Wall Street

Eliot Spitzer Governor Eliot Spitzer prostitute prostitution Above the Law blog.jpgThere is so much blame to go around over the AIG debacle that even “Governor John” Eliot Spitzer is getting knocked around.

Remember Attorney General Spitzer orchestrated AIG founder Maurice “Hank” Greenberg’s resignation, back in 2005. But since then some of the charges against Greenberg have been dropped, while Greenberg continues to fight other allegations.

Greenberg was but one of many “triumphs” Spitzer notched on his bedpost as Attorney General. His zealous prosecution of wall street corruption catapulted him to fame, higher office, and (we now know) abject hypocrisy.

But as the AP points out, it may be a little too easy –and partisan– to blame Spitzer for AIG’s collapse:

“I think the AIG problems were probably even bigger than Hank Greenberg and Eliot Spitzer,” said Professor James D. Cox of the School of Law at Duke University. “I would hope that something of this scale _ which is mammoth, both the bailout and the problems that led up to it _ are bigger than just politics.”

Columbia Law Professor John Coffee blames AIG’s troubles on AIG owns practices: “Ratings agencies don’t downgrade anyone because Eliot Spitzer doesn’t like them.”

Spitzer didn’t break Wall Street, but his particular path to power should be a warning to future attorneys general. Sticking up for the little guy is all well and good. But you shouldn’t use the office to get nice copy for future campaign ads.

Are you listening Andrew Cuomo? Prosecutors are supposed to tackle “corruption” because it is their job, not because it’s a resume builder for higher office. It’s a rule we think both parties should be able to follow.

Analysis: Some see Spitzer role in AIG’s crisis [Associated Press]

Davis Polk Wardwell DPW Above the Law blog.jpgWe’ve been providing extensive coverage of the unfolding financial crisis (as have our colleagues at our sister site, Dealbreaker). In several recent posts — see, e.g., here and here — we’ve discussed the Biglaw winners and losers with respect to the Wall Street meltdown.

One evident winner: Davis Polk & Wardwell. Several DPW sources forwarded us an email that was circulated yesterday, trumpeting how busy the firm is these days and how many engagements it has landed arising out of what the memo calls “recent financial markets matters” (aka “the late unpleasantness”).

One Davis tipster writes:

[This email] went out to all lawyers. I suppose it’s their way of saying things are pretty great at the firm. Let’s hope bonus season will confirm this view!

The supposedly internal memo reads a bit like a press release. It was sent out not by a partner but by Kevin Cavanaugh, the firm’s director of business development.

We suspect that the memo is a bit of “blog bait” from Davis Polk. Naturally, we’re happy to take it.

Check out the full memo, after the jump.

double red triangle arrows Continue reading “Davis Polk: Making Bank”

aig.jpgAnother day, another market massacre. Right now the SEC is meeting about “improper short selling” of Morgan Stanley and Goldman Sachs stock. The Dow is down nearly 450 points.

We have definitely entered the “dogs and cats, living together, mass hysteria” phase of this meltdown.

But while everybody is running around trying to CYA, the government is giving away the store. Professor Bainbridge has nine excellent questions about the AIG bailout; questions that the government lawyers seem to be willfully ignoring. Here are some crucial ones, maybe we can help Bainbridge (and our country) out of this mess:

* On what basis does the Fed have authority to use the discount window to bail out an insurance company?

* Who would have standing to challenge the Fed action, if anyone?

* Why was AIG to big too fail but Lehman wasn’t? Was AIG’s role in the credit default swap market really that important?

* Has the federal government ever taken an equity stake–let alone a controlling stake–as part of a bailout before? Was there any equity stake in Chrysler?

See the rest of Bainbridge’s probing questions here.

There are a lot of smart men and women here. Does anybody have any idea how the federal government just shoved AIG down our collective throats?

Things I don’t Understand About the AIG Bailout [Stephen Bainbridge]


recession california associate pay raises.jpgMore law firms are benefiting — at least in the short term — from Wall Street jumping the shark.

The WSJ Law Blog has a roundup of the newest firms to come away with a piece of the bankrupt pie. Cleary Gottlieb Steen & Hamilton advised Barclays on their scavenging Lehman’s North American business, while Davis Polk & Wardwell helped your nominally “free-market” government bail out AIG.

But the financial crisis is far from over. Which firms are still left to benefit as the financial sector careens down the off ramp of success? We know Simpson Thacher has done a lot of work with Washington Mutual, and we know WaMu is about as stable as Courtney Love after a Seattle rainstorm. Will Simpson be able to cash in on a WaMu sale, or will Weil just add another bloodied notch to their belt?

