Feb. 11, 2021
Good morning. As we head into Day 3 of the impeachment trial, here's what's cooking in the rest of the world - the world of lawyers, anyhow. A new report finds that the market for alternative legal service providers is reaching record heights, Robinhood appears likely to duck a court order that would prevent future GameStop-like stock restrictions, and the federal government under the Biden administration is taking a new stance on Obamacare at the U.S. Supreme Court and rethinking its views on TikTok. Let's get rocking!
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Alternative legal service provider market grows to $14 billion SOURCE: Thomson Reuters Institute The global market for alternative legal service providers has grown to nearly $14 billion, with captive, low-cost legal services platforms launched by law firms themselves to compete with independent providers seeing the biggest gains.
Sara Merken reports those are some of the findings of a new report by the Thomson Reuters Institute, the Center on Ethics and the Legal Profession at Georgetown University Law Center and the University of Oxford's business school that concluded the market had reached a "tipping point."
The report found that 79% of law firms and 71% of corporate legal departments surveyed used alternative legal service providers, which include independent providers, law firm "captive" legal process outsourcing (LPO) entities and accounting firms, signaling they are becoming increasingly mainstream.
The biggest chunk of the market belongs to independent providers, which from 2017 to 2019 grew by about 30% to make up $12 billion of the market and whose dominant revenue source is e-discovery. But the report found law firm captives, while still small, have grown during that same period by about 60% to $480 million.
James Jones, a senior fellow at Georgetown, in a statement noted the "surprising amount" of law firm and ALSP collaboration. "This is encouraging and bodes well for further expansion of collaboration across a growing number of services," Jones said. Learn more.
Judge signals she won't block Robinhood from restricting trading following GameStop rally REUTERS/Brendan McDermid Lawyers for a Robinhood customer had a big request for a federal judge in Los Angeles yesterday: Block the popular trading app service from halting purchases in volatile "meme" stocks as it did during the recent social-media fueled rally involving GameStop.
But Jody Godoy reports that the attorneys pursuing the proposed class action ran up against a skeptical U.S. District Judge Virginia Phillips, who said her tentative view was to reject their sweeping demand for a temporary restraining order.
The case by Robinhood user Levi Cobos is one of several against the Silicon Valley startup that frustrated customers filed in late January as GameStop's stock surged to unfathomable heights before coming back down to earth.
It appeared to be the first time a judge had in those cases considered restricting Robinhood from acting again. Its lawyer, Kevin Orsini of Cravath, argued the case was based on "fundamental misunderstandings" of the regulatory requirements governing brokerages.
"There isn't a single broker dealer in America who has the capital or could have the capital sufficient to cover unrestricted trades," Orsini warned. See how the trader's lawyer responded and why Phillips might rule against him.
Industry buzz
Video: Biden invoked the DPA to ramp up vaccine production, now what? Last week, President Joe Biden invoked the Defense Production Act, a Cold War-era law giving the president sweeping powers to order private sector companies to ramp up production of vital supplies. Biden plans to use the DPA to remedy the COVID-19 vaccine shortage and manufacture PPE. Reuters' Tom Rowe spoke with King & Spalding partner Liz Lindquist and Northeastern University School of Law professor Brook Baker about what invoking the DPA could accomplish and what other tools Biden may have at his disposal. Watch the full video here.
Coming up today
Reporter's notebook: Can a 'unitary executive' fire the NLRB's general counsel? REUTERS/Carlos Barria Reuters reporter Daniel Wiessner on the unusual position conservatives have in challenging the firing of the National Labor Relations Board's GC.
Conservative lawyers and groups that say President Joe Biden's firing of NLRB General Counsel Peter Robb was illegal are in the unenviable position of relying on jurisprudence that undercuts one of the foundational principles of the modern conservative legal movement.
Biden took the unprecedented step of firing the Trump appointee on his first day in office. Unions and Democrats had accused Robb of championing policies that tied NLRB investigators' hands and discouraged unionizing and collective bargaining.
Perhaps the strongest authority backing arguments that the president cannot remove the NLRB's top lawyer without cause is the U.S. Supreme Court's 1935 decision, Humphrey's Executor v. United States, holding that President Franklin Roosevelt's firing of an FTC commissioner who opposed his New Deal policies was illegal. The court said the president lacked an "illimitable power of removal."
That ruling has long been criticized by conservative adherents to the theory of the "unitary executive," which says Congress cannot limit the president's control over the executive branch. But now they will have to hope the NLRB and federal courts stick to that precedent in challenges to Robb's firing.
Mark Pearce, who chaired the NLRB during the Obama administration, told me the situation was ironic given past conservative efforts to overturn the ruling. But he also said the case was distinguishable because the NLRB general counsel lacks the "quasi-judicial" powers of FTC commissioners.
"Congress is better situated than the judiciary to identify the harms that threaten us at the border ... In weighing the competing policy considerations, Congress or the Executive may choose to strike a different balance as to border searches of electronic devices and may choose to grant greater protection than required by the Constitution."
U.S. Circuit Judge Sandra Lynch, in writing for a three-judge 1st Circuit panel that U.S. border agents do not need warrants to search travelers' smartphones and laptops at airports and other U.S. ports of entry, a practice that grew during the Trump administration. The ruling was a blow to 11 travelers represented by the ACLU and the Electronic Frontier Foundation, who challenged the current search policies of U.S. Customs and Border Protection and Immigration and Customs Enforcement. (Reuters)
In the courts
Industry moves
Columnist spotlight 'Stuff happens': Kitty-filter lawyer takes Zoom snafu in stride. Since the onset of the pandemic, we’ve had reports of a lawyer appearing in court via Zoom wearing a coat and tie but no pants, hackers streaming porn into court hearings in Florida and Nebraska, a Kentucky lawyer dialing into a hearing, falling asleep and snoring loudly, and of course, the Great SCOTUS Toilet Flush. But this week's cat lawyer was perhaps the most memorable Zoom flub yet. Jenna Greene looks at some of the Zoom court curveballs the pandemic has provided and how, largely, lawyers have been well-equipped to brush them off and soldier on. Read her full column here.
2nd Circuit squelches Milberg bid to redo arbitration over unpaid $12 million fee. The 2nd Circuit affirmed U.S. District Judge Analisa Torres' dismissal of a suit in which the law firm Milberg sought to vacate an arbitration panel’s 2019 determination that Milberg is not entitled to a $12 million contingency fee from European funds it represented in Argentine bond litigation. Milberg and its counsel from Dunnington, Bartholow & Miller pitched the case to the 2nd Circuit as an opportunity to fill what they called a "statutory gap" in the Federal Arbitration Act, arguing that the 1925 law failed to anticipate challenges to arbitration decisions involving foreign parties. But, as Alison Frankel writes, the 2nd Circuit made clear that if you’re suing a foreign defendant to vacate an arbitration award, you still have to abide by the FAA's three-month deadline for challenging the outcome. Read her full column here for more on the case. Check out other recent pieces from all our columnists: Alison Frankel, Jenna Greene and Hassan Kanu.
Lawyer speak: Oil and gas dealmaking hit hard by pandemic Commodities prices plummeted last spring as the world adjusted to pandemic restrictions and economic uncertainty. Although oil prices have recovered from the depths they reached in the spring, when the price of the benchmark West Texas Intermediate crude briefly fell below zero, they remain about 15% below what they were at the end of 2019. White & Case partner Steven Tredennick discusses the continuing impact COVID-19 is having on M&A in the oil and gas industry.
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