Good morning. All those cost cuts law firms made during the pandemic are paying off in big profits; electronic voting systems maker Smartmatic is taking Fox News and Rudy Giuliani to court; Robinhood is lawyering up; and U.S. District Judge Emmet Sullivan is joining the ranks of judges taking senior status now that the Biden White House is in charge. Buckle up, kids. It might be Friday, but we're not done yet!
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Pandemic expense cuts boosted Big Law profits. Is this the future?
SOURCE: Thomson Reuters Peer Monitor Index
How did major law firms pull off a profit spike in 2020, a year marked by a pandemic and the greatest economic contraction in decades? Through relentless attention to costs and spending cuts, that's partly how. And that could help shift firms' financial calculus going forward.
Caroline Spiezio reports that recent data from Thomson Reuters Peer Monitor Index showed the law firms that it tracks on average spent 44% less on marketing and business development in 2020 than in 2019 and 40% less on recruiting.
The pandemic, which shuttered offices and shifted meetings and court hearings to platforms like Zoom, taught law firms their budgets include an "awful lot of fat," said James Jones at the Center for the Study of the Legal Profession at Georgetown University Law Center.
As the pandemic progressed, firms like Skadden and Baker McKenzie laid off staff, as the stay-at-home environment shifted personnel needs. Morrison & Foerster did so too this week, saying it was clear the "fundamental changes we have experienced over the past year will outlast the pandemic."
Those cuts helped contribute to what PMI found was an 11.5% increase in profits per partner among the around 160 firms it tracks. See why the cuts could continue.
Smartmatic sues Fox News, Giuliani over election-rigging claims
Electronic voting systems maker Smartmatic on Thursday sued Fox News, former President Donald Trump's lawyer Rudy Giuliani and pro-Trump attorney Sidney Powell, alleging they falsely accused the company of helping to rig the presidential election in favor of Joe Biden.
Smartmatic in a lawsuit filed in New York Supreme Court said they and other defendants invented a story that the election was stolen from Trump and made Smartmatic "the villain in their story." It's seeking more than $2.7 billion in compensatory and punitive damages, Helen Coster reports.
The case follows similar lawsuits by Dominion Voting Systems against Giuliani and Powell. After the election, Trump and some supporters spread false claims of election fraud, including that Smartmatic and Dominion manipulated the results.
Fox News said it was "proud of our 2020 election coverage" and called the lawsuit meritless. Other defendants did not respond to requests for comment.
Pursuing Smartmatic's case are J. Erik Connolly and Nicole Wrigley of Benesch, Friedlander, Coplan & Aronoff. David Thomas reports that they previously while partners at Winston & Strawn pursued a lawsuit over ABC's reporting on a processed beef product the network dubbed "pink slime" that settled for at least $177 million. Learn more.
Industry buzz
- Phelps Dunbar, a 300-lawyer law firm based in New Orleans, is merging with Alabama law firm Cabaniss, Johnston, Gardner, Dumas & O'Neal, effective March 1. The deal will add 25 lawyers to Phelps Dunbar. (Reuters)
- The Manhattan federal bankruptcy court will have a new judge among its ranks later this month. David Jones, deputy chief of the civil division of Manhattan U.S. Attorney Audrey Strauss' office, will join the bench on Feb. 19. He will succeed former U.S. Bankruptcy Judge Mary Kay Vyskocil, who is now a judge on Manhattan's federal district court. (Reuters)
- Hogan Lovells has named Marie-Aimée de Dampierre to be its first solo woman chair. The Paris-based partner will take over from incumbent Leopold von Gerlach for a three-year term starting in May. (The American Lawyer)
- U.S. District Judge Emmet Sullivan in D.C., who presided over the case of Trump national security adviser Michael Flynn, will take senior status on April 3. Sullivan was appointed to the court in 1994 by President Bill Clinton. (The Washington Post)
- Morrison & Foerster and former MoFo associates Sherry William and Joshua Ashley Klayman are taking up the request by U.S. Magistrate Judge Jacqueline Scott Corley in San Francisco to try to settle their claims that the firm discriminates against pregnant women and mothers. Corley referred the claims to U.S. Magistrate Judge Virginia DeMarchi for settlement. (Reuters)
- Squire Patton Boggs named Corrine Irish as the firm's new pro bono counsel. She will serve alongside existing pro bono counsel Michael Forshey during 2021, after which she will assume primary responsibility for the firm's pro bono program. (Squire Patton Boggs)
Coming up today
- Belcher Pharmaceuticals will urge the Federal Circuit in D.C. to revive a lawsuit accusing Pfizer's Hospira of infringing its patent on an epinephrine formulation. Belcher counsel Peter Lancaster of Dorsey & Whitney will go up against Matthew Freimuth of Willkie Farr & Gallagher for Hospira.
