Law And More

Apollo Global Management - In Vision, Still the Gunslinger We Love

For Q2 2021 Apollo Global Management crushed it. 

As The Wall Street Journal reports, its private-equity portfolio increased faster than what had been happening in the broader market. In net income, it catapulted to $657.7 million, from $446.3 million a year earlier. The dividend is up too - 50-cents versus 49-cents in a comparable period last year. Meanwhile the assets under management increased to $471.8 billion from $413.6 billion in Q2 2020.

But the bigger news is the vision for the business. That's being engineered by the new Chief Executive Officer Marc Rowan.

Some of it is already playing out. For example, Rowan has been implementing its insurance strategy. Apollo had purchased the 65% of Athene that it hadn't owned. That, in turn, predicts Rowan, will be the platform for doubling its credit business in the next five years. 

Law firm Paul Weiss, chaired by Brad Karp, handled that $11 billion transaction. Here are the details provided by Paul Weiss:

"Apollo (NYSE: APO) and Athene (NYSE: ATH) have entered into a definitive agreement to merge in an all-stock transaction that implies a total equity value of approximately $11 billion for Athene. Under the terms of the transaction, each outstanding Class A common share of Athene will be exchanged for a fixed ratio of 1.149 shares of Apollo common stock. Upon closing of the merger, current Apollo shareholders will own approximately 76% of the combined company on a fully diluted basis, and Athene shareholders will own approximately 24%."

Rowan also envisions the firm's other two niches private equity and real assets will increase by 50% during that same five-year timeframe.

This enhanced focus of insurance is what is being watched.  As The Wall Street Journal puts it:

"The shift reflects Apollo’s evolution from a leveraged-buyout shop to a credit-investing powerhouse catering primarily to insurance companies looking to park reams of cash from selling retirement-savings products known as fixed annuities." 

The gawking is about if Rowan can pull it off and how lucrative this will turn out to be. 

The gunslinger behavior of Apollo's past has ended. Its outsized previous head Leon Black has stepped down. But Rowan's strategy retains that ethos of aggressive building. Currently that's on the foundation of insurance. 

Often Wall Street takes it on the chin because it is made up of, yes, gunslingers. Watchdogs suspect wrongdoing. The intensity, risk-taking, frantic pace of innovation, and the big money involved scare many. Also, the wealth acquired by those in the industry is cause for resentment. 

But most of the Wall Street gunslingers have proved out they shake off all that, take on what is the protective coloring of the new age, and adapt their products and services. Just look how they accommodated ESG investing - and essentially on their own terms and conditions. Apollo has situated itself quite nicely for the Biden Administration regulatory environment. 

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The Law Firm in 2021: Jabs, Branding, and Being "Double-Humped"

The politics and the theatre of the vaccination issue have pivoted into a branding one.

For example, early adopters in announcing mandatory jabs have been positioned and packaged as heroes. Those range from chairpersons David Sanford at Sanford Heisler to Brad Karp at Paul Weiss. In a sense they have been "Profiles in Courage," as John F. Kennedy understood that term.

No surprise, the entire law-firm niche currently gets it how important in reputation management is the jab policy - along with the decisions about the return-to-the-office and when.

Chairperson at Akin Gump Kim Koopersmith receives lots of space in Bloomberg Law in the announcement: no access to the office until two weeks after being fully vaccinated. Also, circling back to the office has been rescheduled from September 13th to October 11th. That might be wishful thinking. 

Obviously, the legal sector is getting it that, just as with the Influenza pandemic, the world is going through a second round of COVID. That, just like how influenza circled back in 1918, could be more virulent than the first hit. Back in the early 20th century, chronicles Lawrence Wright in "The Plague Year: America in the Time of COVID," the phenomenon was called being "double-humped."

A double-humped law-firm industry could ride this out smoothly (despite all the announcements and backtracking) if it doesn't panic. Remote had been proved out. Evidence of that had been the windfall profits of 2020.

The rub, of course, could be possible pressure from clients such as Morgan Stanley by way of Chief Legal Office Eric Grossman. They could be impatient to have all lawyers on the account back in a formal office setting, very soon.  

