Good morning. New reports from Wells Fargo and Thomson Reuters Peer Monitor Index show that large law firms enjoyed one of their most profitable years ever in 2020 despite the pandemic. President Joe Biden is set to take action on immigration through executive orders, Morrison & Foerster is laying off staff citing coronavirus-prompted business changes, and the ACLU for the first time ever will be led by a Black lawyer. Let's go!
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Law firms' fears of financial stress in 2020 met by booming profits instead
Thomson Reuters Peer Monitor Index
The U.S. economy last year shrank by the largest amount since World War II. Millions of people lost their jobs. Yet new data suggests that many major law firms will mark 2020 as one of their best ever.
David Thomas reports that a survey by Wells Fargo Private Bank Legal Specialty Group of 130-plus law firms found that revenues grew by 3.2% on average and annual net income rose in 2020 by 9.9%. Caroline Spiezio reports that new data from Thomson Reuters Peer Monitor Index shows that profits per partner increased 11.5% among the around 160 firms it tracks.
"I think it's a surprise to all of us," said Joe Mendola, senior director of sales for Wells Fargo. He recalled the uncertainty many law firms faced in March and April, when stay-at-home orders and pandemic restrictions began.
Yet Wells Fargo found the richest of the U.S. legal industry - the firms that sit in the first 50 slots of the Am Law 50 as ranked by revenue - saw their net incomes rise by 12.7% and their profits per partner increase by 11.2%. The fourth quarter wound up being one of the best ever recorded in PMI's data. Learn more about how the industry fared.
Biden's immigration orders to target asylum, 'public charge' rule, family separations
President Joe Biden is expected today to order a major review of asylum processing at the U.S.-Mexico border and the legal immigration system in a push to reverse some of the restrictive policies adopted during the Trump era.
Ted Hesson and Steve Holland report that Biden in an executive order will call for a review of former President Donald Trump's so-called "public charge" rule, which makes it harder for immigrants who are poor or need certain government benefits to secure residency. Cases challenging the rule are currently pending before the U.S. Supreme Court.
He will also mandate a review of the Migrant Protection Protocols, a controversial program that pushed 65,000 asylum seekers back to Mexico to wait for U.S. court hearings. Most returned to their home countries but some remained in a makeshift camp near the Mexican border.
Biden is also expected in a separate executive order to create a task force to reunite migrant families that were separated at the U.S.-Mexico border by the now-rescinded "zero tolerance" border strategy that Trump adopted in 2018 amid his crackdown on immigration. The task force, however, will face a challenge in trying to track down the parents of the more than 600 children who, according to a court filing, remain separated. Learn more.
Industry buzz
- NYU law professor Deborah Archer has been elected president of the ACLU, the first Black person to lead the civil rights group ever. (CNN)
- Morrison & Foerster is laying off 4% of its staff in the United States and is moving to eliminate a handful of UK staff roles, saying it had become clear that "fundamental changes we have experienced over the past year will outlast the pandemic." In total, 38 people will be impacted by the layoffs. (Reuters)
- The Trump campaign paid law firms and other legal providers more than $7 million from Nov. 4 through the end of last year, newly-released FEC records show. Kasowitz Benson Torres, home of Marc Kasowitz, was the top-paid firm in that period, receiving about $1.6 million. (Reuters)
- Ex-Goldman Sachs attorney Marla Crawford, who is suing the bank in Manhattan Supreme Court for allegedly covering up sexual misconduct claims in its legal department, has joined electronic discovery software provider Compliance as its general counsel. (Reuters)
- Nixon Peabody has a new leader. Stephen Zubiago, a corporate attorney in Boston whose practice has focused on the healthcare and insurance industries, has been elected to serve as the 600-lawyer firm's new chief executive officer and managing partner. He replaces Andrew Glincher, who served in those roles for a decade. (Reuters)
- Harvard law professor John Coates is joining the SEC as the head of its corporate finance division. He has advocated for requiring companies to disclose their political spending and for the SEC to play an active role in standardizing diversity and climate change disclosures. (Reuters)
- Cozen O'Connor is launching a series of mental wellness seminars this month to help its lawyers and staff cope as the pandemic drags on. Big Law is finding that while the pandemic has exacerbated some mental health problems, it has also lowered some barriers to address them. (Reuters)
Video: How Big Law is handling Biden's environmental plans
Lawyers from large law firms spoke with Reuters video journalist Alex Cohen about how they are dealing with the changes to environmental policy pursued by the new administration and what they are hearing from clients. Check out the video here.
Coming up today
- Former President Donald Trump's lawyers face a deadline to respond to an impeachment charge that he incited insurrection in a fiery speech to his supporters before they stormed the U.S. Capitol last month, killing five including a police officer.
- The 9th Circuit will hear a pair of cases over whether consumers claiming that Amazon.com Inc's Alexa devices recorded them without their knowledge or consent must arbitrate their claims. In one case, a guardian brought a lawsuit on behalf of two children, who were not parties to the arbitration clause, while in the other, the plaintiff argued that the arbitration clause was not enforceable. Laurence Pulgram of Fenwick & West will argue for Amazon and will face Warren Postman of Keller Lenkner and Robert Shelquist of Lockridge Grindal Nauen for the plaintiffs. Check the arguments out online after 9:30 a.m. PST.
