Judicial Notice (04.24.21): Million-Dollar Deals
Justice Barrett's big book deal, Bradley Gayton's lucrative consulting gig, and other legal news from the week that was.
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The past week was hectic for me. As I mentioned last Saturday, I’m returning to full-time writing, which means I’m winding down my work as a legal recruiter at Lateral Link. So I’ve been very busy trying to finish up pending projects and transition matters to my colleagues (although I will continue working on a few searches beyond the end of the month).
That said, I did make time for some fun. On Tuesday, I joined Karen and Steve Vladeck on one of my favorite podcasts, In Loco Parent(i)s, “a podcast about parenting and lawyering — in that order.” We discussed becoming a parent through surrogacy, which is fascinating from both legal and parenting perspectives, and the pluses and minuses of being a two-dad family. Please feel free to give the episode a listen.
Now, on to the news.
Lawyers of the Week: Keith Ellison and the prosecution team in State v. Chauvin.
The biggest story from last week, legal or otherwise, was the conviction of former Minneapolis police officer Derek Chauvin for the murder of George Floyd. Chauvin was convicted on all counts — second-degree murder, third-degree murder, second-degree manslaughter — and the jury deliberated for a little over ten hours.
So there was no contest as to the Lawyers of the Week: the prosecution team in State v. Chauvin, led by Minnesota Attorney General Keith Ellison. From the Wall Street Journal:
Six days after Mr. Floyd’s May 25 death, Mr. Ellison took over the case from Hennepin County Attorney Mike Freeman at the behest of Gov. Tim Walz. The Democratic governor was under pressure from activists, Mr. Floyd’s family and state lawmakers who said they lacked confidence in the local prosecutor who originally charged Mr. Chauvin with third-degree murder and manslaughter. Mr. Freeman ultimately devoted prosecutorial resources to Mr. Ellison’s effort.
Mr. Ellison, the first African-American and the first Muslim American to be elected to statewide office in Minnesota, had never prosecuted such a high-profile case and was better known for his role in progressive Democratic national politics. Mr. Ellison was a congressman for 12 years and before that, a civil-rights lawyer who had built a deep well of trust in Minneapolis’s Black community.
The team he put together included trial lawyer Jerry Blackwell and two former federal prosecutors, Lola Velázquez-Aguilu and Steve Schleicher, both of whom joined the group after receiving a call from Mr. Ellison himself.
In light of the shocking, heart-wrenching video of Derek Chauvin kneeling on the back and neck of George Floyd for almost ten minutes, some might say this was an easy case to win. But in light of how few cases of police violence and misconduct have resulted in convictions at trial over the years, many of us didn’t take the outcome in the Chauvin prosecution for granted — and were relieved when it was all over.
Runners-up: Lisa Monaco and Vanita Gupta, confirmed last week to serve as Deputy Attorney General and Associate Attorney General, respectively. The vote on Gupta was 51-49, but the vote on Monaco was an overwhelming 98-2 — nice to see in our highly polarized age. (The only “nay” votes on Monaco: Sen. Ted Cruz (R-Tex.) and Sen. Rand Paul (R-Ky.), not known for their collegiality.)
Judge of the Week: Justice Sonia Sotomayor.
On Monday, Justice Sotomayor wrote two opinions about cases turned away by the Supreme Court, calling attention to the injustices that each involved. For more, read Mark Joseph Stern’s piece for Slate, “Sonia Sotomayor’s Lonely Battle to Give the Voiceless a Voice at the Supreme Court.” Stern praised Justice Sotomayor “not only as the conscience of the court but as the watchdog of its docket,” who “continually writes separate opinions to flag cases involving extreme cruelty, lawlessness, and other inequities.”
That was just Monday — and Justice Sotomayor was just warming up. On Thursday, in Carr v. Saul, she wrote an opinion for the Court declining to impose an “issue-exhaustion” requirement on Social Security claimants. This might sound technical and boring, but as former Social Security Administration attorney Peter Orlowicz pointed out to me on Twitter, it potentially affects 10,000 claimants and expands their ability to pursue the benefits to which they’re entitled.
