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Treasury
Taps Two Law Firms By Karen Sloan The U.S. Treasury Department has tapped two law firms to help execute the $700 billion bailout package that Congress passed in October. Hughes Hubbard & Reed and Squire Sanders & Dempsey were each awarded contracts worth up to about $5.5 million to assist the U.S. Department of Treasury in the execution of transactions under the new Emergency Economic Stabilization Act, as the bailout package is formally known. The plan allows the U.S. government to purchase distressed assets from the nation's banks. According to a press release from the Treasury Department, the firms' duties include "reviewing executed investment agreements, working directly with accepted financial institutions to identify and resolve and legal issues before closing, and conducting the closing of transactions." The department said that the law firms will work with about 2,000 financial firms as they navigate the new government program. Both New York-based Hughes Hubbard and Squire Sanders declined to comment on the contracts. The two law firm contracts run through April 28, 2009. The Treasury Department said that it asked five law firms to bid on the bailout work, and that four firms responded in late October. It did not disclose the names of the firms that were asked to bid on the work. New York-based Simpson Thacher & Bartlett was awarded a $300,000 contract from the Treasury Department in early October to consult on the bailout. Eyeing
Big Bucks in New Regulations, By Gina Passarella PHILADELPHIA - With increased regulation expected across several industries as a result of the economic crisis and impending election, law firms with Washington, D.C., offices will be at the heart of the activity and, potentially, client coffers. "The D.C. market is perhaps the one that is going to benefit the most in the country from the political and economic climate," according to Dan Binstock, managing director of the Washington office of BCG Attorney Search. Binstock said he hasn't yet received an uptick in calls from firms looking to bulk up in the nation's capital. They are instead creating practice groups around the financial industry meltdown and formulating plans to deal with the economic and political changes in store over the next few months. But law firms are banking on increased regulatory changes, and Binstock said he expects office growth to follow. "Everyone is in a little bit of a wait-and-see pattern to see what plays out with the election," he said. But regardless of who comes into office in January, Binstock said firms are expecting regulatory enforcement to pick up from what has been a more relaxed regulatory environment under the current administration. Some of the practices he said could potentially see a boost include securities enforcement, energy, export control and Food and Drug Administration issues. Blank Rome has built its Washington office to 100 attorneys and lobbyists between the law firm side and the government relations component, with about 20 of those 100 working for Blank Rome Government Relations. In response to recent events, the office puts out a daily update to its clients titled "Financial Reform Watch," and the legal and lobbying entities have jointly created a financial reform task force to help clients navigate the changing financial markets. With the economy continuing to fluctuate and elections just days away, the firm only sees that role expanding into other regulatory-related practices. "The center of activity is moving in some significant part to Washington," the firm's co-chairman, T. Michael Dyer, said. Dyer merged his Washington law firm Dyer Ellis & Joseph into Blank Rome in 2003, and the government relations component began to grow shortly thereafter. While there is no set number, Dyer said the more recent goal has been to about double Blank Rome's presence in the city. Recent developments, he said, lend greater urgency to that goal. Firm managing partner Carl M. Buchholz said there will be significant reform in a number of areas regardless of who wins the election. He pointed to health care as just one example of an industry that would see significant change no matter who enters the White House. Dyer said he expects much greater regulatory enforcement coming from Washington, particularly given that taxpayers have become large stakeholders in a wide range of companies, which he said might expand to include auto manufacturers before the turmoil is over. This is a "new world," he said, with increased regulation over the banking and insurance industries, and that regulation might expand internationally. European and Asian markets are seeking increased regulation over global financial markets, Dyer said. "All these changes will require a lot of effort on the part of government relations [professionals] and lawyers in Washington," he said. Buchholz said the firm's affiliation with Brussels-based public affairs firm Interel would probably see an increased flow of work between the two firms because of the international component to the financial crisis. On the government relations side, Dyer