The BLT: The Blog of Legal Times

Managing Partners' Gloomy Outlook on the Economy

No surprise here: Citi Private Bank Law Firm Group released its 2008 first quarter Managing Partner Confidence Index this week, and overall, it depicts a gloomy outlook on the economy’s impact on law firms.

This is the fifth index released by Citi Private Bank, which first began polling managing partners about their faith in the economy for the first quarter of 2007. Since then, each index has shown a steady decline in confidence, but this most recent survey marks the first time that managing partners were, on average, more negative than positive in their responses.

Respondents ranked their confidence in the future of the economy, using an index that scales from zero to 200, with 100 representing a neutral position. This quarter’s survey shows an average confidence index in the economy at large of 50. That’s a 19-point drop from last quarter. Managing partners also reported an average index of 67 for confidence in business conditions of the legal profession. That’s an 11-point drop from the last survey.

Dozens of U.S. managing partners participate in the survey, and this quarter, U.K. managing partners were also included for the first time.

Hogan & Hartson Adds Wolff to Legislative Practice Group

Former Assistant to the President for Legislative Affairs Candida Wolff has joined Hogan & Hartson’s Washington office as a partner in the firm’s legislative practice group.

Wolff, who left her position as President George W. Bush’s liaison to Congress in December, had been responsible for implementing Bush’s agenda in Congress and advising him, senior White House staff, and other administration officials on legislative strategy for a range of economic, domestic policy, international, and national security issues. She started with Hogan & Hartson on April 1 after taking three months to weigh her options.

Wolff, who prior to joining the White House in 2005 had been a partner at with Washington Council Ernst & Young, says her decision to move from government into the private sector came because she was “getting burnt out.”

“Legislative jobs are pretty rough,” she says. “I felt it was time to get someone in who could sprint to the finish, and I was not sure I could sprint much more.”

— by Jeff Jeffrey

An Eight-Justice Court

As the final oral argument of the Supreme Court's current term began on Wednesday, Justice Stephen Breyer left the bench — but not to catch an early flight out of town. He was recused in the case, Meacham v Knolls Atomic Power Lab, as noted by the Associated Press yesterday.

The justice, who first announced his recusal on Jan. 18 when the Court said it would review the case, owns stock in State Street Bank according to his latest financial disclosure form. State Street owns a significant stake in Lockheed Martin, which in turn owns the Knolls Lab. A group of fired employees sued the New York lab alleging age discrimination. The lab claims the layoffs were made based on reasonable factors other than age. The question before the Court is whether the plaintiffs or the employer have the burden of proof.

For more details on this recusal action and others by Supreme Court justices, check out our Recusal Report page.

Morning Wrap

CIA: Court documents filed yesterday in Manhattan federal court reveal that the CIA foresaw that investigations would be spurred by its interrogation tactics. The documents include a CIA official’s statement that the agency sought help from the Justice Department after concluding that investigations were inevitable, reports the WaPo.

Burnout?: A New York city court judge who jailed 46 defendants in his courtroom in 2005 because of a ringing cell phone got his day in court this week. His lawyer says the case is a chance for the New York Court of Appeals to address “judicial burnout and stress” for the first time, reports the New York Law Journal via Law.com.

Historic: The Legal Intelligencer, via Law.com, reports that Drinker Biddle & Reath’s leaders say the firm had an historic 2007. Gross revenue was up 45 percent, but profits per partner took a dip.

Defeated: The Senate defeated the bill that would have overturned a Supreme Court ruling that made it harder for workers to sue their employers for pay discrimination, reports the WSJ.

Shifting Gears at the Supreme Court

Today was the final day of oral arguments at the Supreme Court for this term, which means the justices now start to hunker down for the spring push to get opinions out before the term ends in late June.

Rumors were strong that the Court was going to hand down a decision in one of its marquee cases this morning, but instead, Justice Antonin Scalia announced one of the less-known, but significant criminal cases of the term: Virginia v. Moore, available here.

The Court unanimously reversed a Virginia Supreme Court decision that invalidated the drug conviction of David Lee Moore. Police had arrested him for driving with a suspended license which, under state law, is a non-arrestable offense. Police searched Moore and found he was carrying crack cocaine. The state court reasoned that the arrest was improper under state law and violated the U.S. Constitution's Fourth Amendment, so the fruits of the search should be inadmissible at trial.

Scalia wrote that states are entitled to protect citizens against improper searches and seizures beyond what the Fourth Amendment requires. But state law doesn't "alter the content of the Fourth Amendment." Since the arrest was permissible under U.S. Supreme Court "probable cause" standards, the evidence did not need to be excluded, Scalia wrote. There were no dissents, but Justice Ruth Bader Ginsburg wrote separately to state she agreed with the judgment, but disagreed with Scalia's reasoning.