A premature return to the office could involve tremendous risk. Even with the abundance of caution, COVID could spread through an office. The jabs don't guarantee much. As played out in Provincetown, MA, some of the fully vaccinated did contract the Delta variant. The most optimistic take on going through the ordeal of the jabs is that if contracting Delta, the experience probably won't be life-threatening. 

The outbreak of COVID in a law firm could derail that brilliantly engineered assembly line to get the nuts and bolts tasks done which implement partner strategy. Associates could wind up beig stuck at home, too sick to even do work remotely. Also, it's a brand issue. The law-firm leadership would be vilified for "allowing" the plague to take over the lives of the workforce.

Of course, there are no right answers.

In "The Plague Year," Wright notes:

"In 1918, Americans were facing the same confounding choices they would a century later."

With the brand in play, law-firm chairpersons are in a pickle they probably never anticipated. On this one, they have to think beyond business to old-fashioned ethics. In a sense, this is the ESG moment for the ethos of the legal sector. Forced could be a massive rethinking of culture. 

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Madonna Badger - She Is So Back (including from all the litigation)

On LinkedIn Updates, ad executive Madonna Badger posts:

"So proud and excited to be a part of the #AdAge Hot List today with our work for #Olay. #Olay has pushed us to empower women with all of the work we do together. This #TokyoOlympics Ad with Aly Raisman celebrates the #PowerofaDream. Thank you Olay, together we really can #faceanything."

Badger is the chief creative officer and founder of Badger and Winters. 

Lawyers might know Badger's name from the litigation generated by the 2011 fatal Christmas morning fire in her Stamford, Connecticut This Old House. Finally in 2018, it was announced that was all done. 

But the larger world knows Badger on an intimate emotional and spiritual level. In that fire she lost her three young daughters and mother and father. Later, her former husband Matthew Badger died of a heart attack at a relatively young age. 

After that tragedy, Badger left her professional life and went out west to heal. We who followed her painful journey weren't optimistic that she could restart her life and ever do the high-powered "Mad Men" kinds of work which had been her brandname. 

But, come back she did.

She married a long-term friend.

There is award-winning Badger and Winters.

And she has extended her brand to advocate for the desexualization of females in advertising. That is to honor her three daughters.

Obviously, Badger is a guiding light for how the rest of us can navigate our current challenges. For my tribe it's been aging. 

Thank you, Madonna Badger, for coming back. We needed that.

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From MyKayla Skinner to Johnny Carson - Lessons for Stuck Law Firm Chairpersons

Even before she won silver in gymnastics MyKayla Skinner had planned to retire from that niche. Like TV talk show host Johnny Carson she was going out before she had to. 

Carson's legacy remained golden. Skinner plans a fresh career path in journalism. 

There could be plenty of lessons from that for chairpersons of law firms. Some are old white men. Some are just stuck. And because they may have already peaked and essentially are just holding on, there have been unnecessary problems and missed opportunities. 

Take the haughty tone of their internal memoes which are leaked to media such as Abovethelaw.com.

That condescending approach to communications hasn't changed since Jeremy Blackman launched his blog in the early 21st century "Anonymous Lawyer" and published a novel by that title. His persona was that of a law firm partner.

One memorable post from "Anonymous Lawyer" was the announcement that between certain morning hours hot chocolate would be available in the law firm kitchen. The tone was as out-of-touch as what continues to be the usual in communications, both for outside counsel and for in-house. 

And what about a fall-off in firm financial performance? Thoughts immediately shift to David Boies at Boies Schiller. After a bad 2020, the firm has downsized its real estate footprint. Should the top layer of leadership there retire? Maybe they can pivot to positions in a legal institute or legal publishing corporatioins. 

Also, what about bad publicity? That could have been avoided for Paul Hastings not only recently but also back in 2008. The ham-handed way it handled the termination of associate Shinyung Oh got it a black eye in media such as The Wall Street Journal. That story hung on for years as journalists kept following up on what Oh had been doing. Recently I did just that - follow up. She is an Associate Marriage and Family Therapist. 

