Law And More

Gilbert & O'Bryan Says Associate Will Earn $10K (yes, you read right) First Year

Distress distorts reality.  Law graduates are a distressed bunch, that is, if they haven't already received an offer for a job.  So, it's understandable that, according to BUSINESS INSIDER, Gilbert & O'Bryan LLC has received about 32 replies to its job post.  Here you can read that help wanted.

In the ad, the law firm says that the associate joining it could earn up to $10K the first year.  Yes, you read that right: $10K.  

In case you are interested in applying, applications are being accepted until June 29th.

John Edwards: Going through that trial was his penance, now he can build his new image on that platform

That nutty trial is John Edwards' ace in the hole for building his new image.  POLITICO has a major article on if and how he can reinvent himself.  However the focus is essentially from a pubic relations and political point of view.  Talk with lawyers, as I have, and they provide a different take.

Edwards, a number of lawyers opine, got a raw deal in being hauled into court.  That trial should never had taken place. But it did.  It imposed enormous suffering on Edwards and his family.  Yes, he had sinned but that in itself was plenty of penance.

It's on that platform of suffering needlessly at the hands of the legal system that Edwards can create his mission.  That would be to help reform the system and to provide pro bono services to those who get caught in the legal buzz-saw.  No, he does not have to, as some experts interviewed by POLITICO suggest, get on national television and cry out his eyes.   He has already been sufficiently humiliated through this trial.  Moreover, if his daughter forgives him, the heck with the rest of the world.

Since lawyers understand the injustice done Edwards, he should begin his journey back by seeking the support of the legal sector.

John Edwards: Implications of the mistrial

Given the complexity of campaign finance law, a mistrial was no surprise in the John Edwards' trial.  The jury could only agree on an acquittal for one of the six counts.  On the other five they were deadlocked.  Federal Judge Catherine Eagles declared a mistrial.

The implications of this are huge.  Federal prosecutors have been humbled.  They will likely consider the nature of the supposed crime and the strength of the evidence more carefully before they bring a person to trial.  This caution will be reinforced further if Rajat Gupta is acquitted in "U.S. v. Gupta."  The evidence is that case is largely circumstantial.

Another consequence of this acquittal could be reflection in the media and on mainstreet about how federal prosecutors can seemingly so easily disrupt someone's life and financial security.  Edwards has suffered.  So has his family.  He's lucky in that he entered this legal buzz-saw financially well-off.  So has Gupta.  But the professional who isn't wealthy could face financial ruin from legal costs.   Everyman and Everywoman could be thinking: That could be me.

A third consequence is a questioning of the entire legal system which allows just about anyone to file a complaint.  Yes, judges decide on its merit and if it will go forward.  Meanwhile, though, a reputation and a sense of personal equilibrium can wind up in tatters.

 

Bear Albert Edwards: If he's right about coming Ice Age, legal sector will get freezer burn

The legal sector should be in a state of high angst.  From recent experience it knows that when the economy is not growing or there is excessive uncertainty out there, corporations are slow to litigate.  That cuts deeply into the B2B revenues for BigLaw.

We may not be out of the woods on the financial freefall.  Bear Albert Edwards, reports BUSINESS INSIDER, is predicting another economic Ice Age.  It will be global, hitting the U.S. as hard as other nations.  The one bright spot could be Italy. 

If Edwards is on the money, the stock market will take another tumble.  Public companies will lose big pieces of their market capitalization.  Law firms will hire fewer associates and push out partners who are not bringing in new business.  Midsized and regional firms which can underprice BigLaw will be invited in for beauty contests and probably get the assignment.  There could be a number more of Dewey & LeBoeuf bankruptcies.

Is the end that near?  We don't know, do we.  The trick is learning to function productively amidst uncertainty.

Roman Catholic Church's Watergate: It isn't what happened, it's the cover up

The lesson we professionals took away from Watergate was that we open ourselves to severe punishment if we attempted to cover up whatever negative had happened.  The new conventional wisdom in business became to not tamper with evidence, witnesses, or even procedures in place.

Unfortunately for that once powerful global brand the Roman Catholic Church the lesson didn't seem to take.  In THE NEW YORK TIMES, Laurie Goodstein reports that when the now Cardinal Timothy M. Dolan was archbishop of Milwaukee he oversaw payments of up to $20,000 being made to sex-abusing clergy.  In return those priests would have to agree to leave the priesthood and make a life for themselves outside the Roman Catholic Church.  When questioned about if that had taken place, Goodstein notes, Dolan said no.  Now, as documents from the past surface in the Archdiocese of Milwaukee filing for bankruptcy, it is confirmed that Dolan was aware that the payments were made.

This could be the Roman Catholic Church's Watergate.  It could bring down this institution in America.  It could take time before all the dominoes fall but fall they could.  The early phase would be the financial collapse as Catholic laypeople cease donating to their parishes and macro Catholic causes.

Radically Cutting Expense: Why can't AM Law 100, 200 do it?

It's your expenses, stupid.  That's what the numbers again bear out for the legal sector.  THE AMERICAN LAWYER reports that the AM 200 had, at 5.3% growth per lawyer, higher revenue growth than the AM 100.  But it had lower profit per partner than the AM 100 because of, you got it, expenses that were too high.  The AM 100 were also faulted for that.

