Prooyen Greenfield ($274k); ABM Janitorial Services ($89k); and AT&T ($81k).

And you thought your Westlaw bill was big….

A little more, after the jump.

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Michael Mukasey small Chief Judge Michael B Mukasey SDNY Above the Law blog.jpg* What’s the reason for U.S. AG Michael Mukasey recusing himself from the Bernard Madoff investigation? It may be his synagogue. [Cityfile]

* K&L Gates grand poobah Peter Kalis gripes about U.S. News & World Reports, gets all mushy about Pitt Law, and praises affirmative action. For minorities and kids from West Virginia. [TaxProf Blog]

* Ohio lawyer David Mills has started a daily legal cartoon blog. We ATL folk are painfully aware of how hard it can be to make the law funny. [Courtoons]

* ATL’s own Elie Mystal in a free-ranging interview on race, the law, blogging, and comments. [On Being a Black Lawyer]

* Two-thirds of law firms expect lower 2009 revenues. Sigh. But 8.2% expect higher revenues. Those must be the boutique bankruptcy firms. [National Law Journal]

Thacher.jpgBecause TPW knows a thing or two about crisis and rescue plans.

Seriously, though, it’s a good sign for the firm, even if it may not be a lucrative engagement — the Treasury press release reports that “total cost for the firm’s services is not expected to exceed approximately $500,000.” It raises the possibility that rumors of the firm’s demise are greatly — well, maybe not greatly, but somewhat — exaggerated.

Treasury Hires Legal Firm Under the Emergency Economic Stabilization Act

[U.S. Department of the Treasury (press release)]

law firm associate bonus watch 2008 biglaw bonuses.jpgIt’s getting ugly out there. For the first time since 2005, associate bonuses at Wachtell Lipton have dipped below 100 percent of base salary.

For those of you who aren’t familiar with the subject, here’s how bonuses at WLRK work. First, they’re lockstep, not tied to any billable-hours requirement or performance review. Everyone in the same class receives the same bonus.

Second, Wachtell bonuses are calculated as a percentage of base salary. Sometimes the percentage is the same from class to class; sometimes it’s not. In 2006, for example, there were divergences from year to year. When there are divergences, they generally favor seniority, with more-senior associates receiving bonus percentages that are higher than those given to juniors.

In 2006 and 2007, total bonus compensation at Wachtell (including midyear bonuses in 2006) clocked in at or above 100 percent of base salaries . This year, however, the bonus percentage sank below that threshold. We don’t have the exact number, but we’re hearing around 70 percent of base salary — “good” and “better than expected,” say two sources, but not as good as recent years.

(If this figure isn’t consistent with what you know, please email us. Please mention the class year that is the basis for your information, since sometimes the bonus percentage varies from class to class. Due to that variability, plus the lack of a firm-wide bonus memo, bonuses at Wachtell are less transparent than at other firms.)

Recall also that Wachtell base salaries are on a scale that is slightly above market. First-year associates at WLRK earn a base of $165,000 rather than the usual $160,000 (no Latham shenanigans here). A base salary of $165,000 and a 70 percent bonus would bring total compensation for a (non-stub-year) first-year to just over $280,000.

A Wachtell associate earning under $300,000 is a sad thing. But these are sad times.

Even the Wachtell holiday party was scaled back. More details, plus predictions about the firm’s future, after the jump.

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Notorious B.O.A.L.T. is a UC-Berkeley law school student who enjoys setting law school lessons to music. He appeared on our pages before, rapping his way through CivPro.

Now he’s back. Notorious has gone acoustic, but this song embraces the rebellious roots of rock & roll. Notorious writes, “As a protest against the lunacy of the Socratic Method and the staggering lack of imagination on the part of the Boalt Hall administration in clinging to a cobwebbed curriculum, I will not be taking any final examinations this semester.”

“Do the Torts Shuffle” is his submission to Professor Patrick Hanlon in lieu of a written final exam. He asks that Hanlon consider giving him a “sub-standard pass in the course.” Here it is:

We think rapping lends itself more easily to talkin’ ’bout the law, but this is a worthy effort. The question is: is it a sub-standard pass level effort?

A lyrical excerpt, and speculation about the future of Notorious B.O.A.L.T., after the jump.

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