In addition, there is the ranking situation. Stuck in its black box and with its Trump Administration baggage, Jones Day dropped in elite status on the Vault 100 5 points. That's from 16 to 21. 

Meanwhile, in contrast to Jones Day, Paul Weiss is in the top 10, according to Vault. In 2007, before social-justice activist and innovator Brad Karp became chairperson, it wasn't up there. Incidentally, Karp is over-60 and white. But the concept of "old" doesn't get applied to his persona or his policies. 

Yes, business is hot in large law firms. But when it cools shareholders in law firms could pile on stuck leadership and force them out. This is an era of upheaval. It really doesn't take much to whip up momentum. Recall how the Little Engine That Could - Engine No. 1 - landed board seats at Exxon. 

Sure, the stuck could get unstuck. However, the ethos of the successful player in the legal sector is not to show weakness. Therefore, the usual dynamic in that kind of configuration is for the chairpersons under attack to dig in their heels even more. That means they can't pull off an organizational pivot. It might require a new generation of leadership to disrupt BigLaw.

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Boies Schiller Downsizing Real Estate Footprint - Interpreted as Negative Signal

"Boies Schiller Flexner is shedding more office space in New York following reports of declines in revenue and headcount. The litigation firm founded by famed trial lawyer David Boies is subleasing an entire floor—some 28,000 square feet—at 55 Hudson Yards, according to a real estate listing viewed by Bloomberg Law." Meghan Tribe, Bloomberg Law, July 29, 2021.

As many know, 2020 revenues had been, unlike myriad other elite law firms, disappointing. Also, lawyer headcount is down 41% to 177 lawyers. Daily news in the legal media had been the poaching of partners. 

Obviously things haven't improved much since then or perhaps not at all. 

In 2015, Boies Schiller had announced it was leasing four floors at 55 Hudson Yards, totaling 83,000 square feet. It intended to occupy three floors and lease out the fourth. 

Any sign of organizational weakness like this cannot only put the jinx on new business development. It could spook current clients to leave. In addition, there can be more partner flight.

Recall that over-the-top praise article in BusinessWeek in 2015 on David Boies. That was then.

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Activision Blizzard - Beyond the Lawsuit, Threatened Walkout, $8 Billion Drop in Stock Price to Question of Prevention

Workplace culture, again.

And again there is the issue of a leader's being tone-deaf.

That's what Chief Executive Officer of Activision Blizzard Bobby Kotick admitted to being, reports Bloomberg Law. He did that to prevent a walkout of employees tomorrow. Here is his letter to constituents, including the employees.

That walkout was planned as a response to the corporation's perceived lack of an appropriate response to the filing of a discrimination lawsuit.

That complaint is "California Department of Fair Employment and Housing v. Activision Blizzard."

Here is a copy of the complaint.

And here is the press release on that filing from that Department.

Essentially, it is an allegation of an "Animal House" type workplace culture. The more up-to-date language for this, of course, is "frat-boy culture."

In addition, as is becoming increasingly standard, today Kotick contracted with law firm WilmerHale to conduct an internal review of the accusations in the lawsuit. Meanwhile also today, the stock lost 9% of its value, documents Insider. Since the filing of the lawsuit last Friday the market value of the video-gaming company has gone down almost $8 billion. Activision Blizzard is known for its popular video games such as "Overwatch," "Call of Duty," and "Candy Crush."

Some of those observing this rapid unraveling of a supposed cool video-game brandname as overdue. The alleged frat-boy antics were supposedly long embedded in the culture. 

The smart crisis management today by Kotick is a sign that the corporation can turn this around. Investors can probably expect the stock to begin rebounding.

Unlike equally tone-deaf Eric Grossman at Morgan Stanley and Jamie Dimon at JPMorgan Chase, Kotick fixed his initial blunders. Currently he is following the fundamentals of crisis management. Not only did he do his mea culpa. He also took the action of authorizing a respected law firm to do the kind of investigation which mainstream America found out existed during the allegations of sexual misconduct at Fox. Those actions send the right signals. 