- The city of Berkeley, California, during a virtual hearing will push U.S. District Judge Yvonne Gonzalez Rogers in Oakland to dismiss a lawsuit by the California Restaurant Association challenging a ban Berkeley imposed last year on the use of natural gas in newly constructed buildings. Courtland Reichman of Reichman Jorgensen will argue the case for the industry trade group.
- A nonprofit whose midtown Manhattan office tower was seized by the U.S. government based on allegations it was effectively controlled by Iran will go before the 2nd Circuit to fight over how much rental income the government must repay it after a judge later declared the seizure unlawful. Alavi Foundation, which had a majority stake in the 36-story building at 650 Fifth Avenue, argues a lower-court judge wrongly concluded the government only owed it rental income generated since December 2019, even though it was seized nearly two years earlier. Daniel Ruzumna of Patterson Belknap will argue for the nonprofit and will face Assistant U.S. Attorney Daniel Tracer. Watch the arguments online at 2 p.m. EST.
- Venezuela's defense ministry will urge the 5th Circuit in New Orleans to overturn a judge's decision to recognize a $129 million arbitration award that Northrop Grumman won in a long-running battle arising out of contracts for a subsidiary to refurbish two frigates for the Venezuelan Navy. Rodney Smith of GST LLP will argue for Venezuela, and Alexander Yanos of Alston & Bird will argue for Northrop.
- Lord & Taylor through lawyers led by Steven Serajeddini of Kirkland & Ellis will ask U.S. Bankruptcy Judge Keith Phillips in Richmond, Virginia, to approve disclosures related to its proposed liquidation plan. It faces opposition from its unsecured creditors' committee, whose lawyers led by Cooley's Cullen Speckhart are looking to bring constructive fraudulent transfer claims against Hudson Bay Capital, which sold the department store to fashion subscription service Le Tote in 2019.
'Tiger King' and 'Rick and Morty' are 1st Amendment art forms for this new Davis Wright partner
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Diana Palacios Davis Wright Tremaine
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Diana Palacios grew up in a family of artists but says she was never very good at it. TV shows and documentaries were more her thing. In college she discovered the connection between the First Amendment and art, realizing that becoming an attorney was her form of creativity.
Now a new partner at Davis Wright Tremaine in Los Angeles, Palacios focuses on media, First Amendment, and intellectual property litigation and counseling, advising projects like the hit Netflix documentary series "Tiger King" and the TV cartoon "Rick and Morty."
Since joining the firm in 2014, she's expanded her First Amendment practice to include a Spanish language component, something that hadn't existed at Davis Wright before. Palcios ensures that regional differences in Spanish translations are taken into account, which is itself an art. "It hasn't been easy, but it's been fascinating," she said.
Palacios attributes part of her success to her artistic family. "They gave me the ability to walk creative types through these very sticky legal issues." she said. "But to this day they haven't exactly figured out what my job is."
"The boss of the country said: 'People of the country, come on down, let people know what you think.' The logical thinking was, 'He invited us down.'"
Michael Scibetta, a lawyer for Proud Boys member Dominic Pezzola, on his planned defense against charges arising from his alleged shattering of a window in the U.S. Capitol during the Jan. 6 riot. Pezzola is among the defendants whose lawyers are looking to pin blame on former President Donald Trump, who told hundreds of supporters to "fight like hell" in a rally before the deadly siege. (Reuters)
In the courts
- In the nation's first jury patent trial conducted entirely by Zoom, jurors in Seattle awarded an IP holding company for video game control maker SCUF Gaming $4 million in a lawsuit accusing a unit of Valve Corp of patent infringement. Manatt, Phelps & Phillips' Robert Becker led SCUF's Ironburg Inventions Ltd to victory against lawyers for Valve led by Shook, Hardy & Bacon's B. Trent Webb. (The Recorder)
- AIG has agreed to pay $12 million to settle charges by the New York State Department of Financial Services that it conducted life insurance business in the state without a license. The settlement stems from a probe by the department into an industry in which life insurers take over corporate pension plans. (Reuters)
- The Office of the Comptroller of the Currency must face a lawsuit by community advocacy groups including the National Community Reinvestment Coalition that challenges a Trump-era rule they say gutted regulations meant to prevent discriminatory lending, U.S. Magistrate Judge Kandis Westmore in San Francisco ruled. The head of NCRC, represented by Democracy Forward Foundation and Farella Braun + Martel, says he expects the Biden administration will withdraw the rule. (Reuters)
- Apollo Global Management can't reopen the Chapter 11 bankruptcy case of LightSquared to fend off litigation from the wireless venture's former owner, hedge fund Harbinger Capital Partners, U.S. Bankruptcy Judge Shelley Chapman in Manhattan ruled. Apollo, repped by O'Melveny's Jonathan Rosenberg, sought the relief after lawyers for Harbinger led by Marc Kasowitz of Kasowitz Benson Torres filed a lawsuit alleging it misled the hedge fund into investing $1.9 billion into LightSquared. (Reuters)