Why can't the legal sector cut its expenses?  Some contend that 30, 40, or more years of success made it assume that the approach they were using was the reason for the success and they are reluctant to tamper with that formula. Therefore they are still hiring in untrained first year associates at $160,000 starting salary.

Most experts on cost efficiency in the legal sector predict fewer associates hired for each partner, more outsourcing, more contract lawyers and fewer equity partners.   Clearly they are fingering the manpower component in terms of where to make cuts.  Yet many top law firms are operating their hiring and compensation policies as if it were pre the 2007 crash.

"U.S. v Gupta" - Naftalis building platform for reasonable doubt

Masterfully, lead defense attorney in "U.S. v Gupta" Gary Nafatalis is building the platform for reasonable doubt that Rajat Gupta was the source of leaks to Galleon Hedge Fund.

For example, he introduced in court the alleged existence of other leakers to Galleon.  On none of the wiretapped calls does Gupta relay any insider information.  The evidence is all circumstantial, such as a call was made from X to Y at this time and after which the head of Galleon Ray Rajaratnam made a trade favorable to him. Would any jury send a man to prison for up to 20 years based on that?

Naftalis also asked prosecution witness Michael Cardillo, reports Bloomberg, if the boys (and one girl) at Galleon tended to exaggerate the extent of their sources of insider information.  Cardillo said that such rarely happened.  However the subject was introduced into the courtroom.  The jury knows these characters lived outsized lives.  Also, they have to have credibility issues with Cardillo.  A former portfolio trader at Galleon, he had been convicted of insider trading and is cooperating with the prosecution.

This notion of exaggeration would sit with me if I were on the jury.  Boasting seems to go with the hedge fund territory.  Gupta could have simply got caught in that mess.

Edwards' Jury Deliberations: Sleepy memories of RI lead paint public nuisance

The jury for the John Edwards' trial has been out for eight days.  POLITICO captures the ennui, along with the frustration.  It's protocol that everyone in the loop waits around in the courtroom and that's that.  Soon all those activities which used to provide distraction, if not even pleasure, don't do it any more.  Folks stop reading, having enriched conversations with each other, and networking.

Those who were tethered to the Rhode Island lead paint public nuisance trial remember, probably vividly, the long long days during deliberations.  The plaintiff lawyers appeared nervous. The defense lawyers deflated.  Because of the latter I assumed that maybe drawn-out deliberations are a bad sign for the defendants.

Then the verdict was in on February 22, 2006. Everyone snapped to attention. We called our buddies who were hanging out in the court library (where there was Internet access).  Someone notified the late Peter Lord from the PROVIDENCE JOURNAL.  He had been jogging.  I thought it was funny that extra court marshals were called in, as if the side ruled against was going to have a violent meltdown.  A child advocate did the sign of cross.

The verdict was read.  The stock of the defendant companies plummeted.  There was still going to be plenty of work for lawyers on both sides for several more years.  The jurors were interviewed by just about every brandname media property including THE NEW YORK TIMES.  Then one day no one even remembered that blip in history.  Today we are focused on Edwards and Rajat Gupta.  Legal action is like the best of TV shows, they have their time and then it's over.  Carson and Seinfeld understood that well.

 

Corporate Goverance Practices: Are CEOs being ditched prematurely?

The mob is hungry for the heads of CEOs today.  Corporate governance lawyers know that.  Yet, experiences like those at H-P show that ousting the incumbent doesn't necessarily mean boosting shareholder returns.  

The funny thing is that investors quickly soured on the new CEO Meg Whitman.  Some law firm somewhere could be sitting right now in some conference room figuring out the compensation package to give Whitman when the board decides it's time to go out there again to choose a CEO for the troubled firm.  Yet, research by Booz & Company shows that insiders deliver a significantly higher return to shareholders than outsiders.

I look at this phenomenon of blaming CEOs for the complex troubles of a company for the financial information site Motley Fool.  Here you can read it.

Associates Living in Fairfield County, CT - More bad news

"Here it's up or out and I won't know if I am one of the up or the outs until September."

That's what a lawyer who works in Manhattan lamented last night at a 12-step meeting we both attend.  She is an associate at a top law firm in Manhattan.

Then she began her fantasy about chucking it all if she's not an up, selling the house in Darien, and moving west to work in a nonprofit which helps substance abusers.  She's willing to return to school to become certified in that field.

But there is a hitch in that dream. Her mortgage on her modest home in Darien, Connecticut is underwater.  A number of Manhattan lawyers live in Fairfield Country, CT.  There the housing market continues to be in freefall.  For example, on BUSINESS INSIDER, Keith Jurow provides the awful numbers.  He cites statistics from real estate company Wm Raveis.  According to the Raveis website, housing prices have gone down 10.7% in Fairfield County this year versus the year before.  In Darien they are down 13.5%. 

That means that lawyers knocked out of the box will find it more financially difficult to pull up stakes and go for something different.  The old thinking was to sell the house, rent, and then use the money as a feeder fund for something else.

The other day, an acquaintance in Darien told me that she did get an offer on her house and was relieved.  She wants to relocate to a lower cost location in northern Connecticut.  She added that the offer "wasn't much."  Also, she will have to find out if the bank will give the mortgage.

For Connecticut, the housing market hasn't bottomed out, not yet.   According to experts on  the legal sector, neither has the market for lawyers.  There will be more reductions in manpower because of the pressure to reduce costs.  That has become an issue most law firms can't duck after the collapse of high flyer Dewey & LeBoeuf.