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Have 2 firms? Make sure they relate
Attorney Blogs |
2008/02/11 11:24
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For some entrepreneurs, opportunity knocks again and again.
While practicing corporate real estate law at Jenner & Block, Jennifer Sara Levin saw an opportunity to make a difference in the lives of other professionals by sharing what she had learned about building a client base.
So she launched a business-relationship consulting firm, NateandDot.com, in January 2006 and left the law firm seven months later to focus on it. Last year, the self-described multitasker launched a concurrent business, Legal Intelligence, an online platform connecting law school students with top-tier firms, in part by applying what she had learned about recruiting at major law firms.
Many people have asked Levin how she juggles both start-ups.
"I'm one of those people who is significantly more efficient when I'm busy," she said. "I try to stack my days for efficiency."
She schedules several downtown meetings on the same day, works nights as needed and relies heavily on communicating via her BlackBerry, Levin said.
While unusual, it's not unheard of for business owners to run two enterprises simultaneously, experts said. The phenomenon occurs most often when entrepreneurs see an opening in the marketplace that is somehow related to their first business and go for it.
They are more likely to succeed when the second business is strategic and not just opportunistic, said Linda Darragh, director of entrepreneurship programs at the University of Chicago.
"Look for a strategic link and a reason they fit together," she said.
For example, Darragh said, a holding company with three separate enterprises all supporting the restaurant industry, offering management, financing and data-processing services, could be effective.
"They link together in terms of cross-selling and some systems," she said.
But with no synergy, managing two enterprises at the same time could be a recipe for disaster, Darragh said, because most entrepreneurs are limited in time and money.
"If you're dividing your resources between two companies, you may be jeopardizing both at the same time," she said.
Levin's two companies have target markets with some overlap and share many core competencies, she said. She researched emotional intelligence and hired an industrial psychologist and cognitive behaviorist to learn the best way to teach networking and communication skills, which apply to both businesses, she said.
Client Sherwin Brook of Chicago accounting firm BrookWeiner said Levin did a stellar job developing a seminar for its young professionals on developing contacts and client relationships. The niche Levin has carved out has great potential, he said, because it is largely overlooked.
Pilot at Northwestern
Levin is just gearing up a pilot program for Legal Intelligence LLC, involving three law firms and her alma mater, Northwestern University School of Law, that will run online at http://www.legalintelllc.com from May 15 to Oct. 15. The idea is to help students find the law firm that fits them best, partly through online video conferences.
"It's like a Match.com for law students," Levin said of her second start-up.
Law firms pay to participate, Levin said, because they want to find law school graduates who aren't just qualified but who also share their firm's values. Often, Levin said, top-tier law firms end up with graduates who don't fit their culture.
"There's no way to do it in a 20-minute interview. You can't get enough information to know if this person is the right cultural fit," she said.
Still, growing two companies at once can be difficult, especially if investors react with skepticism, said Scott Meadow, professor at the University of Chicago Graduate School of Business.
"Unless I had Steve Jobs for both companies, I doubt I would consider backing someone who was working on two different deals," Meadow said.
So what should entrepreneurs do when they are enticed by a new opportunity? Before launching a new business, Meadow said, "you ought to sell that first one, get that off your mind. Then turn to something else." If you make money on the first enterprise, the second one will be that much easier to fund, he said.
Jay Goltz, president of the $15 million-plus Goltz Group, runs three separate operations, with design as the common thread.
He started Artists' Frame Service in 1978, then opened Jayson Home & Garden, a combined home and garden furnishings store, in 1996, in part to give Artists' Frame Service customers a place to shop while their art was being framed. Meantime, his 15-year-old Chicago Art Source aims to tap the corporate market.
"It always started from seeing an unfulfilled need in the marketplace and thinking I could do that better," he said.
Goltz said each time he came up with the new business concept, he thought it would be easy to make it work.
"I tend to jump into the deep end and figure it out later," he said.
Leaps sometimes painful
The process is sometimes painful. He faced several learning curves before he began to identify important differences among the three operations and adapt accordingly, he said.
"The same thing that can be a great asset also can be a liability," Goltz said.
Jayson Home & Garden has seasonal inventory challenges that Artists' Frame Service doesn't have. And Chicago Art Source requires a different type of sales representative than the two retail operations need.
"It has to be someone who understands the corporate market," said Goltz, who employs 115 workers.
Goltz also made some mistakes. For example, he tried opening another business that sold wholesale frames to large department stores, but differences in the market, receivables and inventory proved too great.
He closed it six months after its launch, he said.
Still, Goltz embraces the concept of leveraging core competencies to pursue new business.
"Some people say to stick to the knitting, but if you just stick to the knitting, that would leave enormous opportunities," he said.
