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Wake Up Call: Law Firms Face Off Against Clients in Conflicts Case

Dec. 20, 2016, 1:32 PM

• Dozens of major law firms are taking sides against their corporate clients in briefs linked to a court fight over whether firms should be able to represent clients with opposing interests, when matters are not related. In the case at hand, Sheppard, Mullin, Richter & Hampton is appealing a court order to forfeit millions in fees to a client that refused to pay after learning that the firm had not disclosed it represented a plaintiff in the action, in another employment matter. ( The Recorder )

• King & Wood Mallesons China is reportedly in discussions to buy out the firm’s Dubai, Germany, Italy and Spain offices, which would mean dumping KWM’s Swiss verein structure in those jurisdictions. ( The Lawyer )

• Trump is said to be considering nominating ex-U.S. attorney Debra Wong Yang to run the Securities and Exchange Commission, positioning her to be the second consecutive former federal prosecutor to lead Wall Street’s top regulator. Yang, who is now a partner at law firm Gibson, Dunn & Crutcher, would replace Mary Jo White, who has said she will step down at the end of the Obama administration. ( Bloomberg via BLB )

• The Cravath-inspired salary hikes that about 116 big firms handed out to associates in 2016 cost each firm an average of about $11.6 million, or $57,300 per equity partner, according to a recent tally. Questions persist: How have these raises affected the bottom line for law firms, and will they transfer to the client? ( BLB )

• The U.S. Department of Education said Monday that it will end for-profit Charlotte School of Law’s access to federal student financial aid, citing “misleading and dishonest” practices and failure to meet American Bar Association standards. It’s past time for Charlotte and schools with similar practices and records to be pushed out the door, writes the executive director of Law School Transparency. ( BLB )

• Apple Inc. has set up a court battle with European Union competition watchdogs who ordered Ireland to claw back a record $13.6 billion in unpaid taxes from the iPhone maker. ( Bloomberg via BLB )

• The International Monetary Fund’s executive board reiterated its backing for Christine Lagarde, indicating support for her to remain managing director of the lender despite her conviction for negligence by a French court. ( Bloomberg via BLB ) Lagarde was the first female chair of a major global law firm — Baker and McKenzie — and under president Nicolas Sarkozy in 2007 she became France’s first female economy minister. ( AFP via Yahoo )

Legal Market

• A hard Brexit could jeopardize the employment of the over 370,000 people working in the U.K legal sector, the world’s most international legal sector and a vital asset for the country’s economy, according to a new report. ( TheCityUK )

• Washington-based Cohen Milstein Sellers & Toll tops rankings of U.S. class action law firms in a new Elite Trial Lawyers report, which highlights 35 law firms that did “creative and significant work” on the plaintiffs side. The report says the top 50 plaintiffs law firms for recoveries took in a total $11.2 billion for the 12-month period ending July 1, 2016. ( National Law Journal )

• A Pennsylvania federal judge disqualified Pittsburgh law firm Metz Lewis Brodman Must O’Keefe from representing a company suing a former employee because the firm had represented the same employee in a previous case. ( Legal Intelligencer )

• Perspective: Despite the worrisome stats out there, Big Law is not on the verge of a “Kodachrome moment,” the former editor in chief of The American Lawyer says. He offers benchmarks and observations for 2016 and the new year about the begin. ( BLB )

• In 2016, the U.S. Equal Employment Opportunity Commission’s issued new guidance and its enforcement actions resulted in $482.1 million collected through mediation, settlements and litigation for employees who claimed discrimination, down from $525 million the previous year. ( National Law Journal )

More on the Transition to a Trump presidency

• Hillary Clinton got about 3 million more popular votes than Donald Trump in the presidential election, but it was Trump who officially won the presidency Monday, as a vote by members of the Electoral College settled the contest. ( Washington Post )

• Editorial: It’s time to end the “antiquated mechanism” of the Electoral College. ( New York Times )

• About 4,000 lawyers signed a letter to the White House expressing concern over Russian hacking of the presidential election. ( Above the Law )

• Trump alleged that millions of people voted illegally in the U.S. presidential election. But cases of voter impersonation fraud, where one person goes to the polling place claiming to be someone else, are actually extremely rare, says Richard L. Hasen, Chancellor’s Professor of Law and Political Science at the University of California, Irvine and a leading expert on U.S. election law. ( Bloomberg View )

• Democratic senators know they probably can’t block Trump’s Cabinet picks, but they plan to force lengthy debate on nominees they consider radical — potentially stretching well beyond Inauguration Day. Among the particularly contentious picks so far are Exxon Mobil Corp. CEO Rex Tillerson, who was awarded a friendship medal in 2013 by Russian President Vladimir Putin, at State; former Goldman Sachs Group Inc. banker Steven Mnuchin to run Treasury, and longtime Medicare privatization advocate and Obamacare foe Representative Tom Price to head Health and Human Services. ( Bloomberg )

Happening in SCOTUS and Other Courts

• A California judicial commission on Monday declined to punish the Santa Clara County Superior Court judge who spurred public outrage by giving a six-month jail sentence to a former Stanford University student accused of sexually assaulting an unconscious woman. ( The Recorder )

• U.S. Chief Justice John Roberts Jr. rejected without comment a long-shot effort to force the U.S. Senate to vote on Obama’s Supreme Court nomination of Merrick Garland. Garland, chief judge of the U.S. Court of Appeals for the D.C. Circuit, is set to appear on Jan. 18 for the first time since he began sitting out oral arguments while his nomination was pending. ( National Law Journal )

• A so-called zombie whistleblower is suing in Washington, D.C., federal court to force the Securities and Exchange Commission to give him or her an award for tips given before the 2010 Dodd-Frank Act made such information eligible for recompense. The SEC denied the award request in part because the tip came before Dodd-Frank was enacted. ( National Law Journal )

• A Colorado law firm is on trial for allegedly colluding with companies and a competitor law firm in a scheme to rip off homeowners, banks and investors during the collapse of the real estate industry. ( Colorado Post )

Laterals and Moves

• Giuliani leaves Bracewell for Greenberg Traurig, then stumps for Trump, and other of the biggest lateral moves and hires of 2016. ( The Lawyer )

• Cooley has picked up six partners from Chadbourne & Parke and Pepper Hamilton in the areas of life sciences and international arbitration, from the Philadelphia suburbs and New York, boosting its presence in the Mid-Atlantic region. ( Legal Intelligencer )

• James Marshall, Sydney-based partner for Ashurst, has reportedly stepped down from his role as global co-head of finance after just six months. ( The Lawyer )


• Pressure is building on Senate Majority Leader Mitch McConnell to appoint a select committee to investigate Russia’s hack of the U.S. election and other cybersecurity threats. ( Politico )

• With fewer companies getting funded these days, many startups are opting to borrow instead, and piling on debt as a result. Some have already been forced to shutter after missing payments. ( Bloomberg )

• LeakedSource, the “Google of data breaches,” has a database of about 3 billion leaked accounts. It says it aims to inform users that their information is at risk while also pressuring companies to disclose when they’ve been breached. ( Wired )

• On an employee website, Apple CEO Tim Cook explained that he attended the meeting Trump held last week with tech leaders because he wanted to avoid being on the “sideline” when important policy gets decided that affects his industry. ( Recode )

Legal Education

• The UC-Hastings College of the Law said its board of directors voted to appoint its acting chancellor and dean, David Faigman, to take the role permanently. ( The Recorder )

Compiled by Rick Mitchell and edited by Casey Sullivan.

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