Also on Thursday, Justice Sotomayor wrote her most notable opinion of the week, a scathing dissent in Jones v. Mississippi (discussed below as Ruling of the Week). She did not pull her punches in accusing the majority of running roughshod over stare decisis, as noted by Marcia Coyle for the National Law Journal:
The role of stare decisis—standing by precedent—has been a flash point on the court in recent terms, with the question often dividing the justices along ideological lines. Sotomayor’s accusation presented a new clash about whether the court had overturned precedent without explicitly announcing it.
“How low this court’s respect for stare decisis has sunk. Not long ago, that doctrine was recognized as a pillar of the ‘rule of law,’ critical to ‘keep the scale of justice even and steady, and not liable to waver with every new judge’s opinion,’” she wrote, quoting [Justice Brett] Kavanaugh’s opinion in Ramos v. Louisiana last year.
Who wrote the majority opinion in Jones that Justice Sotomayor was dissenting from? None other than Justice Kavanaugh.
One can agree or disagree with Justice Sotomayor in any given case. But there’s no denying that she is a passionate and powerful writer who isn’t afraid to call out what she sees as unjust.
Runner-up for Judge of the Week, from the other side of the aisle: Judge Amul Thapar of the Sixth Circuit. For why, read this Wall Street Journal editorial piece.
Ruling of the Week: Jones v. Mississippi.
In Jones, the Supreme Court ruled , by a 6-3 vote, that a judge doesn’t have to make a separate factual finding that a juvenile offender is beyond hope of rehabilitation — i.e., “permanently incorrigible” — in order to sentence that juvenile to life in prison. Judge Kavanaugh wrote the majority opinion, while Justice Sotomayor dissented.
The decision is noteworthy because it marks a shift in the Court’s jurisprudence in this area, as Adam Liptak explained in the New York Times:
Over the past 16 years, the court, often led by Justice Anthony M. Kennedy, methodically limited the availability of the harshest penalties for crimes committed by juveniles, first by striking down the juvenile death penalty and then by restricting sentences of life without the possibility of parole. But Justice Kennedy retired in 2018, and the court, now dominated by six conservative members, does not seem to have enthusiasm for continuing his project.
Justice Kavanaugh replaced Justice Kennedy, for whom he once clerked, on the Court. On many questions, Justice Kavanaugh will rule similarly to his former boss — but I think the Eighth Amendment is one issue on which they part ways, and where the replacement of Kennedy by Kavanaugh will continue to shift the Court in a more conservative direction.
Jones is also notable as a “precedent about precedent,” a case in which the Supreme Court grapples with past decisions and how to interpret and apply them to new cases. In dissent, Justice Sotomayor accused the majority of “gut[ting] Miller v. Alabama and Montgomery v. Louisiana,” the two key precedents at issue in Jones. And in his concurrence in the judgment in Jones, Justice Clarence Thomas, no great fan of stare decisis, actually agreed with Justice Sotomayor’s assessment that Justice Kavanaugh’s opinion was throwing precedent out the window. But in Justice Thomas’s view, Justice Kavanaugh, instead of disingenuously adopting a “strained reading” of Montgomery, should have just “reject[ed] Montgomery in both name and substance.”
Before we move on, here’s a quick update on a prior Ruling of the Week, Andy Warhol Foundation v. Goldsmith. The Andy Warhol Foundation, which lost this important fair-use case before a three-judge panel of the Second Circuit, is asking the full court to rehear the case. The Quinn Emanuel team led by Luke Nikas — the noted “art lawyer” who gets a lot of screen time in the excellent Netflix documentary Made You Look — has been joined for the appeal by a Latham & Watkins team led by Roman Martinez, a leading appellate advocate. If you’re curious, here’s the petition for rehearing en banc, and here’s collected coverage from How Appealing.
Litigation of the Week: Sanchez v. Mayorkas.
On Monday, the Supreme Court heard oral argument in Sanchez v. Mayorkas. The technical question presented is “whether, under 8 U.S.C. § 1254a(f)(4), a grant of temporary protected status authorizes eligible noncitizens to obtain lawful-permanent-resident status under 8 U.S.C. § 1255.”