ABA Young Lawyers Give Back

In the wake of 9/11, one young lawyer in South Carolina discovered that most of the firefighters and first responders who lost their lives in the attack did not have wills. That lawyer organized a service to provide free wills and powers of attorney to first responders in his state. Today, the program — known as the Wills for Heroes Foundation — has spread throughout the country. This Saturday, it will have its first event in Washington, when lawyers take over the United States Park Police station in Anacostia to draft free wills for the officers there.

The American Bar Association Young Lawyers Division is helping with Saturday’s event. The division chose Wills for Heroes as its 2007-2008 public service project. The Virginia Bar Association and Ballard Spahr Andrews & Ingersoll are also taking part.

“I wanted a program that was already in existence, and had proved itself successful,” says Justin Goldstein, chair of the Young Lawyers Division, who selected this year’s public service project.

The Young Lawyers Division has so far helped host three other Wills for Heroes events, in San Francisco, Charlotte, and Beverly Hills. Goldstein says he expects that more than 100 officers will turn out to get their wills drafted on Saturday. The lawyers will work from noon to 6 p.m. at the Anacostia station.

Morning Wrap

Thrown Out: The Court of Appeals for the D.C. Circuit threw out a Federal Trade Commission ruling yesterday that memory chip developer Rambus Inc. violated antitrust laws, reports The Recorder via Law.com.

Under Pressure: Partner departures, unpaid client bills, and pressures of an unstable market have led to cash flow problems at Mayer Brown, reports The National Law Journal via Law.com.

Settled: Broadcom agreed to pay $12 million to settle the SEC’s charges that it backdated stock-option grants, reports the WSJ. Prosecutors in Los Angeles are still considering criminal charges against company officials.

Hang Up: A New York appellate court yesterday upheld a cell phone ban across all New York City public schools, reports the AP via the WSJ.

Murdoch: Rupert Murdoch appears set to challenge a media ownership rule recently adopted by the FCC as he nears closure on a deal to acquire Newsday from the Tribune Company, reports the NYT.

SEC vs. Execs at AOL, PurchasePro.com Part III

Jurors this afternoon began deliberating about whether former executives at America Online Inc. and PurchasePro.com should be held liable for a $3.7 million transaction that the Securities and Exchange Commission says is proof that the defendants committed fraud and cooked the books to boost revenue.

Closing arguments ended shortly before 4 p.m. in the case against ex-AOL attorney Kent Wakeford and former PurchasePro officials Michael Kennedy and Christopher Benyo.

About the only thing defense lawyers and the SEC attorneys agree on after a six-week trial in the civil case is that a fraud did take place between March and April of 2001, when documents for a contract worth $3.7 million were backdated to help the financial projections at PurchasePro. They are only at odds over who perpetrated the scheme.

The defendants’ lawyers tried to cast doubt on the SEC’s arguments that their clients aided and abetted a securities violation by pointing to other PurchasePro executives who already are serving time for the fraud. Several of them testified during the trial after they became government witnesses.

“Each of these men did not know enough ... to know that it was wrong or fraudulent,” said David Schertler of Schertler & Onorato, who is representing Michael Kennedy. Kennedy was PurchasePro’s former chief technology officer. “Kennedy, Benyo, or Wakeford didn’t have the expertise that the SEC now says proves fraud.”

Dewey & LeBoeuf partner Henry Asbill, who represents Wakeford, told jurors that his client helped expose the fraud by raising questions about the $3.7 million transaction after he learned about it.

“Neither Kent nor AOL had any intent to commit fraud in the AuctioNet transaction,” Asbill told jurors in reference to the advertising deal between PurchasePro and AOL that government attorneys say was structured to artificially boost revenue as the dot-com bubble burst in 2001.

Asbill described Wakeford as a “mid-level manager” at AOL who had no interest in deceiving anyone because he owned no stock in PurchasePro and did not receive any compensation or bonuses for his work with the Las Vegas software company.

Asbill said Wakeford — one of two former AOL executives to be charged in the case — was involved in more than 104 contracts at the time the government alleges he was the mastermind behind a false contract drawn up to cover the $3.7 million transaction. The other ex-AOL manager — John Tuli — will be tried separately.

In closing remarks during rebuttal, SEC trial attorney David Gottesman said the defense attorneys’ tactics were predictable. The defendants were not mere innocent players who claim they were confused and duped about the sham contract document — officially called a statement of work.

“That’s what guilty people do. The more they get caught guilty in the act, the more they point the fingers at other people,” Gottesman told jurors. “The defendants in this case have misled and fooled a lot of people. Ladies and gentlemen, don’t let them fool you, too.”

