The BLT: The Blog of Legal Times

The Am Law 100: How D.C.’s top players fared

The Am Law 100, our sibling publication The American Lawyer’s annual survey of firm finances, is out today. And after the gloomy financial picture of 2008 and 2009, profits rebounded for the nation’s top-grossing firms, the magazine reported.

The news, however, was tempered by relatively flat revenue growth and the jump in profits appears to have had more to do with cutting lawyers and staff than a significant bump in business. As we reported last week, headcount at the nation’s largest firms declined sharply again last year.

How did Washington’s top players do in the Am Law ranking? Home-grown firms — the 11 firms on the list that got their start in D.C. or still call the District their primary home — had mixed results. Taken together, they grew revenue by less than 1% last year. Profit growth was somewhat stronger — up 3.4% — as was revenue per lawyer (up 3.1%).

Arnold & Porter saw the strongest bounce in revenues among those firms, posting a 5.9% increase in gross revenue last year. Overall, the firm grossed $555 million, enough to push it back into the top 50 on the Am Law 100.

Thomas Milch, Arnold & Porter’s chairman, said the firm was performing strongly in a number of practices, including internal investigations, litigation and regulation — especially environmental, antitrust and health care matters. The firm, which is known for its regulatory work, is “striving to balance our portfolio,” Milch said, by expanding its intellectual property and corporate practices — particularly in middle market M&A and private equity work.

The antitrust practice provided one of 2010’s marquee engagements for the firm: Arnold & Porter lawyers counseled General Electric in its sale of NBCUniversal to Comcast. And on the environmental side, Milch himself has been contributing strongly to the kitty: He’s deeply involved in work stemming from the BP oil spill.

When Democrats took the White House and Congress in 2008, Washington firms had expected a flood of regulation – and a corresponding surge in business. That didn’t happen. While regulatory work did increase in 2010, Milch cautioned against reading it as a sign of a boom. “My view on this is a little tempered,” Milch said. “I think that there has been an increase [in regulatory work] ... but it’s less than predicted if you look at the overall.”

Judge Approves $760M Native American Class Action Settlement

A federal judge in Washington today approved a $760 million settlement in a class action that Native American farmers and ranchers brought over discrimination claims tied to government loan processing.

Judge Emmet Sullivan of Washington federal district court called the terms of the settlement, reached after more than a decade of litigation, historic, fair and appropriate.

The $760 million includes $680 million in damages and $80 million in debt relief. The settlement also calls on the U.S. Department of Agriculture to improve farm loan services. The suit alleged the government, between 1981 and 2007, denied Native American farmers and ranchers the same opportunities as others to obtain low-interest rate loans from the government.

The plaintiffs’ team, which included Cohen Milstein Sellers & Toll, Jenner & Block, Patton Boggs and Conlon, Frantz & Phelan, will split $60.8 million in legal fees. Over the objection of the Justice Department, Sullivan today awarded the maximum amount allowed under the agreement. DOJ had pushed for $30.4 million in fees.

Cohen Milstein partner Joseph Sellers, lead class counsel, said in a statement today that final approval of the deal in Keepseagle v. Vilsack, “marks the end of an unfortunate chapter in our nation’s history where USDA’s credit discrimination against Native Americans was the norm.” Sellers said the agreement provides “compensation and justice” to Native Americans.

Tens of thousands of farmers and ranchers are expected to receive compensation. The settlement sets out two tracks—one that provides the ability to recover up to $50,000 and another that allows recovery of up to $250,000 based on evidence of economic loss. The plaintiffs’ lawyers said the settlement amount is nearly the maximum the plaintiffs could have received at trial.

City Attorneys' Union Loses Arbitration Enforcement Dispute

Updated at 2:47 p.m.

The District of Columbia Court of Appeals has denied the union representing attorneys in the city's Office of the Attorney General the right to seek a court order enforcing an arbitration award in a dispute with management.

The ruling is a setback for American Federation of Government Employees Local 1403, which had successfully sought an order from the D.C. Superior Court to compel management to recognize sections of a new collective bargaining agreement that an arbitrator had awarded in the union’s favor.

