Bloomberg News

Orrick, Cooley, Jones Day, Linklaters: Business of Law

February 20, 2013

Rob McKenna, Washington State’s former attorney general, joined Orrick, Herrington & Sutcliffe LLP as a partner in Seattle and co-chairman of the firm’s public policy group.

“Rob has been a national leader in the development of data protection and privacy regulation that promotes innovation while protecting consumers,” Mitch Zuklie, chairman-elect of Orrick said in a statement. “This is an area of significant focus for Orrick’s technology and other clients, and Rob will be an invaluable asset to them.”

McKenna, who unsuccessfully ran for governor on the Republican ticket last year, finished his second term as attorney general in January. As president of the National Association of Attorneys General, McKenna led efforts to address data-protection, privacy, cybersecurity and intellectual property theft issues, the firm said.

While in office, the state passed anti-spyware and identity-theft laws. He also argued three appeals before the U.S. Supreme Court and co-led settlement negotiations of multistate consumer-protection investigations, the firm said.

“The mortgage lending settlement in 2012 was my most important case, overall,” McKenna said in an e-mail. “It not only produced $25 billion in homeowner relief, it resulted in new mortgage loan servicing rules that are now the industry standard, protecting all borrowers today and in the future.”

Orrick has lawyers at 25 offices in the U.S., Europe and Asia.

Cooley Expands Los Angeles Office With Two From Sheppard Mullin

Cooley LLP said C. Thomas Hopkins and Ian Smith joined the firm’s business department as partners in the Los Angeles office. Both join from Sheppard Mullin Richter & Hampton LLP, where Hopkins co-chaired the global corporate practice group.

“Tom and Ian’s substantial experience and expertise working with growth companies makes them a natural fit with our strategy,” David Hernand, partner-in-charge of Cooley’s Los Angeles office, said in a statement.

Hopkins’s corporate practice focuses on public offerings, mergers and acquisitions, and public and private company governance representation. Smith has experience in venture capital, mergers and acquisitions and representation of growth companies, the firm said.

Since opening the Los Angeles office in July with four founding partners, Cooley has added 11 attorneys. Cooley has 700 attorneys in 12 offices in the U.S. and Shanghai.

Tax Lawyer Wilhelm Haarmann Joins Linklaters in Germany

Linklaters LLP named Wilhelm Haarmann, founding partner of the law firm Haarmann, as a partner in Germany.

“With Wilhelm Haarmann, we are gaining one of the most renowned advisers at the interface of tax and corporate law,” Hans-Ulrich Wilsing, head of the German corporate law practice group, said in a statement.

Haarmann mainly advises on tax mandates and corporate transactions on mergers and acquisitions, private equity and venture capital matters, the firm said. He is also an arbitrator in large-scale arbitration proceedings.

Linklaters has lawyers at 28 offices worldwide.

Jones Day Hires Tax Partner in Columbus Office

Jones Day hired Troy Terakedis in the Columbus, Ohio, office as a partner in the tax practice. He was formerly a partner at Calfee, Halter & Griswold LLP. (1325L:US)

Terakedis counsels clients on federal income tax matters related to partnerships, limited liability companies and corporations. He has worked with leveraged buyout, venture capital, and other private-equity funds on formation issues as well as other tax-related matters, the firm said.

Jones Day has more than 2,400 lawyers at 38 offices throughout the U.S., Europe and Asia.

Deals

TSYS to Buy Prepaid Card Provider NetSpend for $1.4 Billion

King & Spalding LLP advised Total System Services Inc., or TSYS, which agreed to acquire NetSpend Holdings Inc. (NTSP:US), a provider of reloadable prepaid debit cards, for about $1.4 billion in cash. Fried, Frank, Harris, Shriver & Jacobson LLP represented NetSpend.

The King & Spalding legal team involved in the transaction was led by mergers and acquisitions partners Bill Baxley and Spencer Johnson, and also consisted of the following partners: Chip Conrad and Keith Townsend, financing and securities/SEC; Eleanor Banister, Sam Matchett and Cheryl Sabnis, employee benefits and labor; John Sweet, tax; Scott Petty, intellectual property; Jeff Spigel, antitrust; and Scott Stengel and Jeff Telep, financial and regulatory.

