Blawgletter®

Dewey & LeBouef Tanks; WSJ Says Ethics Rules Killed Firm

Dewey & LeBouef filed for bankruptcy protection on Sunday in Manhattan. It plans to liquidate.

WSJ, meanwhile, printed an item that partly blames "regulation" for Dewey's demise.

Snappy and Bitey Ponder the Beauty of Credit Default Swaps

Scene: An office near Ground Zero. Way up high. Perhaps in 40 Wall Street. Which has that awesome Duane Reade store on the ground floor. Some place posh in the area no matter what.

Snappy: Did you know, Bitey, that people could insure themselves against risks they Do Not Have?

Bitey: When, in the course of human events, one people may dissolve the political bands which have connected them to another.

Snappy: Right. You value Freedom. Like contract-freedom, such as those dear oh-so-smart Justices who wrote about it in Lochner. True that!

Bitey: And to assume among the powers of the Earth the separate and equal station to which the laws of Nature and Nature's own God entitle them.

Snappy: Thank you for not leaving a preposition at the end of what you just said.

Bitey: A decent respect to the opinion of womankind requires them to declare the causes of the separation.

Snappy: You have once again made my point about gender-neutral stuff, Bitey! How I adore you.

Bitey: I mainly regret not knowing the rest. The we hold these truths self-evident part for some reason escapes me just now.

Snappy: Don't worry, Bitey-meister. Jamie Dimon sings those words better than you can think! He knows from truth, let me tell you, whose cogitation I value and fear above that of all others.

Bitey: What a dork. We all know that credit default swaps have both a good function (hedging risk for bets you've in fact made on, for instance, a real firm's actual bonds) and a nutty risky one (making crazy gambles on debt as to which you have no risk at all). Will Dimon at last confess that his bank deserves to forfeit any right to write credit default swaps? Because if he won't I'd like to beat the [unclear words here] him.

Snappy: Alrighty then, Bitey. You rock. Let's go see Wicked!

Fade to Snappy and Bitey riding a taxi towards Broadway. Not to see Spiderman. Something else for sure.

Snappy and Bitey Discuss an Epic Fail

Scene: A beach. Palms sway in an August breeze. Salt water swells wash the sandy coast. Snappy and Bitey sit in wicker chairs, beneath a fan that rotates faster than the heat calls for.

Snappy: Did you hear about all those nice lawyers whose big firm liked them so much its leaders told them they ought to get a job somewhere else?

Bitey: Younger than springtime, are you.

Snappy: You got that right, sister!

Bitey: Gayer than laughter, am I.

Snappy: You always go too far, Bitey.

Bitey: So you say. Hmm. And yet you must wonder what made people who worked at Dewey Ballantine and LeBoeuf Lamb think the magic of the wedding would last.

Snappy: Mating made so much sense, Bitey! Hugeness produced catnip for big clients! Haven't you read in The Wall Street Journal about how nuts law firms have gotten about making themselves beautiful -- and sweet-smelling -- to Corporate America?

Bitey: You and me.

Snappy: What?

Bitey: You. And. Me.

Snappy: Come again, please, my dear Bitey.

Bitey: Never mind.

Fade to the swaying palms.

E-Books Case Draws WSJ Wrath

Talk about goofy.

Today's WSJ -- The Wall Street Journal -- includes a column that gets antitrust law so wrong you wonder why the paper's pundits, who include those who write the official editorials, bother.

The column in question takes aim at the U.S. Department of Justice's case that calls Apple and five book publishers price-fixers for, well, fixing prices.

As the WSJ so often does when dealing with antitrust law, this item reflects a breed of magical thinking.

It first claims that the e-book cartel couldn't have conspired because they simply applied Apple's standard "agency model" to e-books. That model lets the makers of a good or service -- here, the book-publishers -- set Apple's price. Apple keeps 30 percent of that price.

The writer doesn't seem to have picked up on the fact that the book people didn't use the agency model until they jointly chose to change their model. Adoption of the model resulted not from independent decisions but from a string of secret meetings where the book-makers' top execs agreed on a common plan to keep book prices high. Prices for their books shot back up and have stayed there. Buyers paid more. And Apple got 30 percent of the bigger take.

Can you say price-fixing?

The writer claims that the DOJ lawsuit has HURT competition by giving Amazon cover to . . . lower prices. You read that right. Paying less for e-books hurts competition.