But the appellate judges, in a written decision (PDF) released today, ruled that the local statute governing city-agency labor negotiations already has remedies in place for arbitration disputes. As a result, they wrote, the union could not try to enforce the agreement by suing under another law, the city’s Uniform Arbitration Act, in Superior Court.

Union president Steven Anderson said he was disappointed in the decision, but is hopeful that under the new leadership of Acting Attorney General Irvin Nathan, they can reach a resolution. The three-year collective bargaining agreement that was under litigation in this case expired late last year, and negotiations are underway over new, three-year agreements for both compensation and non-compensation.

“[Nathan] has made overtures in trying to settle the whole package,” Anderson said.

The union was represented on appeal by Betty Grdina of Washington’s Mooney, Green, Saindon, Murphy & Welch and solo practitioner Charles Both.

Ariel Waldman, senior counsel to the attorney general, said in a written statement this afternoon that while the ruling provided "important clarification" for how arbitration disputes should be resolved in the future, he is also hoping negotiations over the current agreements won't reach that point.

"We have for months been negotiating in good faith with the union to find a resolution acceptable to each party and we have assured the union that we will continue to do so in the wake of the court’s helpful clarifying decision," Waldman said.

The union and management entered into negotiations when non-compensation sections of the old collective bargaining agreement expired in September 2007. The union wanted more input into promotion, suspension and firing decisions, according to the appeals court decision, but when the two sides couldn’t agree on new terms, the issue went before an independent arbitrator.

Justice Stevens Reveals Plan to Write a Book, Talks About Decision to Retire

Anyone who thought that Justice John Paul Stevens, now 91, would slow down after retiring last year should reconsider. In an interview published today on the blog of The Atlantic, Stevens said he is working on a book about the five chief justices he worked with both as a law clerk and justice -- from Fred Vinson to John Roberts Jr.

"I've got it almost done," Stevens said in the interview, conducted by Bill Barnhart, co-author of the 2010 biography of Stevens, titled John Paul Stevens: An Independent Life. Stevens said the book, tentatively titled Five Chiefs, will include personal reminiscences as well as comments about the jurisprudence of the chief justices.

In the interview, Stevens also spoke on the record for the first time about how he reached his decision to retire. He said he had secretly asked colleague Justice David Souter to tell him when it was time for him to retire. When Souter left first in 2009, Stevens said, "I didn't have any safety valve anymore."

The triggering moment for Stevens' own decision to step down, he said, came in January 2010 when he read his impassioned dissent in the Citizens United v. Federal Election Commission. Several media outlets, including The Blog of Legal Times, reported that he stumbled in reading the dissent, mispronouncing several words in a halting voice.

“That was the day I decided to resign,” Stevens told Barnhart. Even though Stevens' doctor later told him he detected no problems, Stevens said, “I learned giving that talk that I had a speech problem.”  

Morning Wrap

Birthers Won't Quit: President Obama was right when he said Wednesday that the release of his birth certificate would not satisfy hard-core conspiracy theorists. They're still disbelieving, The Washington Post reports. Meanwhile, we had the story of the Perkins Coie partner who requested and obtained the birth certificate on behalf of her client Obama.

Guantanamo Files: David Remes, who has devoted his career to representing Guantanamo detainees, went to court Wednesday to seek permission to read and comment on classified documents that were obtained by WikiLeaks and published by The New York Times. The paper reported that the Justice Department told defense lawyers they could not read the still-classified documents.

Recusal Request: Lawyers in the litigation against Chevron for environmental harms in Ecuador have asked the judge in the case to step aside, according to this story from sibling publication New York Law Journal. New York Southern District U.S. Judge Lewis Kaplan has lost "all semblance of impartiality," the lawyers suing Ecuador claim.

New Security Team: President Obama is set to announce major changes in his security team today, including the appointment of Leon Panetta as defense secretary. The San Francisco Chronicle has the story on Panetta, who was once a practicing attorney in California.

D.C. Attorney General’s Office Fighting Sanctions Request Following Verdict

More than a month after a Washington federal court jury sided with city resident Lindsay Huthnance in a false arrest lawsuit against the city, the two sides are continuing to duke it out over a request for sanctions that Huthnance’s attorneys filed before the trial began in early March.