Fried Frank corporate partners Peter Golden and Abigail Bomba led a team which included corporate partner Amy Blackman, antitrust partner Barry Nigro, tax partner Michael Alter, litigation partner David Hennes and intellectual property & technology partner Daniel Glazer.

Davis Polk & Wardwell LLP is advising Bank of America Corp.’s Merrill Lynch as financial adviser to Netspend. The Davis Polk corporate team includes partners George R. Bason Jr. and Leonard Kreynin.

NetSpend shareholders will get $16 for each share of the company they own, according to a statement. Compared with NetSpend’s closing price of $12.69 on Feb. 15, the offer reflects a premium of about 26 percent.

TSYS may be betting on NetSpend’s growth prospects. The Austin, Texas-based company had more than 2.3 million active cards at the end of the year, and is “poised to capture a significant portion of this market,” Andrew Jeffrey, a SunTrust Banks Inc. analyst, said in a Feb. 14 note.

Spending on prepaid cards in the U.S. in 2011 totaled $186 billion, representing about 2.2 percent of $8.34 trillion in consumer purchases, and is projected to climb to $274.7 billion in 2016, according to the Nilson Report, a payments industry newsletter.

For more, click here.

News

Conrad Black Loses Bid to Void Conviction Because of Counsel

Conrad Black, the former Hollinger International Inc. chairman convicted in 2007 on fraud and obstruction charges, lost a bid to void that verdict on grounds he was blocked from hiring the defense lawyers he wanted.

Black argued that the seizure by federal agents in 2005 of about $9 million in proceeds from the sale of a Manhattan apartment left him unable to retain criminal defense lawyers Brendan V. Sullivan and Gregory Craig, then both with Washington’s Williams & Connolly LLP (1317L:US). Craig is a former White House Counsel under President Barack Obama. Sullivan is known for defending U.S. Marine Corps Lieutenant-Colonel Oliver North in the Iran-Contra scandal.

U.S. District Judge Amy J. St. Eve, who presided over the trial, yesterday rejected Black’s argument and faulted him for not pressing it earlier.

“I never thought there was much chance that Judge St. Eve would rule in our favor,” Black, 68, said in an e-mailed statement. “The entire prosecution was a fraud and a disgrace and any serious examination of it reveals that.”

Randall Samborn, a spokesman for acting Chicago U.S. Attorney Gary Shapiro, declined to comment on St. Eve’s ruling or on Black’s comments.

Black’s defense at trial was led by Edward Genson of Chicago and Edward Greenspan of Toronto.

Black was convicted of three counts of mail fraud and one count of obstructing a U.S. Securities and Exchange Commission probe. He successfully appealed two of the fraud convictions and won a three-year reduction of his original 6 1/2-year sentence. He was released from federal custody last year and is now living in Toronto.

Former U.S. Attorney Patrick Fitzgerald, who led the office during the Black case, is now in private practice with New York- based Skadden Arps Slate Meagher & Flom LLP (1112L:US), where Craig is also now a partner.

Hollinger International is now known as the Sun-Times Media Group Inc (SUTMQ:US).

The case is Black v. U.S., 12-cv-4306, U.S. District Court, Northern District of Illinois (Chicago).

For more, click here.

NCAA Fires Head of Enforcement After Violations in Miami Probe

The National Collegiate Athletic Association’s head of enforcement was fired after an independent review by New York law firm Cadwalader, Wickersham & Taft LLP said internal protocols were violated during the organization’s investigation into the University of Miami.

Julie Roe Lach was replaced by Jonathan Duncan Feb. 18 as the vice president of enforcement for college sports’ governing body. NCAA President Mark Emmert declined to comment further on Roe Lach’s status within the NCAA.

Roe Lach’s ousting came after Cadwalader released the results of its 27-day review of the NCAA’s investigation into possible improper benefits provided to Miami athletes. The review, published Feb. 18 on the NCAA website, found that while the NCAA did nothing illegal, staff members disregarded legal advice while using outside counsel and a federal bankruptcy process to obtain information.