The practical question is whether holders of Temporary Protected Status (TPS), some 400,000 U.S. residents who fled to this country because of crises or disasters in their home countries, can get coveted green cards, i.e., lawful permanent residency. Given the sheer number of individuals potentially affected by this case, its importance is obvious (which is why Sanchez has generated extensive media coverage).
But that’s not the only important aspect of this case. It also implicates the status of Chevron deference, the doctrine calling upon courts to defer to an agency’s interpretation of a statute the agency administers. Different members of the Court have expressed different views of Chevron over the years, as Justice Samuel Alito noted at oral argument — and this case could be a vehicle for clarifying, cutting back, or otherwise adjusting Chevron deference.
Based on the tenor of the arguments, it sounds like the Court will leave Chevron untouched for now. But the Court sometimes surprises us by taking on issues it didn’t have to tackle, and the possibility of a modification of Chevron is another reason Sanchez is one to watch.
Deal of the Week: Justice Amy Coney Barrett’s book deal.
Deal of the Week is usually a big-bucks transaction being handled by a bunch of Biglaw firms. But this past week, the deal that everyone was talking about was a deal of a different sort: Justice Amy Coney Barrett’s $2 million book deal (first reported by Daniel Lippman for Politico).
For more about Justice Barrett’s book and additional context, including comparisons to the book deals landed by other SCOTUS justices in the past, please see my Twitter thread, as well as the commentary by Professor Josh Blackman linked therein. Blackman has some concerns about these big book deals for the justices — and as discussed in this Bloomberg piece by Greg Stohr, Blackman is not alone.
Runners-up for Deal of the Week (both in the world of legal tech, a subject I covered at Above the Law and continue to follow today):
Rocket Lawyer’s $223 million financing round, led by Vista Credit Partners, with Goodwin Procter, Manatt, and Akin Gump serving as the legal advisors; and
the merger of two top ediscovery companies, Consilio and Xact Data Discovery (XDD), with Kirkland & Ellis, Debevoise & Plimpton, Willkie Farr, and Jones Day serving as the legal advisors.
Law Firm of the Week: Hogan Lovells.
For Law Firm of the Week, I was tempted to say “the Am Law 100.” On Tuesday, the American Lawyer released its closely watched, eagerly anticipated Am Law 100 rankings for 2021, and taken as a group, the firms were “stunningly successful,” in the words of Am Law’s Dan Packel. During a global pandemic and economic downturn, the nation’s 100 largest law firms managed to grow revenue by 6.6 percent, revenue per lawyer by almost 5 percent, and profits per equity partner by 13.4 percent.
Especially impressive: the performance of Davis Polk & Wardwell. The top firm in profits per partner was M&A powerhouse Wachtell Lipton, the perennial leader in this category, with an incredible $7.5 million in PPEP. But not that far behind was Davis Polk, which managed to grow its PPEP by 40 percent to $6.35 million. (For a deep dive into DPW’s accomplishment, see this Bloomberg piece by Roy Strom.)
But I’ve already given Law Firm of the Week honors to DPW twice. This week, I’d like to honor Hogan Lovells — for two reasons.
First, Hogan Lovells also had an excellent 2020 in terms of financial performance. The firm increased its PPEP by a hefty 31 percent, falling just shy of $2 million. Yes, some of that came from shrinking the equity partnership, but Hogan Lovells grew its revenue too. It increased total revenue by 2.8 percent to $2.31 billion, and revenue per lawyer climbed by 4 percent to $884,000.
Second, Hogan Lovells deserves some credit for the successful prosecution of Derek Chauvin. As reported in this behind-the-scenes look at the Chauvin prosecution by Deanna Paul, Jacob Gershman, and Joe Barrett of the Wall Street Journal, the firm got involved after partner Neal Katyal cold-called Keith Ellison and offered the firm’s assistance. Not surprisingly, Ellison was more than happy to get pro bono help from Katyal, a former acting U.S. solicitor general under President Barack Obama, and seven or so of Katyal’s colleagues at Hogan Lovells.