Anybody else with their hand out? After the jump.

double red triangle arrows Continue reading “Open Thread: Will Your Firm Get Some Scraps?”

untitled-5.jpgAs the Fed steps in to save the financial world with a bridge to nowhere AIG, we pause to reflect on the results from Monday’s ATL / Lateral Link survey, which asked whether the woes of Lehman Brothers and Merrill Lynch would hurt your career.

We received 830 responses, and quite a few of them looked like this one:

It’s the end of the world.

Overall, 42% of practicing attorneys said the demise of Lehman Brothers and Merrill Lynch would hurt their careers, which is way up from the 27% who said the same about Bear Stearns back in March. Law students are even more concerned, with 50% of 3Ls, 68% of 2Ls, and 63% of 1Ls feeling fearful.

While a third of New Yorkers were afraid about the impact of Bear Stearns back in March, the more recent collapses have frightened 55% of the Big Apple’s Big Law respondents. In fact, fear has risen dramatically in every market:

Responses by market: Are you afraid that the recent collapse will hurt your career?


City/Region
After Merrill Lynch    
& Lehman Brothers    
After
Bear Stearns
Austin
20% yes
-
Dallas
20% yes
-
Miami
20% yes
-
Boston
31% yes
16% yes
Houston
34% yes
-
Washington, D.C.    
37% yes
20% yes
Bay Area
38% yes
13% yes
Chicago
39% yes
8% yes
Los Angeles
41% yes
24% yes
Philadelphia
44% yes
17% yes
Atlanta
54% yes
25% yes
Charlotte
54% yes
-
New York
55% yes
33% yes

Additional discussion, including selected comments from survey respondents, after the jump.

double red triangle arrows Continue reading “Associate Life Survey: Life After Lehman Brothers?”

funny-pictures-panda-will-let-you-take-the-bamboo.jpgBack in March, we found that 27% of ATL readers — and a third of ATL readers in New York — thought the Bear Stearns collapse would hurt their careers.
With Lehman Brothers filing for bankruptcy this morning, and Merrill Lynch selling itself to Bank of America, after “a marathon series of meetings at Wachtell, Lipton, Rosen & Katz,” we can’t help but wonder how billables at Wachtell and Weil and Shearman & Sterling are going to look this month . . . and how everybody else’s are going to look over the next year (especially if other firms, like, say, AIG, go under as well).
As we asked back in March:

But how will it affect you? Will work slow down as investors circle the wagons, or will there be a regulatory response that actually increases the need for lawyers? Will shareholders’ fear of fire sales increase bankruptcy and litigation work?

In today’s ATL / Lateral Link survey, let’s find out if your thoughts are any different, now that we’ve had a little post-Bear-Stearns experience to inform our expectations.
Update: This survey is now closed. Click here for the results.

Justin Bernold is a Director at Lateral Link, the sponsor of this survey.

Wall St Wall Street investment banking finance financial.jpgIn case you hadn’t heard, Wall Street is in meltdown mode right now. Our colleagues over at Dealbreaker have been working over the weekend and around the clock to cover all the latest developments.
Here are the two big stories from the financial world. First, the top-level parent company of Lehman Brothers, Lehman Brothers Holdings Inc., is filing for Chapter 11 bankruptcy protection. (But no sleeping in for Lehmanites; they have been informed that they’re still expected to show up to work this morning.)
Second, Merrill Lynch, the investment bank that some feared might be next to go down the Bear Stearns / Lehman Brothers path, has reached a deal to sell itself to Bank of America, for $50 billion.
What do these deals mean for lawyers? Well, at least in the short term, they bring good news: more work. (Over the long term, of course, the news may be less good, as current and potential future clients vanish from the landscape on Wall Street.)
For its bankruptcy, Lehman is turning to Weil Gotshal & Manges, long known for its top-notch bankruptcy practice. From Dealbook:

Weil.gifLehman has hired Weil, Gotshal & Manges, the law firm that handled Drexel [Burnham Lambert]‘s bankruptcy filing [in 1990]. Harvey Miller, the head of Weil’s restructuring practice, is known as one of the deans of the bankruptcy bar.