Today, Goltz's three operations are successful, he said, because he has the right people in place to manage them.
"It's about finding talent and developing it," he said. "I have less stress today than I've ever had because I have hired key people to run these businesses, and they are doing a good job." |
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Some of Saudi prince's assets frozen in US
Lawyer Blog News |
2008/02/11 11:17
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| A federal judge this week ordered frozen some of the assets in the United States of Prince Bandar, former Saudi ambassador to Washington, who has been hit by a lawsuit by BAE Systems shareholders, a court source said Sunday. The British defense group since June has been the subject of a criminal investigation in the United States of possible anti-corruption law violations related to its activities in Saudi Arabia. Britain's Serious Fraud Office announced in 2006 that it was halting an investigation into claims that BAE Systems set up a slush fund for some members of the Saudi royal family during the giant 1980s Al-Yamamah deal. Press reports said BAE paid two billion dollars in bribes to the prince with staggered payments, a furnished Airbus A340 and a honeymoon for his daughter. BAE has not denied the payments and in September US shareholders saying they had been injured filed suit against BAE executives and Prince Bandar. Plaintiffs, after learning Bandar might sell some of his US properties, asked authorities to ensure that profits from any such sales were not allowed to leave the country. In a decision announced Tuesday Judge Rosemary Collyer, who is handling the case in a Washington federal court, granted their request. The prince can sell his properties as he likes but the product of any sale would remain in a US account in his name, she ordered. |
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Class actions feel effects of Milberg case
Legal Career News |
2008/02/11 10:24
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As famed class-action lawyer William S. Lerach steps before a federal judge in Los Angeles today to learn his sentence in a wide-ranging fraud and conspiracy probe, his misdeeds and those of former colleagues may be helping to alter the way securities law is practiced.
The number of class actions filed on behalf of disgruntled investors has been dropping, and legal experts say that is partly because practitioners are distancing themselves from the aggressive tactics that made Lerach, 61, and his former partners courtroom legends and lightning rods for critics of the civil justice system.
In some instances, judges have balked at certifying class actions they have deemed frivolous and in others have rejected settlements for paying attorneys at the expense of plaintiffs, sometimes citing the ongoing prosecution of Lerach's former firm, once known as Milberg Weiss Bershad & Schulman.
Lerach left in 2004 to found a San Diego class-action practice now called Coughlin Stoia Geller Rudman & Robbins. Lerach resigned from that firm in October, days before he pleaded guilty to one count of conspiracy.
"What you're watching is a bit of a transition from a world in which class-action practice did have some disreputable aspects to a different model that's much more responsible, publicly oriented and closely regulated," said Stephen Bundy, who teaches law at Boalt Hall, at UC Berkeley.
Lerach's trademark vitriol -- he famously threatened to "destroy" companies that balked at settling -- and his fondness for television cameras may belong to the past. Lawyers who now dominate the field are far less confrontational, Bundy said, and their resumes resemble those of their big-firm opponents.
Several factors may explain the drop in securities class-action filings from the peak years of 2000 to 2004, including, until recently, rising stock prices.
Bundy said, though, that the decline also reflects an evolution from "smaller, informal and slightly shady firms" to more mainstream law practitioners.
Federal rules helped push the change.
Until 1995, the first law firm to file suit could direct the class action and reap the largest legal fees. The rules favored firms with a stable of ready-made plaintiffs: people with a few shares in many companies who were willing to immediately lend their name to litigation. That year, Congress changed the law so the lead law firm should be one that represents the plaintiff with the most significant holdings at risk.
These days, state pension funds and other institutional investors are the major plaintiffs in shareholder suits. Such big-money investors are reluctant to discuss their legal strategies, but litigation watchers contend that they are choosing their lawyers more carefully -- examining a firm's ethical record, for example, and even its campaign contributions.
"There's heightened concern," said San Francisco lawyer Richard Heimann, who represents plaintiffs in securities class actions. Fund managers who have approached him want reassurance "that there weren't any skeletons in our closet," he said, often asking for written declarations from prospective lawyers that they have not been indicted or disciplined by the bar.
The Milberg Weiss prosecutions also are likely to make lawyers more careful, said Stephen Gillers, who teaches legal ethics at the New York University School of Law.
"It has to worry them even if they're doing nothing wrong because the Justice Department has shown its willingness to look into how they do business," he said.
Some institutional investors have opted out of class actions in recent years, believing they would do better on their own, Heimann said.
His firm represented Merrill Lynch in a securities class action against McKesson HBOC a couple of years ago. Class members ultimately recovered 15% of their losses in that case, he said, but Merrill Lynch recouped $150 million -- more than its monetary loss -- by opting out of the class and settling with McKesson separately.