The help of Hogan Lovells definitely made a difference. As discussed in a prior installment of Judicial Notice, Judge Peter Cahill initially dismissed the charge of third-degree murder — but Katyal successfully appealed, then convinced Judge Cahill on remand to let the charge stand. The conviction on that charge will now factor into Judge Cahill’s sentencing of Chauvin, currently set for June 16, and could be used by the judge to give Chauvin a sentence at the higher end of the range.
Lateral Move of the Week: Monica Howard Douglas replacing Bradley Gayton as general counsel of Coca-Cola.
I thought about giving this award to the move of Alan Prescott, acting general counsel at Tesla, to Luminar Technologies, a startup that develops laser sensors for self-driving cars. Prescott is the fourth GC to leave Tesla in under two years (because CEO Elon Musk is just so much fun to work for).
But when it comes to bizarre boardroom news from the past week, what can I say? “Coke is it.”
On Wednesday, Coca-Cola announced that its general counsel, Bradley Gayton, was stepping down, after a tenure of just eight months, to become a “strategic consultant” to Coke’s CEO. Gayton is being replaced by Monica Howard Douglas, who stepped up from the role of chief compliance officer to take the helm. (Yes, these aren’t standard “lateral moves,” but I use this category to capture all personnel-related news.)
Congratulations to Monica Douglas on her appointment as Coca-Cola’s first woman GC — which was, unfortunately, overshadowed by all the unanswered questions over Gayton’s sudden departure. Definitely raising questions — and eyebrows — was Gayton’s pay package as he exited. Per Phillip Bantz of Corporate Counsel:
Gayton is no longer employed at Coca-Cola, but has entered into an agreement to serve as a “strategic consultant” to company chairman and CEO James Quincey and “drive certain key objectives.” As part of the agreement, he will receive a $4 million sign-on payment and a monthly consulting fee of $666,666, beginning in May and ending April 2022, according to a filing with the Securities and Exchange Commission.
I wondered for a second if the amount of the consulting fee might be some sort of satanic send-off. If you do the math, though, it looks like Coca-Cola wanted to pay Gayton a total of $8 million over 12 months, which works out to $666,666 a month — or a total of $12 million, when combined with the $4 million signing bonus.
It sounds like Gayton wasn’t a good fit at Coca-Cola’s legal department, with “unrealistic expectations” about what things he could change and how quickly he could change them, and he rubbed some folks at the company the wrong way. But at the same time, he hadn’t done anything so bad as to justify his firing, leaving Coca-Cola with no choice but to buy out his employment contract if it wanted him to leave. And because Gayton had to be lured over to Coca-Cola from Ford Motor, where he held the top legal job and had worked for some 30 years, presumably his Coke contract included downside protection for him if things went south — i.e., a big monetary payment if the company wanted to remove him without cause.
Here’s one other factor to consider. Bradley Gayton recently instituted aggressive new diversity guidelines for its outside law firms — a policy, praised in some quarters and criticized in others, for which I named him a Lawyer of the Week back in January. It’s not clear whether his diversity policies factored into his departure (the company declined comment on this), but just in terms of optics, firing a new GC so soon after he announced a big diversity push could have gotten Coca-Cola some negative publicity. But offering him a generous package in exchange for his voluntary resignation, while keeping him on as a “strategic consultant” — a role in which he can presumably continue to advocate for diversity — is a face-saving escape from a tricky situation.
Runners-up for Lateral Move of the Week, around the theme of top Asian American attorneys on the move:
Alex Oh, currently a partner at Paul, Weiss, has been hired by Gary Gensler, chair of the Securities and Exchange Commission, to lead the SEC’s powerful division of enforcement (making her the first woman of color to hold the role); and
Aric Wu, a seasoned securities litigator and longtime partner at Gibson Dunn & Crutcher, has been hired by Cooley, based out of the New York office.
Congratulations to Oh and Wu on their new roles. As an Asian American attorney myself, I’m pleased and proud to see our growing representation among leadership in the legal profession. With Asian American and Pacific Islander Heritage Month just around the corner, we have a lot of work to do, but we also much to celebrate.
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