“This is something that is an embarrassment to the association and our staff,” Emmert said Feb. 18 on a conference call to discuss the findings. “It’s something that is contrary to all of the activities and directions that we’ve been engaged with and all the things that we espouse.”

The NCAA has expunged any information obtained through these actions from its examination of Miami and will continue with its investigation, Emmert said.

The NCAA doesn’t have subpoena power, meaning it doesn’t have the authority to compel testimony during investigations. Staffers in the organization’s enforcement department used subpoena authority through bankruptcy proceedings of Hurricanes booster Nevin Shapiro to obtain information that wouldn’t have been available otherwise, Kenneth Wainstein, a partner at Cadwalader said on the conference call.

The technique, proposed by Maria Elena Perez, Shapiro’s attorney, was approved by two supervisors in the enforcement department, despite vocal concern from the NCAA’s legal staff, Wainstein said. Perez was paid to depose two people in Dec. 2011 using questions proposed by the NCAA, according to the report.

Perez said in a telephone interview that she was never told that her work with the NCAA was in violation of their own rules and that she felt “enormously betrayed” by the NCAA.

The actions violated an NCAA policy that says only its legal staff is allowed to hire outside counsel, Wainstein said. He added that while it wasn’t illegal, it could be perceived as a manipulation of the bankruptcy process, and that it showed disregard for the expectations of the NCAA’s membership.

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Firm News

Kaye Scholer Pays $1.5 Million to Settle GSC Claims

Law firm Kaye Scholer LLP (1192L:US) agreed to give up $1.5 million to settle claims by the U.S. Trustee that the firm, as lawyers for fund manager GSC Group Inc., filed inaccurate and misleading court papers in connection with the retention of Capstone Advisory Group LLC and Robert Manzo as the company’s financial advisers.

Assuming the settlements are approved by the bankruptcy court, the U.S. Trustee will have made $5.5 million in recoveries for GSC. Earlier last week, the U.S. Trustee announced settlements where Capstone and Manzo will pay or give up almost $4 million.

The Justice Department’s watchdog for bankruptcy, the U.S. Trustee, said that the two firms and Manzo covered up a prohibited fee-splitting agreement between Manzo and Capstone.

New York-based Kaye Scholer will give back $1.15 million in fees already paid and will waive $350,000 in fees yet to be paid.

The firm also agreed to the appointment at its own expense of an independent expert who will review the firm’s procedures in connection with the filing of papers to retain professionals in bankruptcy cases.

Kaye Scholer agreed that a bankruptcy partner not involved in a case and a member of the firm’s ethics committee will review and approve all court filings related to retentions of professionals.

The firm’s general counsel Aaron Rubinstein said in an e- mailed statement that the settlement contains “no acknowledgement by Kaye Scholer of any wrongdoing.” He said the firm considered that the settlement wasn’t “unduly burdensome or intrusive” and allowed the firm to “avoid the distraction of trial.”

There will be an April 22 hearing to consider approval of the settlements with the two firms and Manzo. There may be objections, however.

Black Diamond Capital Finance LLC said in a court filing last week that it opposes the settlement with the financial advisers. The firm said that Manzo, as trustee for the creditors’ trust, is spending several million dollars more than the trust agreement allows. As part of his settlement, Manzo will step down as trustee for the trust.

Black Diamond or others can file objections by March 15, when they can also oppose professionals’ fee requests. If Black Diamond or others seek larger disgorgements for inaccurate court filings, papers likewise must be filed by March 15.

Black Diamond was the proponent of the Chapter 11 plan for GSC that was approved and confirmed in February 2012.

According to the U.S. Trustee, Kaye Scholer incurred fees of $6.13 million, while Capstone’s were $6.07 million, not including a success fee not yet granted.

The case is In re GSC Group Inc., 10-14653, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Litigation

Dow Chemical Lawyer Denies Conspiracy to Fix Urethane Prices

A Dow Chemical Co. (DOW:US) lawyer told a jury that the company didn’t conspire with other chemical makers to fix the price of urethane products used in the manufacture of cars, appliances and furniture.

