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You know it has been a slow news week when you find yourself talking about the weather. But the wintry weather of last week was no joke. Extreme cold and snow caused or contributed to the deaths of at least 58 people and left millions without electricity, heat, and running water, including four million in Texas alone.
I hope that you and your families are safe, healthy, and comfortable tonight. Now, on to the news.
Lawyer of the Week: Barbara Ann Rowan.
No, I’m not going to inflict Ted Cruz on you again as Lawyer of the Week. Although Senator Cruz’s ill-advised, short-lived trip to Cancun garnered extensive coverage, there wasn’t anything particularly legal, lawyerly, or interesting about it.
Instead, I’d like to take this opportunity to recognize Barbara Ann Rowan, the first Black woman to serve as an assistant U.S. attorney in the storied Southern District of New York. Last week, Rowan’s death at the age of 82 became public (although she had passed away a number of months ago, from Covid-19).
When she joined the S.D.N.Y. in 1971, Rowan became one of just two women serving as federal prosecutors in the office’s criminal division. She subsequently garnered headlines for protesting a prominent defense lawyer’s use of a racial slur during a speech at a bar association dinner. Throughout her long career, Rowan worked tirelessly to promote diversity, inclusion, and justice.
You can read more about her remarkable life and career in this New York Times obituary by Benjamin Weiser. Barbara Ann Rowan, rest in peace.
Judge of the Week: Judge Esther Salas.
Last July, Judge Esther Salas (D.N.J.) paid the ultimate price for serving as a federal judge: her only child, Daniel Anderl, was shot and killed, and her husband, Mark Anderl, was critically injured, at the hands of a lawyer who was angry at Judge Salas for her handling of his case.
Since the tragic events of last summer, Judge Salas has been speaking out about the security threats that judges face and possible ways to offer them more protection. In an interview this week with 60 Minutes (via Howard Bashman/How Appealing), Judge Salas revealed that the gunman who killed her son also targeted Justice Sonia Sotomayor. In a locker he kept, he had another gun, more ammunition, and a dossier full of personal information about Justice Sotomayor.
Judge Salas advocates legislation that would upgrade home security systems for judges and keep certain personal information about judges off the internet. Thank you to Judge Salas for raising public awareness about the threats that judges face, for trying to come up with a solution — and, of course, for her past and continuing service to the federal judiciary and the nation.
Ruling of the Week: In re August 11, 2020 wire transfers.
The facts of this case are insane. Last year, Citigroup accidentally wired $900 million to a group of lenders who have been battling with the beauty company Revlon, in addition to $7.8 million that Citi and Revlon actually intended to pay Revlon’s lenders at the time. And most of the $900 million came out of Citigroup’s own coffers. Oops.
Here’s the opening to the opinion by Judge Jesse M. Furman (S.D.N.Y.):
[Citigroup] made one of the biggest blunders in banking history: It mistakenly wired, in addition to Revlon’s $7.8 million [interest payment to its lenders], almost $900 million of its own money as well. The resulting payments equaled — to the penny — the amounts of principal and interest that Revlon owed on the loan to its lenders. The question in this case is whether Citibank is entitled to get the money back or whether the lenders are allowed to keep it.
Judge Furman’s answer: they get to keep it — as some of the lenders actually did, to the tune of about $500 million. (The other lenders returned the money after Citi noticed the mistake the following day and asked for the money back.)
That outcome might seem as nutty as Citi’s original error. But just read the introduction to Judge Furman’s learned and lengthy opinion, which provides a clear and concise explanation of the discharge-for-value defense under New York law. (Of course, there’s a decent argument on the other side; see this piece by Professor Noah Feldman.)
There’s a good chance that Judge Furman, one of the mostly highly respected members of a highly respected bench, will be affirmed on appeal — but in case he’s not, he did enter a temporary restraining order preventing the ten investment firms in question from blowing through the cash. It will be interesting to see what the Second Circuit does with this one.
Runner-up: Bruun v. Red Robin Gourmet Burgers Inc., a proposed nationwide class action about allegedly underfilled glasses of Stella Artois, in which Judge Jennifer A. Dorsey (D. Nev.) managed to slip an impressive eight references to beer into her opinion. Good for Judge Dorsey for “ferment[ing] a creative home brew of hand-crafted language and [pouring] it — drop by drop — into an otherwise mundane legal document,” as Aaron Keller of Law & Crime put it. Cheers!
Litigation of the Week: SEC v. Morningstar Credit Ratings, LLC.
On Tuesday, the Securities and Exchange Commission sued Morningstar, the big ratings agency, in the Southern District of New York. In its complaint, the SEC accused Morningstar of making undisclosed “adjustments” to its ratings for $30 billion worth of commercial mortgage-backed securities transactions. According to the SEC, the allegedly improper adjustments allowed Morningstar to assign higher ratings to certain classes of securities.
This litigation is interesting for a few reasons. First, it’s reminiscent of the scandal years ago when regulators accused Wall Street investment banks of offering essentially inflated ratings to various stocks during the first dot-com boom (although Morningstar’s alleged misconduct, more limited and modest in scope, is far less egregious). Second, it relates to the CMBS market, whose meltdown contributed to the last financial crisis — and has kept countless Biglaw litigators busy for years, some to this day. Finally, following the case could give us insight into how the SEC will operate and what it will prioritize under Gary Gensler, President Joe Biden’s pick to lead the Commission.