If found liable by the seven women and four men serving as jurors in the civil trial before Senior Judge Gladys Kessler of the U.S. District Court for the District of Columbia, the defendants could be assessed fines by Kessler and be permanently barred from holding positions in publicly traded companies.

Ex-DOJ Offical Pleads Guilty to Conflict of Interest

Former Justice Department official Robert Coughlin II pleaded guilty today to accepting free concert tickets, luxury seats at sporting events, meals and golf outings from a member of Jack Abramoff’s lobbying team in exchange for helping the lobbyist's clients.

The Justice Department's far-reaching probe has snared a dozen officials, including congressmen, Hill staffers and prominent lobbyists, but today marked the first time one of the department's own admitted guilt in the affair.

Coughlin, 36, received the gifts from former Greenberg Traurig lobbyist Kevin Ring, while he was in the Justice Department’s office of legislative affairs from 2001 to 2003. The documents do not include Ring's name, identying him only as "Lobbyist A." (Click here and here for some fill-in from The Associated Press and The Washington Post.)

The one count criminal information — conflict of interest — carries up to 10 months in prison and a $10,000 fine under the terms of the plea deal. Citing personal reasons, Coughlin resigned last April as deputy chief of staff in the Justice Department’s Criminal Division, which is handling the Abramoff probe.

The statement of offense filed today says that Ring held Coughlin out to be among his most prized contacts at the Justice Department. Coughlin, the documents say, provided Greenberg Traurig with "information regarding the status and responsibilities of certain DOJ officials, and advised [Ring] regarding which official in various components was a 'friendly,'" or a political appointee who was inclined to help Greenberg Traurig's clients.

Among other things, Coughlin helped Ring obtain a $16.3 million grant for the Choctaw Tribe to build a jail. According to the documents, Coughlin set up meetings between the lobbyist and a political appointee in the Office of Justice Programs with grant-making authority and approached officials in the Office of Legislative Affairs with legislative materials from Ring.

During that time, Ring provided Coughlin with a steady "stream of things of value," the documents say, including 25 "occasions" at upscale restaurants and bars in the District (the Abramoff-owned Signatures among them); 20 tickets to sporting events; five concert tickets; and a round of golf. The government values the gifts at $6,180. Coughlin has calculated the total at $4,800.

The parties disagree on the value of a skybox for a Redskins game at FedEx Field, said Assistant U.S. Attorney Michael Leotta at the hearing today.

Coughlin, who said in court that he is unemployed, declined to comment after the hearing. His lawyer, Sonnenschein Nath & Rosenthal’s Joshua Berman, said in an e-mailed statement that "Mr. Coughlin is deeply saddened by these events and looks forward to focusing his attention on his family and moving forward with his life."

A sentencing date has not been set, but U.S. District Judge Ellen Segal Huvelle scheduled a status hearing for September. Leotta said that he may ask her to continue that hearing. Presumably, it would depend on Coughlin's cooperation with the government, which is promised in his plea agreement.

Prosecutors have put off Abramoff’s sentencing here in the District — on charges of mail fraud, conspiracy and tax evasion — several times, citing his cooperation in the ongoing investigation. He is serving prison time for unrelated charges originating in Florida.

Ring is reportedly under investigation, as is his former boss Rep. John Doolittle (R-Calif.), who is retiring after this year. Ring was asked to resign from Greenberg Traurig along with most of Abramoff’s yeomen and later joined Barnes & Thornburg. He left after opting to take the Fifth Amendment rather than testify before a congressional committee investigating the suspected exploitation of Indian tribes.

Justice Scalia and the Price of Homes

As is often the case, Justice Antonin Scalia was the protagonist during oral arguments this morning in the case of Davis v. Federal Election Commission, a challenge to the so-called "Millionaires Amendment" in federal campaign finance law. Under the law, when a candidate for Congress spends more than $350,000 or his or her own funds, the opposition candidate is allowed to receive higher contributions than otherwise permitted from individuals and parties. Our full report on the argument can be found at the LegalTimes.com.

Scalia usually had spectators laughing, but at one point, he had many in the courtroom shaking their heads. The justice was making the point that with the triggering point of the law set at $350,000, it affected not just millionaires.

"Are we talking wealthy people here? What's the average price of a home in the United States?" Scalia asked rhetorically. "I think it's a good deal above $350,000, isn't it?"

Well, not exactly. According to the National Association of Realtors, the average sales price of existing homes nationwide last month was $247,700. But Scalia could perhaps be forgiven, considering where he lives. In McLean, Virginia, where he and Justice Anthony Kennedy own homes, the average price is $1,827,188, according to MRIS, a real estate data service.