Who does the author cite for that idea? The head of a group that lobbies for people who write books. They of course want high prices for their products, pretty much for the same reason Apple does -- they get a cut, too.

But, wait, there's more.

The writer ends by quoting antitrust guru and prophet Richard Posner, who for many years has taught antitrust law both as a judge on the Seventh Circuit Court of Appeals in Chicago and as a prof at the University of Chicago. The quote has Judge Posner saying that courts may often do a bad job of weighing "efficiency against monopoly". But the e-book case doesn't deal with "monopoly" -- which by its terms ("mono") involves a single firm. No, this case concerns a price-fixing cartel. And the balance in cases like that falls almost always on the side of condemnation.

The irony? The same paper talked with a bunch of antitrust experts and put what they said about United States v. Apple Corporation in an article. The title?

"Critics of E-Books Lawsuit Miss the Mark, Experts Say".

As Top Rates Rise, Do You Get What You Pay for?

The Wall Street Journal reports that law firm partners on the high end boosted their hourly rates more than those at the low end.

Blawgletter doubts that should surprise anyone. The difference between a really good lawyer and a good one resembles the difference (with apologies to Samuel Clemens) between lightning and a lightning bug.

If you can't afford top-end rates or even if you just don't like them, think about trying a risk-sharing deal -- such as a flat fee, contingent fee, or bonus for good results. That will better align your interests with your dear lawyer's and just might pay off big time.

ABA May Sponsor Letting Non-Lawyers Buy Firms

The WSJ has a front-page online item on an effort within the American Bar Association to change the rule on who can own law firms. Right now, only lawyers can, as a matter of legal ethics, share in law firm equity. But the rule differs in U.K. and even more so Down Under.

People who oppose changing the rule tend to urge that letting non-lawyers buy into firms would cloud lawyers' judgment and force them to adopt the dubious morals of the market.

What do you think?

Annals of Oil and Gas: Mineral Owner Wins Fight with Seismic Supplier

Blawgletter adores trials. Let us tell you about our last one:

The other side thought the case related to theft of their 3D seismic data. They felt so strongly about it that at trial they asked for more than $70 million -- for what they deemed misuse of their trade secrets.

But the court saw things differently. On March 5, 2012, the 36th District Court of Beauregard Parish, Louisiana, issued its Reasons for Judgment. And, in those Reasons for Judgment, by The Honorable H. Ward Fontenot, Susman Godfrey's client won a near-total victory.

Olympia Minerals held mineral leases and servitudes that covered 445 square miles in western Louisiana. In 2000, Olympia, which then belonged to El Paso Production Company, entered into a contract with Aspect Resources and a predecessor of Kerr-McGee Oil & Gas for a project over 135 square miles in Beauregard and Calcasieu Parishes. Aspect and Kerr-McGee agreed to conduct a 3D seismic survey, to sublease at least 15 percent of the acreage, and to provide Olympia with a copy of the seismic data, including in the form of raw data or field tapes. But Aspect and Kerr-McGee shot only about half of the 135 square miles, did not sublease any acreage, and provided only processed seismic data to Olympia.

Aspect and Kerr-McGee nonetheless claimed that Olympia had misused the seismic data by letting other parties, which had subleased some of the Louisiana lands from Olympia, "work" the data in a secure data room. They also alleged that one of the sublessees removed the data from the data room and put it on the company's computer system. They asked for disgorgement of all profits Olympia and the sublessees had made on productive wells plus a five percent royalty on future discoveries and other relief.

In the Reasons for Judgment, the trial court found the evidence "strongly suggests that it was never the intention of the defendants to honor the terms of the" contract with Olympia and that Aspect breached the contract intentionally and therefore in "bad faith". The court cited testimony of "Alex Cranberg, the chairman and founder of Aspect", on the question of why Aspect chose not to shoot more than half of the 3D survey, in support of the court's finding that Aspect made "conscious and calculated business decisions" to commit "major breaches" of the contract with Olympia. The court also found that "the 'shell game' played by Aspect . . . when Olympia sought the [field] tapes is inexcusable." The court therefore struck the contractual limitation on consequential damages, awarded damages (including for loss of royalties) that Olympia estimates at $40 million or more, dissolved the contract between Olympia and Aspect, and directed Aspect to provide Olympia with the field tapes for the 3D data. The court also dismissed all of Aspect's claims against Olympia and its sublessees for misappropriation of trade secrets, breach of contract, and other theories with prejudice.