First runner-up: Epic Games, Inc. v. Apple Inc. Epic, the famous maker of the highly addictive Fortnite video game, has sued Apple in multiple jurisdictions over alleged antitrust violations. Epic claims that Apple has unlawfully blocked Fortnite from the iOS platform in order to benefit Apple’s own game distribution service, Apple Arcade. Last week, Epic took its fight to the European Union, filing an antitrust complaint with the European Commission. Along with other antitrust actions against companies like Amazon and Google, this Epic litigation — now taking place in the European Union, United States, United Kingdom, and Australia — will determine how much power the tech giants will wield for years to come.
Second runner-up (for its quirkiness, not its consequence): the prosecution of a former Wisconsin state biologist and three others who were allegedly involved in an illegal operation that collected sturgeon eggs, supposedly for research purposes, and turned them over to a caviar processor instead. According to the criminal complaint, the caviar producer then gave the conspirators tens of thousands of dollars in caviar for themselves. (I wonder how caviar tastes on top of nutraloaf.)
Deal of the Week: Alden Global Capital’s acquisition of Tribune Publishing Co.
Tribune Publishing, the troubled publisher of such name-brand newspapers as the Chicago Tribune and the New York Daily News, announced on Tuesday that it would be selling itself to Alden Global Capital, in a deal valuing Tribune at $630 million. Many in the media world reacted with dismay, given Alden’s track record of trying to achieve profitability at papers through extreme cost cutting. (On the bright side, the Baltimore Sun is not part of the deal; it’s instead being rescued by Stewart Bainum Jr., a wealthy Maryland hotel executive.)
Regardless of what it means for the future of journalism, the deal does represent good news for lawyers. Akin Gump Strauss Hauer & Feld, known for its strength in private equity M&A, advised Alden, while the M&A mavens at Davis Polk & Wardwell advised the special committee of Tribune’s board of directors.
Runner-up: Nestle SA selling some of its North American water brands, including Poland Spring and Deer Park, to a partnership involving investment firm One Rock Capital Partners LLC and serial food investor Metropoulos & Co. Nestle was advised in the $4.3 billion deal by Mayer Brown.
Law Firm of the Week: Crowell & Moring.
Despite the coronavirus pandemic and economic downturn, Biglaw had a surprisingly good year in 2020, with multiple firms reporting increases in revenue, profit, or both. And based on the early reports of Am Law 200 financial results, one of the best performers of last year was Crowell & Moring.
As reported by Christine Simmons of the National Law Journal on Thursday, in 2020 Crowell enjoyed a 19 percent increase in gross revenue, which hit $514.4 million; a 21 percent increase in revenue per lawyer, which broke the million-dollar mark to reach $1.1 million; and, most impressive of all, a 47 percent increase in profits per equity partner, which exceeded $1.6 million. These results are especially notable considering that early in the pandemic, in April, Crowell implemented pay cuts to avoid layoffs — which it wound up reversing in August, as its strong year started to shape up.
What drove the increase? Litigation — specifically, contingency-fee litigation. According to management board chairman Phil Inglima, Crowell recovered more than $2.2 billion for clients in what it refers to as “affirmative recoveries,” plaintiff-side work in antitrust, health care, and terrorism-related cases, among others. Many of these cases employed alternative fee arrangements, which accounted for approximately 40 percent of the firm’s 2020 revenue.
Spurred by these strong results, Crowell plans to expand in 2021, possibly through picking up partner groups or acquiring boutiques. Also last week, the firm announced its hiring of Michael K. Atkinson, former Inspector General of the U.S. Intelligence Community — one of its first big hires of the year, but certainly not its last.
Lateral Move of the Week: Cravath hiring David Portilla from Debevoise & Plimpton.
Unlike so many other top law firms, Cravath Swaine & Moore makes lateral hires once in a blue moon. So its hiring of David Portilla, previously a bank regulatory partner at Debevoise & Plimpton, is an obvious choice for Lateral Move of the Week.
As noted by Meghan Tribe of Bloomberg Law, Cravath hasn’t brought in a partner from the outside since 2018, when then-Judge Katherine Forrest left the S.D.N.Y. for Cravath (and that doesn’t even fully count, since Forrest was at Cravath for more than two decades before taking the bench). But one can understand Portilla’s appeal: in addition to his time in Biglaw, at Debevoise and at Davis Polk (where he started his career as an associate), he has valuable government experience, having previously served as the former senior policy advisor to the U.S. Department of the Treasury’s Financial Stability Oversight Council.
Runners-up: the many lawyers returning from federal government service to the halls of Biglaw. Some of them are boldface names, such as former SEC Chair Jay Clayton and former acting U.S. Solicitor General Jeff Wall, who are both returning to Sullivan & Cromwell (although note that Clayton is going back as a senior policy adviser and of counsel, not a partner; he’ll juggle his S&C work with serving as an independent director at Apollo Global Management and teaching at Penn Law). And some of the returnees are rising stars, such as Alexander Maugeri — former Deputy Assistant Attorney General at the Justice Department’s Civil Rights Division, and prior to that, a senior associate at Cravath — who has joined Jones Day as of counsel.
Surprising no one, impeachment counsels Barry Berke and Joshua Matz returned to Kramer Levin and Kaplan Hecker & Fink, respectively. If you’d like to read more about Berke’s experience serving as chief impeachment counsel, check out his interesting interview with Jacqueline Thomsen of the National Law Journal (in which he gives a nice shoutout to DOAR, the renowned trial strategy consultants who worked pro bono on the impeachment, helping the House managers tell a compelling story).
As always, thanks for reading, and stay safe and warm.
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