The city attorney general’s office also filed a motion yesterday indicating its plans to pursue requests for judgment, a new trial or remittitur, although it has yet so specify on what grounds.

Huthnance had sued a group of Washington police officers over her November 2005 arrest, claiming they arrested her on a trumped-up disorderly conduct charge in retaliation for publicly criticizing them. She also named the city as a defendant, claiming it was responsible for failing to properly train officers and take steps to stop unlawful “contempt-of-cop” arrests.

On March 25, the jury found the city and two officers who arrested Huthnance liable for $97,500 in damages for false arrest, emotional distress and a slew of constitutional violations she had claimed were committed in the course of her arrest and imprisonment; a third officer was not found liable. U.S. District Court Chief Judge Royce Lamberth entered the judgment on March 31.

The day before the trial was scheduled to begin on a Monday, March 7, Huthnance’s attorneys filed an emergency motion (PDF) to strike amendments to discovery responses the city’s attorneys had submitted on Saturday, as well as the city’s notice that it intended to amend its exhibit list.

Calling the move a “Hail Mary” pass, Huthnance’s attorneys asked the court to not only strike the documents, but also to impose sanctions on the city’s attorneys for the “eve-of-trial attempts to ambush Plaintiff.” Lamberth granted the request (PDF) to strike, but held off on making a decision on sanctions until after trial.

Former King & Spalding Partners Claim Usual Vetting Process Is Very Thorough

The process King & Spalding uses to screen potential clients is usually rigorous and time-consuming, but it's not necessarily a flawless system, according to interviews with lawyers who have worked there.

The Atlanta-based firm's vetting process is under scrutiny because of its decision this week, amid pressure from gay-rights advocates, to drop the U.S. House Republican leadership as a client in same-sex marriage lawsuits.

Robert Hays Jr., the firm’s chairman, said in announcing the decision that the firm’s review process had been “inadequate,” although the lawyer who had been handling the cases, former U.S. solicitor general Paul Clement, disputed that. Clement said he thought he had the firm’s backing, and he gave Hays his resignation in protest.

The firm won’t say how Clement's engagement was vetted. Traditionally, though, King & Spalding uses an internal panel known as the Business Review Committee to vet all potential new clients, three former partners said. Many other large law firms use similar committees, but not all. Others, for example, run potential clients through an in-house general counsel’s office.

Richard Cirillo, a New York-based partner, is the chairman of the Business Review Committee, according to his firm profile. He held a similar position at a prior firm, Rogers & Wells, which is now part of Clifford Chance. He was also the one tasked with filing a request in federal court on Monday asking that King & Spalding be allowed to withdraw from a lawsuit that challenges the 1996 Defense of Marriage Act.

The former partners, who spoke on condition that they not be named, said the committee looks for standard conflicts of interest — for example, whether the potential client would be an adversary of an existing client — but also less obvious business sensitivities. For example, the firm can be very strict about representing only one side of an industry; its construction practice generally represents construction companies and not contractors.

“It was very thorough, and it would take a couple days,” one former partner said of the process. The same partner expressed surprise that King & Spalding initially took the same-sex marriage litigation, because the firm’s leadership has a reputation for supporting gay rights, including by offering partnership benefits. “I don’t know how this got through,” the partner said.

Drug Maker Agrees to Divest Two Medicines to Win FTC Acquisition Approval

Speciality drug maker Hikma Pharmaceuticals PLC agreed to divest two generic injectable medicines to win Federal Trade Commission approval of its $111 million acquisition of Baxter Healthcare Corp.

Without the divestiture, the merger would have been anticompetitive and likely resulted in higher prices for the two drugs, according to the FTC.

One of the drugs, promethazine, had sales of $17 million in 2009. It’s used to prevent some types of allergies, to prevent or control motion sickness, nausea, vomiting, and dizziness, and to help patients go to sleep and control their pain or anxiety before or after surgery. The other drug, phenytoin, is an anti-convulsant used to control and prevent seizures during or after surgery. In 2009, sales of injectable phenytoin totaled $1.5 million.

Only three companies in the United States - Hikma, Baxter, and Hospira, Inc. - currently provide phenytoin and promethazine. The acqusition would have reduced the number of suppliers from three to two.