said he expects the group to grow because of an anticipated increase in work. If the Democrats make big gains in Congress and win the White House, regulatory activity will pick up even more, he said. But, on the whole, the government relations group is fairly evenly split along party lines and doesn't look to pick up people on one side or another because of who wins an election, he said. Edward J. Allera heads up Buchanan Ingersoll & Rooney's FDA/biotechnology practice and co-leads the firm's Washington office. Mergers and acquisitions attorneys in other markets may have been busy for the last few years, but Allera said the pendulum has swung back toward administrative and regulatory practices. "The one thing we know is Congress is going to increase oversight and oversight is going to increase agency activity," he said. The firm's D.C. office has lost a few government relations professionals this year, but Allera said it has been adding to the group as well, most recently bringing on Akerman Senterfitt government relations professional Alan Rubin. There are now about 45 attorneys and another 15 attorneys and professionals who work in the firm's government relations practice. The changes in the economic and political landscape are good things for Washington business, Allera said. The firm has been busy in regulatory practices related to the FDA, health care, banking and tax arenas and he said he only sees that increasing in January. For Reed Smith, the biggest growth potential comes for its financial industry group, which makes up about 30 percent of the firm's revenue, according to the firm's director of legal personnel, Eugene Tillman. The firm also has a strong health care and government contracts presence in Washington. While Tillman said he thinks the regulations over those industries certainly aren't going anywhere, he said he doesn't think there will be the dramatic sea change in regulation that will be seen in the financial services market. Tillman is based in Washington along with more than 70 other Reed Smith attorneys. He said the firm is well positioned to handle increased regulatory needs, but would be open to adding high-level attorneys with regulatory experience. "This is a time we would be particularly interested in that," Tillman said. Drinker Biddle & Reath grew its Washington office through a January 2007 merger with Chicago-based Gardner Carton & Douglas. It now has slightly fewer than 100 attorneys in the market. Executive partner Andrew C. Kassner said the firm's strategic plan called for growth in Washington long before the current economic crisis. Drinker Biddle has a strong focus in the pharmaceutical and health care industries, two areas that would tie into the regulatory changes in the capital. Kassner said the firm would also look to grow in Washington its human resources practice, which includes labor and employment and employee benefits, along with its intellectual property, litigation and investment management practices. While many firms are looking to grow in the Washington market, there are a few local firms that don't have offices anywhere near Pennsylvania Avenue. According to The Legal 's publication PaLAW 2007 , seven of the largest 25 law firms in the state don't have Washington offices. Wolf Block has a small satellite office with two attorneys who spend part of their time there. Marshall Dennehey Warner Coleman & Goggin, Fox Rothschild, White & Williams, Stevens & Lee, Obermayer Rebmann Maxwell & Hippel, Montgomery McCracken Walker & Rhoads and Cohen & Grigsby are some of the largest Pennsylvania firms that have yet to create a presence in the district. Morgan Lewis & Bockius has the largest Washington presence of any Pennsylvania firm, ranking fourth on the Legal Times ' recent rankings of the 50 largest branch offices in the city. With 274 lawyers in Washington, Morgan Lewis ranked 13th in the overall list of the 150 largest firms in the capital. It was followed by K&L Gates with 185 attorneys, Drinker Biddle with 88, Dechert with 86, Blank Rome with 85 attorneys and Reed Smith with 81. Montgomery McCracken Chairman Stephen A. Madva said he has been cautioning his clients and colleagues about jumping into the Washington market at this point. "I think anyone who thinks they are going to get into it now is probably going to be well behind everyone else," he said. A firm has to have a client base that would make use of a new market, and most firms enter a new market because of client demands, not the other way around, Madva said. His firm had a Washington office when he joined about 30 years ago. Madva said maybe the firm was too parochial at that point, but it couldn't quite figure out how to make best use of a presence in the capital. The group was later acquired by another firm. In May 2007, Montgomery McCracken did lose partner Scott A. Coffina to a position in the White House as associate counsel to the president. Madva said it's the firm's expectation and hope that Coffina comes back to Philadelphia. "If he does, what he has gained in terms of expertise is the kind of impetus that would cause us to open an office [in Washington]," Madva