However, the elephant in the room is this question: Could all this have been prevented? And, will investors begin to expect preventive measures. If they have not been taken, the CEO could be fired. Already, reports The Wall Street Journal, that is happening. It is more likely that CEOs will lose their positions for a failure in managing a social issue than a financial one.

If a corporation such as Activision Blizzard has on retainer a law firm or multiple law firms which have ESG practices (Environmental Social and Enviromental) couldn't there have been proactive guidance and actions taken? That is, those heading the ESG practices alert the client to the risks - legal, political, branding, stockprice, and customer relations - related to both values and actual behavior. Next, there are recommended initiatives. 

Do the current roles of lawyers, at least in ESG practices, include that of culture coach?

Some ESG practices such as the one created in April 2020 at Paul Weiss by Brad Karp are structured to cover that kind of territory.  Following is the mission statement. Note the language and tone are about guidance. 

"Business leaders face greater pressure to increase their organizations’ resilience while simultaneously addressing social issues of importance to stakeholders. Our advisory practice helps companies navigate the legal, business and political ramifications of developing and implementing ESG initiatives. We advise on matters such as stakeholder engagement, corporate governance, crisis management, corporate social responsibility, sustainability, diversity and inclusion, ethics and compliance."

In addition, law firms such as Jenner & Block which have practices specifically focused on toxic workplaces also can come to provide proactive guidance. The target market for that would be businesses blind to how they are operating right on the cultural third rail. 

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Not the Millennial Way and Other Matters of Culture, Legalities and Innovation - From Jones Day to Wall Street to BigTech

"Financial transparency is an extension of the way young adults conduct the rest of their lives, including their openness on social media." - Svati Kirsten Narula, The Wall Street Journal, May 3, 2021.

Another generational shift: Millennials regularly share information about their salary and other money issues. The implications are huge for old-line organizations like Jones Day which make it a matter of culture to keep compensation secret. In the war for talent, the Jones Days could find themselves quite unattractive to youth.

This goes beyond the numbers in the paycheck, of course. Cultural matters are huge. McKinsey & Co. found that culture directly impacts financial performance, creates differentiation (think brand), and accelerates the ability to adapt to change. 

And, increasingly, the members of the workforce are shaping the culture. That could mean, for example, remote is here to stay. The Conference Board survey found that 55% of Millennials are reluctant to return to the office. 

But it isn't only the Jones Days which have plenty of rethinking to do about the soft stuff - that is, values which create the human touchpoints (as well as the contractual policies) for a business.

Employee activism has become the norm in BigTech such as Apple and Amazon.

Media centers are making a list and checking it twice about what cultures are naughty and which are nice. Then they zero in with punitive coverage. Post the Trump phenomenon, that's the new clickbait. 

And, consumers expect the brands they're associated to walk the line in social justice.

The transformations which will be in play increasingly will involve law firm ESG (Environmental Social Governance) practices. They have to.

That's because the shift to a culture co-created by myriad constituencies is complex and characterized by plenty of passion. It can't avoid hovering near the third rail of legalities. Consumer activist Ralph Nader taught Everyman and Everywoman to go to court. Business should expect plenty of legal action.

Law firms had to anticipate this. And, in April 2020, law firm Paul Weiss, chaired by Brad Karp, did just that. It launched a comprehensive ESG practice which covers it all - soft and hard. 

Here's the short version:

"Paul, Weiss’s Sustainability and Environmental, Social & Governance (ESG) Advisory Practice helps clients develop integrated ESG strategies that safeguard corporate reputation, mitigate risk and leverage opportunity."

The edge that law firm has in this - both in branding and operationally - is that it also has been an early adopter in inventing new approaches to addressing social justice issues. Classic now is that COVID Resource Center it engineered through a collaborative effort with thousands of lawyers from other firms. Of course, that's been a life-saver, literally, during this Delta variant. 

Not hyperbolic: Only that kind of innovation in resetting cultures could prevent the diaspora of talent.

Meanwhile, Wall Street is already losing a generation of workers.

Top-down tech corporations like Apple could also find themselves in that pickle.