"I knew the only way ultimately to prevail was to be genuinely prepared to try the case represented by a firm with a track record of success", said Olympia's President, Michael Lewis. "That said", he added, "the Susman Godfrey attorneys presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom".

"Judge Fontenot's scholarly and compelling analysis demonstrates the importance of keeping promises, in the oil patch and in everyday life", said Barry Barnett, Olympia's lead trial counsel and a partner in Susman Godfrey L.L.P. "It also shows that mineral owners in Louisiana can count on the law to protect the rights they bargain for."

The Olympia trial team consisted of Mr. Barnett and partner Daniel Charest, both of Dallas, and Brian Gillett, an associate in Susman Godfrey's Houston office. Pat Long, a Patton Boggs partner in Dallas, and Carver Darden partner John Dunlap and associate Harry Barton, both of New Orleans, represented different groups of the working interest owners. Barry Wertz and Jonathan Baughman of McGinnis Lochridge & Kilgore in Houston represented Aspect.

Olympia and the working interest owners settled with Kerr-McGee following summary judgment rulings favoring the plaintiffs.

 

 

Letting Justices Rule on Their Biases

Do you think a Supreme Court justice who has given good wishes, outside of court, to one side or the other should sit in judgment of the case?

Should we hold the justice who chooses to remain on the case accountable for his or her recusal decision?

The Chief Justice of the Court devoted his year-end report on the federal judiciary to claiming that Their Honors need to choose whether to recuse in Total Peace. He went on to say:

Indeed, if the Supreme Court reviewed those decisions [on whether or not to recuse], it would create an undesirable situation in which the Court could affect the outcome of a case by selecting who among its Members may participate.

So you can "affect the outcome of a case by selecting who among [the Court's Members]" get to vote. Huh.

Quote of the Day: Martin Luther King, Jr.

Quote of the Day: Martin Luther King, Jr.

  
Martin Luther King, Jr. (1929-68).

I know you are asking today, "How long will it take?" Somebody’s asking, "How long will prejudice blind the visions of men, darken their understanding, and drive bright-eyed wisdom from her sacred throne?" Somebody’s asking, "When will wounded justice, lying prostrate on the streets of Selma and Birmingham and communities all over the South, be lifted from this dust of shame to reign supreme among the children of men?" Somebody’s asking, "When will the radiant star of hope be plunged against the nocturnal bosom of this lonely night, plucked from weary souls with chains of fear and the manacles of death? How long will justice be crucified, and truth bear it?"

I come to say to you this afternoon, however difficult the moment, however frustrating the hour, it will not be long, because "truth crushed to earth will rise again."

How long? Not long, because "no lie can live forever."

How long? Not long, because "you shall reap what you sow."

How long? Not long:

Truth forever on the scaffold,

Wrong forever on the throne,

Yet that scaffold sways the future,

And, behind the dim unknown,

Standeth God within the shadow,

Keeping watch above his own.

How long? Not long, because the arc of the moral universe is long, but it bends toward justice.

How long? Not long, because:

Mine eyes have seen the glory of the coming of the Lord;

He is trampling out the vintage where the grapes of wrath are stored;

He has loosed the fateful lightning of his terrible swift sword;

His truth is marching on.

He has sounded forth the trumpet that shall never call retreat;

He is sifting out the hearts of men before His judgment seat.

O, be swift, my soul, to answer Him! Be jubilant my feet!

Our God is marching on.

Glory, hallelujah! Glory, hallelujah!

Glory, hallelujah! Glory, hallelujah!

His truth is marching on.

Martin Luther King, Jr., March 25, 1965, Montgomery, Alabama.  Watch it here.

 

Quote of the Day: Elena Kagan

Well, even if some regulation is permissible, the kind of regulation that the FCC has done here is regulation that gives it complete discretion as to what kind of speech to go after and what not to go after; that it has not tied itself in any way to any kinds of standards. And, it's, you know, evident in the notion that this -- the way that this policy seems to work, it's like nobody can use dirty words or nudity except for Steven Spielberg and that there's a lot of room here for FCC enforcement on the basis of what speech they think is kind of nice and proper and good. And so that's a serious First Amendment issue.

Justice Elena Kagan, FCC v. Fox Television Stations, Inc., No. 10-1293, Transcript at 51:20-52:8 (emphasis ours).

[Hat tip to Adam Liptak.]