- The 2nd Circuit ruled in favor of the Hartford Courant in the newspaper's constitutional challenge to a 2019 Connecticut law that kept sealed the identities of juveniles whose cases were transferred to adult court. Katie Townsend of the Reporters Committee for Freedom of the Press and William Fish of Hinckley, Allen & Snyder represented the paper. (AP)
- At the request of the Biden administration's EPA, U.S. District Judge Brian Morris in Great Falls, Montana threw out a Trump-era rule that limits what scientific research the agency can use to formulate regulations. The judge vacated and remanded to the agency the so-called "secret science" rule, whose legal basis he last week in a separate opinion said he had begun to doubt. The Environmental Defense Fund had been challenging the rule. (Reuters)
- FirstEnergy Corp and Ohio Attorney General Dave Yost agreed to a settlement under which the power company will no longer collect $102 million in 2021 in customer surcharges that were approved under a controversial law at the center of a bribery scandal to bail out two of its nuclear power plants. Michael Gladman of Jones Day represents the company. (Reuters)
Industry moves
- Quinn Emanuel is expanding into Atlanta, bringing on former Alston & Bird antitrust litigator Debra Bernstein as a partner and head of its new office. The firm touted that she secured more than $1 billion in settlements and had previously represented Dell as an "opt-out" plaintiff in several computer parts price-fixing cartel cases. (Reuters)
- Gary Zanfagna, who served as chief antitrust counsel at Honeywell International and chairs the American Bar Association's Antitrust Law Section, has joined Paul Hastings as a partner in D.C. (Reuters)
- William McSwain, the former U.S. Attorney for the Eastern District of Pennsylvania, has joined Duane Morris as a partner in its Philadelphia office. (Philadelphia Inquirer)
- Eight Shearman & Sterling international arbitration partners, including Paris-based practice leaders Emmanuel Gaillard and Yas Banifatemi, are splitting off to start a boutique called Gaillard Banifatemi Shelbaya Disputes. (Reuters)
- Mergers and acquisitions attorney Michael Russell has rejoined Wilson Sonsini from Goodwin Procter, which he had joined in 2016. Russell, who will be based in the firm’s Palo Alto and San Francisco offices, will co-lead its M&A practice with longtime partner Robert Ishii. (Reuters)
- Arnold & Porter has brought on five new partners. Mark Eply, who served as senior advisor and general counsel to former U.S. House Speaker Paul Ryan and more recently was the chief legal officer of the Managed Funds Association, has joined its legislative and public practice in D.C. The firm expanded its corporate and finance practice with Alex Gendzier in New York, who joined from Jones Day, and Michele Rowland and John Ruppert, two Denver lawyers from Ballard Spahr. And Katherine Treistman, who focuses on complex commercial litigation, has joined the firm in Houston from Greenberg Traurig. (Arnold & Porter)
- Bankruptcy attorney David Eastlake has joined Baker Botts as a partner in its financial restructuring practice in Houston from Greenberg Traurig. (Baker Botts)
- Litigator Steven Hamilton, who mainly represents healthcare clients, has joined Reed Smith in Chicago as a member of its managed care team in its global commercial disputes group. He was at McGuireWoods. (Reed Smith)
- Boris Liberman has joined Lowenstein Sandler as a partner in its investment management group in New York. He was previously senior counsel at the investment management firm AQR Capital Management. (Lowenstein Sandler)
Columnist spotlight: Judge Lynn Hughes is pulled off case as 5th Circuit revives professor's discrimination claim
As the 5th Circuit overturned U.S. District Judge Lynn Hughes' summary judgment to universities in gender discrimination and retaliation cases brought by onetime psychology professor Audrey Miller, the appeals court dedicated most of the opinion to what is said was the Houston judge's imperious and evidently biased conduct in the litigation. As Alison Frankel writes, the appeals court noted that the judge, who has an affirmance rate of 72% according to Westlaw analytics, among other things refused to allow Miller to depose a key witness from the University of Houston but allowed the school to depose her. The judge also sat in on parts of Miller's deposition, which took place in his jury room, the 5th Circuit wrote. The appeals court ordered Miller's revived case to be reassigned to another judge, finding that Hughes’ behavior "from the outset ... evinced a prejudgment of Miller's claims." A reasonable observer, the court said, would question Hughes's partiality. Hughes did not respond to requests from comment. Check out Frankel's full column.
Check out other recent pieces from all our columnists: Alison Frankel, Jenna Greene and Hassan Kanu.
Lawyer speak: Biden's inauguration brings foreclosure, eviction moratoria extensions
The launch of the Biden administration last month brought with it further extensions of the coronavirus-prompted federal moratoria against foreclosures of single-family homes and residential evictions. Seyfarth Shaw attorneys J. Patrick Kennedy, Tonya Esposito and David Bizar in a recent article examined the widely-expected extensions issued by the CDC, FHFA and FHA and the likelihood that the administration with a Democrat-controlled Congress could extend them further until Sept. 30. That's the proposal in the administration's proposed $1.9 trillion stimulus package. Check out their full article.
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