Story here. When the commodity brokerage Refco crashed, the bankruptcy trustee suggested that Refco's lawyers, at Mayer Brown, might be civilly liable for Refco's participation in questionable transactions. A large investor in Refco has now sued Mayer Brown for $245 million, alleging fraud and RICO violations. The firm has hired the redoubtable John Villa of Williams & Connolly. Villa quite capably defended Vinson & Elkins in at least two post-Enron-crash suits: the claim by the company itself and the class action suit. Remarkably, the American Lawyer Media article suggests that Weil, Gotshal & Manges is representing the investor. Normally, we don't see large firms taking on that kind of work.
I haven't had a chance to read the complaint yet. Do any of you readers know where it can be found? While there has been much broad policy discussion of whether the corporate lawyer should be the client's "gatekeeper," as a practical matter the issue is driven by the legal analysis by which corporate firms are, or are not, held liable after the client goes belly-up. That analysis turns on a number of technical arguments that I won't be able to discuss until I see how the complaint frames the issues.
In a cover story in the ABA Journal, Scott Turow offers a rather powerful critique of billable hours. Of course, criticism of billable hours is nothing new; academics and practitioners have offered important critiques for years.
But Turow reminded me of the argument, made elsewhere, that billable hours create a kind of conflict for many lawyers under Rule 1.7. Namely, a lawyer may have a financial interest in billing more time, even though the client won't benefit from the extra lawyering.
Of course, there are ways around the doctrinal point. But the concept seems right to me: there is needless lawyering that takes place under a billable hour system.
The problem, inevitably, is developing a system that creates better incentives. Contingency fees can create problematic incentives, as can other fee-generating structures.
Increasingly, firms are experimenting with mixes of contingencies, flat fees, and other methods in specific matters. Do any readers who are on the front lines have any thoughts as to what fee structures most effectively align the interests of lawyers and clients?
A New York federal district court has struck down various aspects of the new advertising rules in that state. The result is right in my opinion, but arguably didn't go far enough. Apparently, the court left intact the prohibition on advertising within thirty days of an accident, a provision that was arguably unconstitutional as well.
So many legal ethics discussions are reactions to disasters or scandals. It's nice to see this report, on The Graying of Laywers, which explores issues we'll be increasingly facing in the next decade. (nod to David Giacalone)
The Massachusetts Supreme Judicial Court issued an opinion a few days ago that addresses whether the state's public records law applies to communications that would otherwise be protected by the attorney-client privilege.
The problem is that the Massachusetts public records law is quite broad and does not explicitly preclude access to privileged government documents. The issue was whether the statute should be interpreted to include an unwritten exception for privileged communications.
The SJC concluded that, given the importance of the privilege, the legislature would not have preempted it without explicitly saying so. Given that the statute was silent, the SJC concluded that the privilege remains intact.
You can find the opinion, which should make for a good classroom discussion on either statutory interpretation or the attorney-client privilege (or both), here. And you can watch the oral argument here.
The judge ruled that the prosecution's efforts to cut off some defendants' legal defense funding was intolerable. Story here. One of the defining aspects of an adversarial system is a limitation on litigants' efforts to attack the very system itself. I have been critical of the government's efforts to interfere with KPMG's legal duties to indemnify its accused employees. The judge apparently agrees.
UPDATE: Not surprisingly, White Collar Crime Prof Blog has excellent analyses of this development.
A judge in Massachusetts, who recently had his high profile 2 million dollar libel verdict against the Boston Herald affirmed by the Supreme Judicial Court, is now facing ethics charges in connection with the case.
The charges are that, shortly after winning his verdict, which turned on a Herald story that falsely accused the judge of saying that a 14 year old rape victim "should get over it," the judge sent a note to the Herald's publisher, asking for a meeting. In his letter, which was on judicial stationery, the judge wrote: "You will bring to that meeting a cashiers check, payable to me, in the sum of $3,260,000....No check, no meeting." He also warned the publisher that telling anyone about the letter would be "a BIG mistake."
The judge is accused of having engaged in "willful misconduct" that was unbecoming of a judicial officer and that cast the judicial system in a bad light. He's also accused of using his position for personal gain. More on the story here and here.
The Sixth Circuit, in a panel decision with three separate opinions, on July 6, 2007 held that plaintiff attorneys who feared that their e-mail and telephone conversations were being intercepted pursuant to the infamous "Terrorist Surveillance Program" lacked standing to challenge the constitutionality of this program. ACLU v. Nat'l Sec. Agency, __ F.3d __ (6th Cir. July 2007). The 65-pages of opinion are hard to condense, but in the majority's view, the only way you have standing to challenge an unconstitutional surveillance program is to show that your rights, in fact, have been violated. Given that the government won't say who it's monitoring...