In addition, Lehman is trying to sell its more valuable assets, including its broker-dealer and asset-management operations. It appears to be represented in those efforts by Sullivan & Cromwell, according to TheDeal.com (subscription).
Wachtell Lipton Rosen Katz WLRK AboveTheLaw Above the Law blog.jpgMeanwhile, Wachtell, Lipton, Rosen & Katz, a powerhouse in financial-institutions M&A, is getting a piece of the action on the Merrill deal. As reported by the Wall Street Journal, the Merrill / B of A deal was hammered out in “a marathon series of meetings at Wachtell, Lipton, Rosen & Katz, the law firm which has long represented Bank of America in its deals.”
Shearman & Sterling logo Above the Law blog.jpgWachtell isn’t lending out their offices for free. As TheDeal.com reports, WLRK is indeed representing Bank of America in the transaction (for a fee that will be well into the eight figures — Ed Herlihy doesn’t come cheap). Merrill Lynch is being advised by Shearman & Sterling.
If you’re aware of other winners and losers from these deals, please share what you know, in the comments.
Lehman Announces Bankruptcy Filing For Holding Company [Dealbreaker]
Bank of America Reaches Deal To Buy Merrill Lynch [Dealbreaker]
What a Lehman Bankruptcy Filing Might Look Like [DealBook]
Bank of America to Buy Merrill [Wall Street Journal]

Sarbanes Oxley for Dummies Sarbox SOX book.jpgThe constitutionality of the Public Company Accounting Oversight Board, enacted as part of the Sarbanes-Oxley Act, was recently upheld — decision available here (PDF) — by a divided panel of the D.C. Circuit. But those who challenged the Board’s legitimacy are fighting on.
The appellants will either seek rehearing en banc in the D.C. Circuit or certiorari from the Supreme Court. In their efforts, expect them to draw support from the forceful dissent by judicial superstar Brett Kavanaugh (who is, by the way, familiar with this fine website).
If appellants seek succor from the SCOTUS, their pleas may fall upon sympathetic ears. From our colleague, former Skadden and Latham corporate lawyer John Carney, over at Dealbreaker:

Perhaps the most ominous sign for the PCAOB is the fact that Judge Kavanaugh clerked for Supreme Court Justice Anthony Kennedy, who would probably hold the swing vote if the case went to the Supreme Court. His dissenting opinion seems tailor-made to provoke the conservative wing of the court into striking down the board. Unless Congress acts to amend it, we’d bet the autonomous PCAOB is headed for extinction.

You can read the rest of his analysis — which will take you “back to Con Law and the halcyon days of youth,” in the words of one Dealbreaker commenter — over here.
Short Sarbanes-Oxley’s Accounting Board [Dealbreaker]
Free Enterprise Fund v. PBAOB (PDF) [U.S. Court of Appeals for the D.C. Circuit]
Sell Sarbanes-Oxley [New York Sun]
D.C. Circuit Affirms Constitutionality of Accounting Oversight Board [WSJ Law Blog]
Will a Lawsuit Unravel SOX? Firm Brings Constitutional Challenge [WSJ Law Blog]

Russian nesting dolls Matryoshka doll.jpg* Why does Wall Street get all the juicy scandals? We’re jealous of our DealBreaker colleagues. [Dealbreaker]
* Larry Ribstein’s take: “it’s hard not to think that it’s really all about dispute a few weeks ago between [the NYT's Andrew Ross] Sorkin and Dealbreaker’s John Carney.” [Ideoblog]
* Are you in the top one percent of U.S. taxpayers ranked by adjusted gross income? And which states are home to the richest of rich taxpayers? [TaxProf Blog]
* “Would you trust a law professor to be President?” [Althouse]
* Speaking of law profs, they may boycott the annual AALS meeting, due to the hotel owner’s opposition to same-sex marriage. [National Law Journal via TaxProf Blog]
* An interesting interview of Fried Frank partner Jonathan Mechanic, a superstar of the real estate bar. [New York Observer]
* Russian judge: “If we had no sexual harassment we would have no children.” [Telegraph (U.K.)]

Dustin Hoffman Rain Man autism autistic.jpgThis post over at our sister site, Dealbreaker, may remind you of some of your colleagues. It reminded us of a partner we once worked with — a brilliant litigator, with a photographic memory, but not the easiest person to interact with socially. Writes Bess Levin:

I’m sure it doesn’t come as a shock for me to point out that many of you are socially awkward, often fail to demonstrate empathy for your peers, and are prone to restricted patterns of behavior such as hitting the submit button over and over and over again when trying to comment.

Which is to say, you likely all have a mild to major form of Asperger syndrome. Or do you? Take this quiz and post your results.

The incidence of Asperger syndrome is probably higher among Dealbreaker’s Wall Street readership than it is among the more well-adjusted ATL crowd. But if you’d like to see where you fall on the scale, visit Dealbreaker, and take the test.
(It’s 50 questions long, so it takes a few minutes to complete, but it goes by faster than you’d expect. We scored a 6. Feel free to post your score in the comments.)
What’s Wrong With You? [Dealbreaker]

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