Lawyers for Dow and suing urethane buyers delivered closing arguments yesterday in federal court in Kansas City, Kansas, at the end of a four-week trial. The plaintiffs seek $1.125 billion in damages, one of their lawyers said.

The case started in 2005 with allegations that Dow plotted with BASF SE, Huntsman International LLC and Lyondell Chemical Co. Only Midland, Michigan-based Dow didn’t settle.

“What kind of cartel is it where everybody is doing exactly what they would be doing otherwise?” David Bernick, a partner at Boies Schiller & Flexner LLP (1422L:US) and a Dow lawyer, asked the jury of five women and two men. “There’s a difference between a conversation and an agreement, this is key,” he said, denying his client ever made such a pact.

At the center of the case are urethane-based products used in the automotive, construction, appliance and furniture industries. The plaintiffs contend that Dow and other companies illegally plotted to fix product prices in violation of U.S. law, attorney Joseph Goldberg said in court.

“An agreement can be just a wink and a nod,” Goldberg told the jury. He said such schemes aren’t agreed upon in corporate board rooms; rather, they’re hatched in back rooms, on golf courses and over cocktails.

“If it quacks like a duck and it walks like a duck, it can be a duck, even if you don’t see it,” he said, calling evidence of the price-fixing conspiracy “overwhelming.”

Bernick, the Dow lawyer, said the purchasers included industrial companies such as 3M Corp. and General Motors Co (GM:US).

The trial before U.S. District Judge John W. Lungstrum began on Jan. 23. Lungstrum last year denied a motion for judgment in Dow’s favor, ruling that the claims of a conspiracy from 1999 to 2003 were sufficient to go before a jury.

The case is In re Urethane Antitrust Litigation, 04- md-1616, U.S. District Court, District of Kansas (Kansas City).

For more, click here.

BP Ready for Trial After Failing to Find ‘Reasonable’ Settlement

BP Plc will defend itself against claims over 2010’s Gulf of Mexico oil spill at a trial next week after failing to reach a settlement with the U.S. and individual states. The company will be represented at trial by lawyers from Covington & Burling LLP, Kirkland & Ellis LLP and Liskow & Lewis.

“We have always been open to settlements on reasonable terms,” Rupert Bondy, group general counsel at BP, said in a statement. “Faced with demands that are excessive and not based on reality of the merits of the case, we are going to trial.”

A two-phase trial will start at a federal court in New Orleans on Feb. 25, overseen by Judge Carl Barbier. The first phase will determine responsibility for the Deepwater Horizon accident, which killed 11 rig workers and started the worst U.S. offshore oil spill. The second will decide the size of fines under the Clean Water Act.

BP said it won’t be found grossly negligent, a legal threshold of responsibility that determines the scale of fines Barbier would be able to levy.

“Gross negligence is a very high bar that BP believes cannot be met in this case,” Bondy said. “This was a tragic accident, resulting from multiple causes and involving multiple parties. We firmly believe we were not grossly negligent.”

BP will also contest U.S. estimates of how much oil was spilt. The government’s figure of 4.9 million barrels is overestimated by at least 20 percent, according to the London- based company. Given BP managed to contain and collect 810,000 barrels of oil, the penalty should be based on no more than 3.1 million barrels, it said.

Podcast

$300 Million Dairy Settlement Will Bring Reform, Lawyer Says

Robert Abrams, chairman of the antitrust group at Baker & Hostetler LLP, talks about his representation of a certified class of southeastern dairy farmers in the recently announced $158.6 million settlement of a continuing antitrust class action brought by the farmers against major milk producers. Total recovery for the dairy farmers in this matter is more than $300 million.

Abrams, speaking with Bloomberg Law’s Spencer Mazyck in this “Rainmakers” episode, also explains why there has been an increase in criminal antitrust enforcement actions under the Obama administration.

This is a Bloomberg podcast. To download, click here.

To contact the reporter on this story: Elizabeth Amon in New York at eamon2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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