- Another Federal Circuit panel will hear generic drug maker Torrent Pharmaceuticals' appeal of a judge's conclusion that Takeda Pharmaceutical's patent covering the Type II diabetes drugs Nesina is valid and would be infringed by its planned generic version. H. Keeto Sabharwal of Pillsbury and Gregory Castanias of Jones Day will argue for Torrent and Takeda, respectively.
- Johnson & Johnson's DePuy Orthopaedics unit will urge U.S. Magistrate Judge M. Page Kelley in Boston to quash subpoenas issued to the U.S. Centers for Medicare and Medicaid Services and to the New York Department of Health by lawyers pursuing a whistleblower lawsuit alleging it marketed defective hip-replacement devices to unsuspecting doctors. The False Claims Act lawsuit was brought by British orthopedic surgeons Antoni Nargol and David Langton, who have served as expert witnesses in related product liability litigation. Their lawyers include W. Mark Lanier of The Lanier Law Firm and Justin Presnal and Jayne Conroy of Simmons Hanly Conroy. Mark Seltzer of Nixon Peabody is defending DePuy.
- Honeywell International through lawyers including Faegre Drinker Biddle & Reath's Michael Maimone will urge Delaware Vice Chancellor Sam Glasscock to issue a preliminary injunction blocking its rival The Chemours Company from employing a former top scientist who specialized in fluorochemical refrigerants and to bar him from using or disclosing its trade secrets. Fish & Richardson's Jeremy Anderson reps the defendants.
- The 9th Circuit in Phoenix will hear a challenge by auto dealer data companies CDK Global and Reynolds and Reynolds Co to an Arizona law that bars them from preventing car dealerships from allowing third parties to access their systems. A federal judge in July declined to enjoin enforcement of Arizona's Dealer Data Security Law. Michael Scodro of Mayer Brown and Thomas Dillickrath of Sheppard Mullin will argue for CDK and Reynolds and Reynolds and will face Arizona Assistant Attorney General Brunn Roysden and Derek Ho, a lawyer at Kellogg Hansen for the Arizona Automobile Dealers Association. Watch the arguments after 2 p.m. PST.
What we learned this week
"They were part of a machine that disrupted, in fact destroyed, lives and families in America."
California Attorney General Xavier Becerra, President Joe Biden's nominee to lead the U.S. Department of Health and Human Services, in announcing a $573 million multistate settlement with consulting firm McKinsey & Company resolving allegations its advice to drugmakers including OxyContin maker Purdue Pharma on how to boost sales contributed to the opioid epidemic. The company, represented by James Bernard of Stroock & Stroock & Lavan, overall agreed to pay nearly $600 million to resolve investigations by state attorneys general. (Reuters)
In the courts
- Robinhood is turning to lawyers at Cravath including Kevin Orsini and Antony Ryan to defend the online brokerage in federal lawsuits in California over its restrictions on trading in shares of GameStop and other companies whose stocks recently saw hefty gains in a Reddit-fueled trading frenzy. (Reuters)
- Federal prosecutors in Brooklyn charged David Gentile, the chief executive of New York money manager GPB Capital Holdings, and two associates with running a $1.8 billion Ponzi-like fraud where thousands of victims were falsely promised steady returns on their investments. Other federal and state regulators including the SEC filed related civil cases. Bill McGovern of Kobre & Kim is defending Gentile. (Reuters)
- FedEx, through lawyers led by Skadden's Jay Kasner, persuaded U.S. District Judge Ronnie Abrams in Manhattan to dismiss a proposed class action alleging the delivery services company misled investors about its recovery from the NotPetya cyberattack in 2017, in which a virus spread worldwide and shut down shipping ports, factories and corporate offices. Chad Johnson of Robbins Geller represents the investors and lead plaintiff City of Bradford Metropolitan District Council. (Reuters)
- During a pretrial hearing in an antitrust lawsuit against Google by several state attorneys general led by Texas Attorney General Ken Paxton, defense lawyer R. Paul Yetter at Yetter Coleman said he wanted disclosures of who receives confidential information related to the case to prevent future leaks after major newspapers reported on an underacted draft of the complaint. W. Mark Lanier of The Lanier Law Firm, whom Paxton hired to litigate the case, countered that he would be "loath to" disclose their consultants but would agree to having people sign for documents and suffer repercussions in the case of a breach. (Reuters)
- The mere risk of identity theft does not establish data breach victims' constitutional right to sue in federal court, the 11th Circuit ruled in a lawsuit involving a hack of credit and debit card information from Captiva MVP Restaurant Partners, which does business as the PDQ restaurant chain. The ruling deepened a long-running circuit split on standing for plaintiffs in data breach class actions. The company's lawyer, Marie Borland of Hill Ward Henderson, said she was pleased the 11th Circuit joined the majority of federal appeals courts that have reached the same conclusion it did. (Alison Frankel's On the Case)