Within 10 days of the acquisition, Hikma must divest the drugs to X-Gen Pharmaceuticals Inc.

Hikma, which was founded in Amman, Jordan in 1978 was represented by Brian Meiners of King & Spalding. FTC lawyers included Randall Long and Michael Moiseyev.

D.C. Judge Questions Bank Selection in Native American Class Action

The federal judge overseeing the $760 million settlement in a Native American class action expressed concern Tuesday over the selection of four banks in which the plaintiffs' lawyers want to invest money before checks are cut to potentially thousands of beneficiaries.

The plaintiffs’ lawyers in Keepseagle v. Vilsack, a suit over discrimination in the government's loan processing for Native American farmers and ranchers, proposed splitting and investing about $600 million in Bank of America Corporation, Wells Fargo & Company, Citigroup, Inc. and PNC Financial Services. A fifth bank, owned by a Native American tribe in Oklahoma, would receive about $18 million.

At a hearing in the case yesterday in Washington federal district court, U.S. District Judge Emmet Sullivan criticized the selection of the four major banks, saying the plaintiffs’ team failed to fully examine the use of Native American or minority-owned banks.

The plaintiffs’ lawyers, he said, should have sent proposal requests to more banks outside of the major national institutions. The judge called the selection of the big four banks “suspect” and asked whether their designation marked “business as usual."

Joseph Sellers of Washington’s Cohen Milstein Sellers & Toll and Patton Boggs tax partner Sean Clancy said the safe-keeping of the settlement funds was the driving force behind the selection of the four banks. Sellers and Clancy said the plaintiffs’ team sought a balance between protecting the money while simultaneously generating modest interest. The lawyers anticipate the settlement money would sit for a year to 18 months before class members receive money.

The settlement does not require judicial approval of the banks. Sellers pitched the plaintiffs’ proposal to the judge not to ask him to evaluate the merits of the selection but to apprise him on the designation process. That Sullivan cannot control the banks that are chosen did not stop him from weighing in.

Diplomatic Immunity Upheld for Lebanese Ambassador

A Washington federal court judge has ruled that the Lebanese ambassador to the United States and his wife are immune from a breach of contract lawsuit brought by a former housekeeper.

U.S. District Court Judge James Boasberg wrote in an opinion (PDF) released yesterday afternoon that Antoine Chedid and his family are protected by the Vienna Convention on Diplomatic Relations, finding that an exception to diplomatic immunity for certain commercial agreements doesn’t apply to domestic workers.

The former housekeeper, Araceli Montuya, worked for the Chedid family in their diplomatic residence from August 2007 to September 2009. In her complaint (PDF), she accused Chedid of failing to pay minimum wage and also of verbally abusing and otherwise mistreating her.

Montuya’s attorney, Silver Spring, Md.-based solo practitioner Laurence Johnson, had argued that Montuya’s job fell outside the scope of commercial activities relating to diplomatic responsibilities that are protected under the Vienna Convention. Under that logic, Johnson said, a diplomat could refuse payment to any number of everyday service providers – house painting and tailoring, for instance – without any consequences.

Johnson asked the court to consider a definition of commercial activity as defined in the Federal Sovereign Immunities Act, which he claimed would support his position. Boasberg, noting that the FSIA is not a multilateral treaty and was not intended to “change the meaning of existing international treaties,” declined to do so.

Johnson did not immediately return a request for comment this morning.

Chedid’s attorney, Mary Gately of Washington’s DLA Piper, said that while the Chedid family has denied the underlying allegations, she was pleased to resolve the case on “a purely legal basis.”

“The judge made the right decision. There’s an abundance of case law that supports our side,” she said in a phone interview this morning.

Boasberg wrote that while “the Court is cognizant of the potential injustice to people in Plaintiff’s position,” the case law and precedent set in other courts does not support applying the commercial activities exception to domestic workers.

He quoted a “Statement of Interest” filed by the U.S. State Department in two similar cases, which stated explicitly that the department did not consider the hiring of domestic workers as the type of “commercial activity” exempted from diplomatic immunity.

“What may prevent parties from obtaining redress in our courts also serves to protect American diplomats and their families from what we might consider as legal abuses overseas,” Boasberg wrote. “This balancing is a policy decision this Court should not challenge.”