Jones Day? Time will tell.

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Apollo Fund Rebrands - Wealth Also Requires Reputation Restoration and Lots of Help from ESG Practices

"Father, forgive me. I had acquired wealth."

Finally, sizes up Bloomberg, the Apollo Fund is moving out of the shadow of scandal. Investors are re-committed. 

The specifics of the previous Apollo brand tarnishing included media-grabbing tidbits like association with Jeffrey Epstein. 

Okay, Epstein was a bad guy.

But the intensity of the hit to the Apollo brand and its one-time head Leon Black is not really about that, is it? The root of the self-righteous hysteria seems to be this: America's ambivalence about wealth. Both institutional and personal. 

On the one hand, the Puritan ethos had the acquisition of wealth as a the play-out of the right moral values. The lack of it was interpreted as a lack of those. That's not gone away. Shame on you. You're not on the list of billionaires under-40.  

On the other hand, there is the embedded meme: Money is the root of all evil. Had Black not possessed such personal wealth he wouldn't have been able to have become involved in a romantic dalliance resulting in a lawsuit against him and a countersuit by him, right. We're certain of that. We praise MacKenzie Scott for giving away so much of her wealth.

The problem is that the ambivance (along with the certitude) is growing. That means so much confusion. 

On an individual level, the Hamptons had become a symbol of decadence. The media does photos of disgraced "Today" executive Matt Lauer you know where: the Hamptons. 

As for institutional wealth. Where to begin. Yes, folks want the returns on their investments in public companies to be amazing. Simultaneously they want the corporations producing them not to showcase wealth in terms of power and influence.

No, they shouldn't be dictating where the employees are working from.

No, they cannot choose whom they want to hire.

No they can't just operate the business when there is so much suffering in the world. And, the brass is getting paid too damn much. Wall Street? You don't want your kid training there as a junior analyst. And as a lawyer do you want to work at a BigLaw firm representing Wall Street? 

A proven out public relations firm like Edelman might have to be parachuted in to design a campaign for rebranding wealth as an economic-growth necessity. It's like the car industry is the 1950s. What was good for GM was good for the creation of the middle class. Only the creation of more wealth now will restore that middle class. Tighten that up as a message.

In addition, corporate leadership has to get smarter about identifying where the landmines are on this one and how to not step on them. That's the rub. What was a standard value a month ago is verboten yesterday and today who the hell knows. Check your values before you start announcing policies this morning.

That's why law firms' ESG (environmental, social, goverance) practices may be evolving into the most critical service to current clients and to prospective ones. That could be inventing a new category of what law firms do, in addition to the traditional transactional and litigation segments. Actually, that could be more important than the latter two. Will law firms come to declare that the real business that they are in is saving American capitalism? Part of that is figuring out social justice for the clients.

Paul Weiss, chaired by Brad Karp, has captured that new core function of a law firm in how it has positioned and packaged its own ESG practice mission.

Essentially the language is code for how to succeed despite what's happening externally and internally (employee activism). The current cultural upheaval doesn't get corporations off the hook for producing over-the-top financial performance. But they better do that and communicate about that in ways that walk the line on the perception of wealth.

Here is the Paul Weiss mission:

"Business leaders face greater pressure to increase their organizations’ resilience while simultaneously addressing social issues of importance to stakeholders. Our advisory practice helps companies navigate the legal, business and political ramifications of developing and implementing ESG initiatives. We advise on matters such as stakeholder engagement, corporate governance, crisis management, corporate social responsibility, sustainability, diversity and inclusion, ethics and compliance."

Meanwhile, the Delta variant has introduced more uncertainty. Folks don't like that. Individuals and organizations with wealth will likely be taking it on the chin. There could be greater expectations of help from them as well as vilification of what they are assumed to be about. Give us your money and get out of our sight.

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BigTech, Big Pushback By Employees on Workplace Culture - Will This Become Major Issue for Law Firms' ESG Practices?