- Lev Parnas, an associate of Rudy Giuliani, and Parnas' business partner David Correia are facing new legal troubles after the SEC sued in Manhattan federal court alleging they bilked investors in an insurance venture called - wait for it - Fraud Guarantee. Both men are facing related criminal charges, and Correia, represented by Goodwin Procter's Bill Harrington, is set to be sentenced next week after pleading guilty to charges related to that fraud and a campaign finance scheme. Parnas' lawyer, Joseph Bondy, did not respond to requests for comment. (Reuters)
- Two former clients of Eric Conn, a disbarred Kentucky attorney convicted of operating a massive $550 million Social Security fraud scheme, have won a new shot at defending their disability benefits after the government cut them off. Their lawyer, Alexandra Stewart of WilmerHale, swayed the 4th Circuit to become the third federal appeals court to find the Social Security Administration wrongly excluded all evidence from medical providers linked to Conn in terminating benefits of his clients without giving them a chance to rebut the agency's claim they were fraudulent. (Reuters)
- China's Luckin Coffee, whose explosive growth was derailed last year by allegations of accounting fraud, filed for bankruptcy under Chapter 15 of the U.S. Bankruptcy Code. The coffee chain said the filing would facilitate the restructuring of its debts. R. Craig Martin of DLA Piper represented the company in filing its petition in federal bankruptcy court in Manhattan. (Reuters)
Industry moves
- Eric Dreiband has rejoined Jones Day as a partner in the firm's labor and employment and government regulation practices in D.C. after serving as assistant attorney general in the DOJ's civil rights division since 2018. (Jones Day)
- Dylan Carson, a former trial attorney in the media, entertainment and communications section of the DOJ's antitrust division, has joined Faegre Drinker in its Denver and D.C. offices as a partner in the antitrust practice of the firm’s litigation group. (Faegre Drinker)
- Kevin Turner, most recently general counsel of the U.S. International Development Finance Corporation, has joined Holland & Knight as a partner in D.C. as a member of its corporate, M&A and securities practice group. (Holland & Knight)
Revised $2 billion Roundup deal is much less ambitious – but likelier to survive. There’s an air of resignation in plaintiffs lawyers' announcement of a revised agreement to resolve claims by thousands of people who have been exposed to Monsanto's Roundup. As Alison Frankel notes, it's a big, creative deal with benefits for both prospective plaintiffs and Monsanto's parent Bayer, but it is also "a conventional mass tort class settlement." The settlement Bayer and plaintiffs lawyers proposed last summer offered an entirely new vision for resolving mass torts with long latencies. U.S. District Judge Vince Chhabria had deep concerns about a paradigm shift in mass tort settlements, forcing Bayer and class counsel drastically to scale back the novelty of their agreement. Frankel takes a look at the settlement's evolution and finds that while the revised deal is not as exciting as the June settlement, it’s probably a better proposal. Read her full column here.
Big Law and Yelp: One star. Do not recommend. Driven by sheer curiosity Jenna Greene looked at the Yelp reviews for the 100 biggest law firms by headcount in the United States. What did she find? A bunch of one-star reviews and some ugliness. In some ways a scathing review on Yelp doesn’t matter much for Big Law. A general counsel is very, very unlikely to consult Yelp in deciding whom to hire for a billion-dollar deal. Still, 32 million people use the Yelp app each month and that’s a lot of eyeballs. Greene found some common themes that she thinks firms would benefit from paying attention to and has some suggestions for what firms can do if they don’t want to have comments like, "They will ruin your life," just hanging out there. Read her full column here.
Check out other recent pieces from all our columnists: Alison Frankel, Jenna Greene and Hassan Kanu.
Lawyer speak: What to expect from Biden's labor agenda
Within hours of taking the oath of office, President Joe Biden fired the general counsel of the NLRB with 10 months remaining in his term. Labor unions and advocates celebrated the unprecedented move, as well as the termination a day later of the top deputy. But a shakeup at the NLRB isn’t the only thing on Biden’s labor agenda. Perkins Coie partners Seth Borden, Brennan Bolt and Richard Hankins discuss what to expect in labor law this year under the new administration.
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