said. Binstock pointed to the difficulty of growing a D.C. presence from scratch in this market. Lateral partners are more cautious about moving in this economy and would only join a firm that had a significant and meaningful presence in the city, he said. It's a little bit of a toss-up in terms of which of the firms already in D.C. will be able to best capitalize on the changing market, he said. "The homegrown firms are at an advantage because they have deeper benches, but some of the out-of-town firms are more flexible with rates," Binstock said. Ballard Spahr Andrews & Ingersoll has had a Washington presence for a long time, now with more than 50 attorneys. Firm Chairman Arthur Makadon agreed there would be stepped up interaction with the government and increased regulatory enforcement. There will also be a large number of qualified government attorneys with regulatory experience looking for new jobs. But while the firm would be open to bringing on new attorneys to the Washington office, Makadon said restraints are in place that weren't there in past administration changes — namely the troubled economy. Firms are being more cautious, he said, about bringing in laterals. Weil's Lehman Bankruptcy Bonanza By Nate Raymond Lehman reportedly retained Weil Gotshal on Sept. 10. Five days later, Lehman filed for bankruptcy. Lehman paid Weil a $5 million advance to cover legal fees and expenses arising from Lehman's negotiations and efforts to remain in business and to prepare for the possibility of the Chapter 11 filing if negotiations failed. "The negotiations were unsuccessful and the Chapter 11 cases resulted," Harvey Miller, the senior Weil partner representing Lehman, said in a filing. "[Weil] is applying the advance to the charges for the professional services performed and to reimbursement of out of pocket expenses." The sum contrasts with the $51.8 million Weil earned from Lehman for work done in the 12 months preceding September, according to the filing. And the $5 million is nothing compared with what the total bounty could be from the Lehman bankruptcy for lawyers. Lynn LoPucki, a professor at UCLA Law School, estimates legal fees could come to $906 million, Bloomberg reports. The disclosure of Weil's fees came as part of a formal application by the firm to be retroactively hired as Lehman's bankruptcy lawyers. In a separate filing, also on Wednesday, Lehman sought to employ Curtis, Mallet-Prevost, Colt & Mosle as its conflicts counsel. The filing says Lehman asked Curtis Mallet to fill that role before the bankruptcy proceedings commenced. A spokesman for Weil did not immediately return a request for comment. Calls to Curtis Mallet were not immediately returned. Both applications lay out billing rates the two firms expect to charge Lehman. Weil says its partners charge $650 to $950 an hour. Curtis Mallet says its partners charge $675 to $785 an hour. Rates for counsel, associates and paralegals also are detailed. Curtis Mallet bankruptcy partners Steven Reisman and Lynn Harrison will step in as Lehman's lawyers when a potential or actual conflict of interest arises with Weil, the filings say. The application says Curtis Mallet has a history of serving as conflicts or special counsel, including in the bankruptcy cases of Northwest Airlines and Calpine Corp. As part of the applications, both firms laid their potential conflicts bare. Miller, in his filing, listed more than 100 Weil clients who might have an interest in the proceedings. Only seven of those, Miller said, comprised more than 1 percent of the firm's revenue during the last 12 months. The biggest of those were General Electric Capital Corp. with 3.3 percent, Providence Equity Partners with 1.54 percent, and Microsoft Corp. with 1.49 percent, Miller says in the filing. (In 2007, Weil had $1.175 billion in gross revenue, according to the Am Law 100.) Curtis Mallet listed only four current clients with potential conflicts. The firm said in its filing that several of the clients "have either executed a waiver letter or indicated that they will execute a waiver" for Lehman's case, including JPMorgan Chase Bank. Curtis Mallet also says that "as a one-time courtesy," it represented former client NYSE Euronext Inc. on issues arising out of Barclays Capital Inc.'s acquisition of Lehman's broker-dealer business and real estate. Curtis Mallet says it had a waiver from NYSE, and that it no longer represents the exchange in the bankruptcy. A hearing on both applications is scheduled for next Thursday. In Market
