You don’t want to live in a town where the police and the mob work together.
In a completely unrelated note, today the Second Circuit heard arguments from the SEC — the federal agency statutorily charged to enforce the nation’s securities laws — and Citigroup — a company targeted for securities laws violations that it refuses to admit or deny committing — on the SAME SIDE.
This should be a red flag.
They wanted the Second Circuit to spank Judge Jed Rakoff for having the audacity to ask the SEC to kindly do its job. The nerve of some people.
Well, securities law may not be as sexy as drone strikes, but I watched the SEC try to pull off just as naked an executive power grab.
The grass isn’t quite this green in the ‘new normal.’
In a piece from last month, New York Times columnist Paul Krugman wondered: Is Growth Over? One could very easily take this question, posed with respect to the broader economy, and apply it to the world of large law firms.
And what would the answer be? According to a client advisory just issued by Citi Private Bank and Hildebrandt Consulting, “Probably.”
Their analysis is gloomy, although guardedly so; we’re not talking about “the sky is falling” pronouncements. Let’s take a look at the specifics….
I later found out that during this whole period of time… when I was being romanced by Citibank, that they had reason to believe — in fact, they knew — that Howrey was in default of material covenants, and they didn’t tell me that.
– Stephen O’Neal, a former partner of Howrey LLP, in a deposition in his pending litigation against Citibank. O’Neal and another former Howrey partner, David Buoncristiani, allege that Citibank committed fraud by encouraging them to finance their capital contributions with Citi, claiming that Howrey was financially sound when the bank knew Howrey wasn’t.
The Dewey & LeBoeuf drama continues to unfold. As we mentioned in Morning Docket, there have been a few notable recent developments. Citibank just filed a vigorous response to allegations by Steven Otillar, a former Dewey partner, that Citi colluded with Dewey to take advantage of individual partners. Meanwhile, three former leaders of the firm — former chairman Steven Davis, former executive director Stephen DiCarmine, and former CFO Joel Sanders — have filed objections to the global settlement with former partners.
It’s not a pretty picture. And here’s what we’re wondering: Could it happen to another major law firm, sometime in the next twelve months?
What is the future outlook for Biglaw? The Magic 8 Ball is not optimistic.
Last month, we wrote about a less-than-cheery report from Citi Private Bank’s Law Firm Group, the largest lender to U.S. law firms. The bottom line of that report for law firms: “With weak demand growth and the continuation of expense growth, it is likely that expenses will continue to grow at a faster pace than revenue, squeezing margins and making it tricky to achieve even low single-digit profit growth.”
As we mentioned in Morning Docket, there’s a new report out from our friends at Citi, and it also sounds pessimistic notes. It concerns the confidence levels of law firm managing partners.
What are the powers-that-be in Biglaw worried about right now? Let’s find out….
As we mentioned in the Labor Day edition of Morning Docket, there’s some interesting news on the Dewey & LeBoeuf front. The one former Dewey partner being sued by Citibank for allegedly defaulting on a capital loan — energy lawyer Steven Otillar, now a partner in the Houston office of Akin Gump — is opposing Citi’s attempt to collect on the debt, by arguing that he was “fraudulently induced” to borrow the money in question.
How much are we talking about? How does the debt compare to Otillar’s compensation while at Dewey? And what are Otillar’s specific allegations about “fraudulent inducement”?
* Court accidentally posts secret settlement. That’ll teach these courts from keeping secrets. [Boston Globe]
* Here is an appropriate response to a law firm brochure. [Lawprofblawg]
* Former News of the World lawyer arrested. You know, the problem with the News of the World scandal is that it’s one of those things that happens somewhere else and so Americans don’t care. Americans like me. [Wall Street Journal]
* Cincinnati law profs pass around the collection plate and come up with a scholarship for students. [Tax Prof Blawg]
* Citibank settled with its shareholders for being buying bad assets. In other news, Citibank bought a lot of bad assets. [Dealbreaker]
The fable of the ant and the grasshopper may have lessons for the world of large law firms.
As regular readers of Above the Law well know, most major law firms — with a fewnotableexceptions — did not pay spring or mid-year bonuses in 2012. Our associate readers generally viewed this news with disappointment, while our partner readers had less of a problem with it.
But perhaps even associates should have been supportive of their firms’ decisions not to pay spring bonuses. Storm clouds are gathering over the law firm world. So says a recent report by Biglaw’s biggest bankers, over at Citigroup….
Law firm financials can be shrouded in mystery. Sure, the American Lawyer releases its closely watched and highly influential Am Law 100 rankings each year, which shed some light on the subject. But these numbers are not Gospel truth, and sometimes they get restated — which is what happened last month to Dewey & LeBoeuf.
Making a material misrepresentation to the American Lawyer doesn’t violate the securities laws. Making a material misrepresentation in connection with the purchase or sale of any security — well, that’s more problematic.
Let’s take a closer look at a subject we mentioned last night and again this morning, namely, the offering memorandum for Dewey’s 2010 private placement of $125 million in bonds….
The law firm of Dewey & LeBoeuf, which is currently fighting for its life, might have good news to report — and we’re happy to share it with you. It seems that LeBoeuf is not yet cooked.
As we’ve previously mentioned, tomorrow, April 30, was supposed to be the deadline for Dewey to reach a new deal with its syndicate of bank lenders. The firm owes its banks a reported $75 million pursuant to a $100 million revolving line of credit.
So what’s the latest — and relatively upbeat — news about Dewey?
UPDATE (4:30 PM): Additional, less cheerful Dewey updates — about the talks with Greenberg Traurig, and about embattled ex-chairman Steven H. Davis — have been added after the jump.
UPDATE (6:00 PM): More Dewey debt news — good news, happily — has been added below.
Average law school debt for graduates of private universities hovered around $122,000 last year. With only 57% of new attorneys actually obtaining real lawyer jobs, recent graduates have a lot to consider when it comes to managing their student loan payments. Thanks to our friends at SoFi, today’s infographic takes a look at student loan debt, including the possible benefits of refinancing for JDs…
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: