In January 1999, Graeme Bush joined Zuckerman Spaeder after having spent more than 21 years at Caplin & Drysdale. A little more than a year later, Bush assumed the role of chairman of the firm - one that he retains today.
The midsize firm—Zuckerman had 61 attorneys in Washington at the end of 2011—specializes in litigation. Bush, for instance, was retained as special litigation counsel for the creditors committee of the Tribune Company to investigate and prosecute claims of fraud amid Sam Zell's takeover. Bush also represented Matthew Lawlor, the founder of Online Resources Corporation, who was ousted by the company and then denied benefits in his severance package. After a three-week trial, a jury ruled in Lawlor's favor.
Legal Times sat down with Bush to discuss the business of the firm, changes in the Washington legal market and sports.
Legal Times: Tell me about some of the litigation matters the firm has been working on recently.
Bush: To give you a flavor of some of the major cases that are in the firm right now, we just resolved the remainder of the Tim Howard case. He was the CFO of Fannie Mae. We won a motion through summary judgment to dismiss the securities fraud cases against him. The securities litigation area is a big area for the firm. There is a big SEC enforcement matter pending in the Southern District which will be active for the next year and a half to two years. We also have some of the insider trading cases that were investigated by the SEC.
We do a lot of litigation in executive departures. Some people call it employment litigation. I think it's a little different when you have senior executives leaving. We've tried a couple of those cases in the past year and a half. We won both of the cases that we tried, and one of my partners has just had a hearing on a senior person who left a company, and has been sued by his former employer under a non-compete clause. We do a lot of plaintiffs litigation. About 15 percent of the firm's work is in plaintiffs contingency fee.
White collar criminal is a very big part of the firm and there is a very big case in Tampa that has been in trial for almost three months. Some of the people that we brought into the New York office, including Judge [Barbara] Jones and Mitra Hormozi, have been engaged to do one monitorship and one special master position. Both Steve Cohen and Mitra are special masters for the [New York City] fire department, which was sued for discrimination. They are handling and processing all of the claims of individual firemen for discrimination under the terms of an order that was entered by the court. We are also handling a case not for JP Morgan but we are monitors of a consent decree where they are paying out to servicemen who were discriminated against in their mortgages. That is an area where we hope to grow.
What are other areas of potential growth?
One of the areas that I think is a big growth area for the firm is our FDA litigation practice which primarily represents generic drug manufacturers. The litigation is under the Hatch-Waxman Act. The first generic gets 180 days of exclusive right to market, once a branded drug goes off patent. We have handled a number of cases in that area. That, I think, will grow beyond Hatch-Waxman to other types of litigation and counseling. Some of the litigation will be administrative before the FDA.
I think we're pretty opportunistic about growth. If we see a good opportunity, we are willing to grow. Some of the people that have come into the New York office are interested in what we call crisis management. We do the litigation, but you also help the client manage PR and other fallout in situations that have multiple facets. Steve Cohen and Mitra and Judge Jones are all focused on doing that kind of work.
How prevalent is the firm's use of alternative fees?
Based on talking to my colleagues at other bigger firms, we may do a little less of that than some of the other firms that have institutional client relationships where their client is maybe giving different types of business—some litigation, some corporate, some regulatory. There are package deals to handle a whole variety of things. We don't tend to do that. A contingency fee is to some extent an alternative fee arrangement, and we do a fair amount of that—including with some business clients, not just with individuals.
We have also done what I call collar arrangements, which is a flat fee with a collar. We will take X amount and then if it goes a certain amount above the collar in terms of time, we will get the amount above that, although sometimes at a reduced rate. If it is below that, as long as it’s within a certain range, we will keep the difference. If it is way below it, then we will adjust the fee. That is one thing we do on a fairly regular basis with certain clients. Honestly, I think a lot of what passes for alternative fees these days is simply a discount on your hourly rate.
How has the Washington legal market changed over your career?
When I started in the late 70's, if you had a big derivative suit or a securities class action, the litigation was by and large defended by law firms in New York, D.C., LA and maybe Chicago. Over that period of time and certainly beyond, I think the bars in other cities have been recognized as having very competent and very good lawyers who are capable of handling that. I think the carriers are happy to be paying rates in other cities maybe where the litigation has been brought. It's not a given that a D.C., New York, Chicago or LA firm is going to have the primary defense role in those kinds of cases.
I think there were always very good lawyers in other jurisdictions, but now there are more good lawyers. There are more high quality lawyers more broadly across the country. I think the carriers are looking for lower rates and less expensive representation. I know in the legal malpractice area, that having a local lawyer who really knows the court is important. As long as that person is capable of handling the whole case, they don't need somebody from a big city to ride shotgun.
What is your take on the current legal environment?
I think the leverage model is under pretty severe attack. It doesn't affect us as much because we never had a high leverage model. I think one of the really interesting and unique things to D.C. is the question of how much some of the virtual law firms are going to force fees down for certain kinds of work. Even though you might say is kind of sophisticated can still be done by people at a virtual law firm that has been pulled from Wall Street firms. They have no overhead and their fee structure is such that they can do a big corporate deal. They aren't going to do a $10 billion corporate deal with securities and regulatory issues. But a $100 million deal maybe they can do. Some of that work is going to get pulled away from firms that used to do that. They are either going to have to figure out how to do it as cheaply as the alternatives or they are going to lose the work. What happens when that happens?
It's nice to have the $4 or $5 billion deal, but you don't have five or six of those a year. If you're losing all the lower end work, then you can't keep people busy and you can't support the kind of staffing and you are not going to be as profitable. I think that is a real challenge. It may be a challenge for firms like ours. I think it's harder to use that virtual law firm model to do litigation. If somebody is under a criminal investigation, I don't think they're going to a virtual law firm anytime soon.
You've got some sports memorabilia peppered around the office. Do you have a favorite sport?
The real sport that I am a fan of both watching and playing is tennis. I have been active In the tennis center at College Park. It is one of the top junior training programs in the country. My son trained out there before he went to college. I am on the board and help to raise money for their inner city program. The kids in the champions program work in the city and give back both by mentoring and training. It's also partly in Prince George's county.
The firm used to have season tickets to the [Washington] Capitals, and there was one year where they were so bad, that literally we did not use one ticket for the entire season. We couldn't give them away. People on the executive committee said this is silly and we have to get rid of these tickets. Within two years, they had [Alex] Ovechkin and they started to be the hottest ticket in town. We still have Wizards tickets and I refuse to give them up because I know what will happen.
This is part of a series of Q&A sessions Legal Times is conducting with D.C.-based law firm managing partners. Photo by The National Law Journal's Diego M. Radzinschi.