Mess, Are Law Firms Vultures or Saviors? By Vivia Chen Akin Gump, Bracewell & Giuliani, Fried Frank, Gibson Dunn & Crutcher, Katten Muchin, K&L Gates, Susman Godfrey, and Squire Sanders are just some of the law firms that have formed "crisis centers" or "task forces" to respond to the financial crisis and what it has wrought--"upheaval," "a dramatic reconfiguration of the market", a "crisis in confidence." Two that we know of--Fried Frank and Paul Hastings--are marking the launch of their groups today with planned roundtable "briefings." And all these firms have teams of corporate, regulatory, litigation, criminal, and governmental lawyers standing by to answer client calls. Are clients calling? Well, it's a bit early to tell--though the firms are hopeful that some handholding and lots of unsolicited e-mails will blossom into paying matters. "There will be frenetic activity; and there will be investigations and litigations," predicts Bruce McLean, head of Akin Gump. He adds that some of the firm’s investment fund clients already have expressed interest in acquiring or managing assets in the bailout. It's probably no accident that the firms brandishing their crisis units are not the prime beneficiaries of the recent economic collapse. Not every firm can be so blessed as Davis Polk, Cleary Gottlieb, Sullivan & Cromwell, or Weil Gotshal & Manges to have a starring role in the financial catastrophe. What's a mere mortal firm to do but blow its own horn and make a play for a piece of the action, right? But the New York Daily News has taken one firm to task for doing just this. The tabloid painted a less than pretty picture of Bracewell & Giuliani's business strategy in a September 26 article titled "Rudy Giuliani's 'crass opportunism' reflects on Mac: Dems." "Rudy Giuliani is positioning his law firm to cash in on Wall Street's train wreck," the article starts. Moreover, the Daily News labeled Giuliani a "prime surrogate for Republican McCain, who has called the economic meltdown 'the greatest crisis since the end of World War II.'" The criticism doesn't bother Patrick Oxford, the firm's sonorous sounding chairman. The Houston-based lawyer says he's proud that "Rudy has been very heavily involved in helping us focus on the way government works" and knows a lot of the key players in the bailout, including treasury secretary Henry Paulson. Giuliani is a target, Oxford says, because "he's a spokesperson for McCain." It's only natural to deploy the former New York City mayor to get business now he says, because "Rudy is first and last a great lawyer." We checked in with NYU law professor Stephen Gillers on whether there's an ethics question to consider in Bracwell & Giuliani's business development. As Gillers sees it, Giuliani's mandate is to go out there and get business. "That's his job; that's why the firm brought him in." The potential ethical problem lies with McCain, Gillers says, "if he's getting advice from someone with a vested interest." As for what the future holds, Oxford sees nothing morbid about law practice in the post-financial disaster era. "There will be a tectonic shift [in the financial sector]; we will see a regulatory tsunami," he predicts. Will firms learn to play vulture to survive? Not in Oxford’s view. "It's more like a birth rather than death," he says. Which
Litigators Will Be Left Out in the By Julie Triedman Who represents Lehman and Merrill when they go to court? Here's a quick rundown. For Lehman: Paul, Weiss, Rifkind, Wharton & Garrison is defending the investment bank in ten matters filed in state and federal court in the last two years (and 32 since 2003), according to Westlaw. Paul Weiss partners Moses Silverman and Brad Karp (when he gets a moment away from Citigroup) are working on Lehman's derivative, auction-rate securities, and antitrust cases. At Jones Day, David Cardin--who led Lehman's defense in the Enron securities class action--has handled 33 matters for Lehman since 2003. DLA Piper worked on 17 matters, and Heller Ehrman and Morgan Lewis & Bockius each worked on 16. Simpson Thacher & Bartlett has lately become a go-to firm for Lehman, taking the lead in six cases filed in 2008, including a major mortgage-backed securities class action. Partners Michael Chepiga and Paul Curnin are leads on Simpson's Lehman cases. For Merrill Lynch: Skadden Arps Slate Meagher & Flom dominates the securities docket, working on more than 60 matters in the last five years (and 28 in just the last two years). Partners Jay Kasner and Scott Musoff are leads in cases that include Merrill's recent settlement of auction-rate securities litigation with regulators. Shearman & Sterling's Stuart Baskin also represents Merrill in securities cases; he was lead counsel for Merrill when the bank successfully challenged class certification in the Enron case. Dickstein Shapiro has handled 380 matters, mostly tort and real estate, for Merrill since 2003; Munger Tolles has represented the bank in more than 50 employment matters; and Gibson Dunn has worked on about 60 securities and ERISA cases. Calls to lawyers seeking comment on whether they'd lose work didn't yield much more than an off-the-record, "It's too soon to tell." Meanwhile, the litigators at O'Melveny & Myers must be doing cartwheels in the hallways. Since Bank of America--a loyal client of O'Melveny's litigation department--took over Countrywide earlier this year, O'Melveny has already begun to pick up extra work generated by the beleaguered mortgage company. With Merrill about to become part of B. of A., O'Melveny might just be the best bet for out-of-work securities litigators looking for someplace to send their resumes.
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A Feast
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