[The petition submitted by 550 Amazon employees in Web Services] is just the latest example of a Big Tech company facing backlash from its own employees over workplace culture. Employees at Google, Facebook, and Apple have in recent years banded together to vocalize concerns about internal issues in an effort to incite change." - Sara Ashley O'Brien, CNN Business, July 23, 2021.

What the petition contends is that there have been systemic discrimination, harassment, bullying and bias against women and other underrepresented groups at Amazon's ProServ. That's its unit providing its enterprise customers support for  products for cloud computing. Further, the petition claims that the internal processes for investigating and managing these issues are not fair, objective, or transparent. 

Amazon has contracted with a women-owned outside firm to investigate the allegations. It has not disclosed the identity of the firm.

As many know, BigTech recently has been a target of employee unrest. The rank and file at Apple submitted a second petition about where work will be done. The corporation is mandating a hybrid model. That has been put on hold for another month because of the Delta variant. Instead of that directive, the employees propose a pilot in which for a year all work will be done remotely, wherever. At one time this kind of initiative launched by employees would have been unthinkable. That's because Apple is a top-down corporation.

The internal agitation about workplace culture extends, of course, beyond BigTech in the U.S.

Deloitte U.K. and KPMG U.K. have already taken action against executives for accusations about bullying. One resigned. One was reassigned.

In the dust-up over the Eric Grossman "encouragement" about the return to the office for businesses associated with Morgan Stanley the push-back has been from financial partners in the U.K. and Europe. 

What could play out is this: Workplace cultural issues could become a primary focus for law firms' ESG (Environmental Social and Governance) practices.

For example, if we read between the lines of how law firm Paul Weiss, chaired by Brad Karp, has structured its ESG practice the services provided are wide-open for assisting corporations in navigating disruptions in organizational values.

Here is its mission statement. Look at the language:

"Business leaders face greater pressure to increase their organizations’ resilience while simultaneously addressing social issues of importance to stakeholders. Our advisory practice helps companies navigate the legal, business and political ramifications of developing and implementing ESG initiatives. We advise on matters such as stakeholder engagement, corporate governance, crisis management, corporate social responsibility, sustainability, diversity and inclusion, ethics and compliance."

That language is generic enough to be applied to just about any cultural matter. And, as McKinsey & Co. hammers, culture is a core business function. It directly determines financial performance, provides points of differentiation, and empowers faster adaptation to change. 

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The Great Quit - Unbundling Money and Power (Like Jamie Dimon Is Stuck)

"For decades, large swaths of low wage service work have proved difficult to unionize because of fissured workplaces and aggressive union-busting by employers. Now these workers, many of them women of color—have taken the next best option, protesting through mass resignation." Lauren Karori Gurley, Vice, July 23, 2021.

Soon enough it won't be a story when the whole workforce walks off the job. And that isn't a strike. It's a quit. Like, we're not coming back. 

Currently it is the story, though, at Burger King, Chipotle, and Dollar General. A more sophisticated version of that is happening on Wall Street. Young analysts have been exiting for more humane work cultures. And, just the threat of walking out in BigLaw by junior lawyers has been shaping back to office policies (at least before the Delta variant). 

Meanwhile, freelance players have re-learned that they can make a good buck in the underground economy. No, they don't have to pitch over and over for assignments in the above-ground economy. So, obviously, if the balance of power between business and workers doesn't shift, the government is going to lose on plenty of tax money. 

Nothing is static. This use of quitting to send a message will evolve into legislation and litigation. Employment law practices will continue to blossom. 

And, all of us who exchange our labor for money will be making an existential assessment about what "work" means. That is part of how the Future of Work is playing out. 

Of course, corporations will stumble. That's where law firms ESG practices loop in. They provide both preventive guidance and fix-it operations for business when power is being redistributed.

JPMorgan Chase head Jamie Dimon can have all the money in the world. But that no longer ensures that he will control the levers of power. Already, he is being mocked for pontificating where work has to be done. And, Generation Z preferences about the values of the workplace are making Dimon look, well, old-line. 

Yes, Dimon has just re-opped with JPMorgan Chase. And, yes, that institution will probably still make lots of money. But there has been an unbundling of money and power.

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