Heimann also helped settle a case last year in which two Alaska public funds recovered 90% of their economic losses by bowing out of the class. It was many times more than they would have gotten if they'd remained in, he said.
Some legal experts say the Milberg Weiss probe also has prompted judges to more closely monitor these cases, particularly those involving that firm or Coughlin Stoia.
Federal rules require judges to ensure that class-action settlements are fair and adequate for individual plaintiffs.
Noting those rules, several companies targeted by Milberg Weiss or Lerach's former firm have asked judges within the last year to refuse class-action status, citing the firm's indictment or Lerach's guilty plea. The motions have met with mixed results.
Lawyers split on whether the case is casting a shadow beyond the two law firms.
New York plaintiffs' lawyer Sean Coffey sees no evidence that judges are scrutinizing settlements or fee requests from other firms more closely. But a Los Angeles defense attorney said that since the prosecution, he has been called into the judge's chambers to justify the legal fees in the case and how much money class members will get.
Those settlement agreements "used to be accepted more readily," said the lawyer, who requested anonymity out of concern that pending settlements might be jeopardized. "Now they make you really explain."
Until his guilty plea in October, the pugnacious, Brillo-haired Lerach was one of the most feared lawyers in the nation, boasting of having wrung billions over the years for investors from Enron Corp., WorldCom and Intel Corp. and a roster of blue-chip corporations.
Many clients and consumer groups credit Lerach with defending them against what he called the "dishonorable and despicable greed" of corporate America. Corporate executives denounced the lawsuits as extortion but usually chose to settle rather than roll the dice at trial, paying out millions to plaintiffs.
Two former partners at Milberg Weiss -- David Bershad and Steven Schulman -- also have pleaded guilty to fraud charges as part of an alleged scheme to pay $11.4 million in illegal kickbacks to clients who agreed to serve as ready-made plaintiffs in class actions. The two men await sentencing for their roles in the conspiracy which, prosecutors allege, earned the firm $250 million in fees from dozens of cases stretching back more than 20 years.
The law firm and co-founder Melvyn Weiss have pleaded not guilty, but the probe has triggered an exodus of lawyers and clients. A trial is scheduled for August.
John Beisner, a Washington lawyer who faced Lerach in a number of fraud suits, said the case marked a milestone. The guilty pleas, he said, have sidelined "some of the great lions of the plaintiffs bar." |
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Law firms follow money in credit mess
Headline News |
2008/02/10 22:44
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First came the $211 billion in write-downs of subprime debt, now comes the legal bonanza. In the past four months, nearly 20 law firms have set up subprime practices comprising more than 500 attorneys, many of them in New York. Not since the savings and loan crisis two decades ago have so many law firms moved so fast to create a whole new discipline. “It's a sea change,“ says Marvin Pickholz, the partner in charge of Duane Morris' month-old, 15-lawyer subprime practice group. “These problems are going to expand to such a dimension that it will consume vast amounts of lawyers' time.“ Among the first was powerhouse Greenberg Traurig, which has 1,750 lawyers. It began building what is now a 48-member group in August. Mintz Levin Cohn Ferris Glovsky and Popeo launched its 25-lawyer practice in December; Pepper Hamilton followed in February with its 70-member credit crisis response team. Many other firms, including Bryan Cave, are mulling plans for their own subprime groups. At Bingham McCutchen, 65 partners make up a subprime practice that didn't exist two months ago. Such top firms often bill in the range of $600 to $800 an hour. Amy Kyle says she is already drawing additional lawyers from the 1,000-attorney firm and is open to hiring more legal talent. “We'd be opportunistic,“ Ms. Kyle says. At this point, firms seem to be running ahead of actual demand. “A client told me that he got seven cold-calls last week from law firms offering their services in this area,“ says John Grossbart, partner at Sonnenschein Nath & Rosenthal and co-head of its 40-lawyer credit markets and subprime lending task force. So far, much of the work has involved the investment houses that packaged and sold subprime debt. Law firms are being hired to sue or defend such companies as Citigroup, J.P. Morgan Chase, Merrill Lynch and Bear Stearns. The work will by necessity be spread to many firms, as the lawyers who advised banks in the creation of these instruments will face conflicts of interest and most likely be barred from participating. Mr. Grossbart reports a rise in fraud actions as insurers and other institutional investors absorb huge losses from holdings in supposedly top-rated subprime debt. One of his clients, an insurance company, has been the target of six subprime-related lawsuits in as many months. “Frankly, that's a lot,“ Mr. Grossbart says. A growing number of investigations launched by federal, state and local authorities have generated further demand. In recent weeks, the U.S. Attorney for the Southern District of New York has launched criminal probes of Bear Stearns and UBS; the Securities and Exchange Commission has begun formal inquiries into Merrill Lynch, UBS, Morgan Stanley and others; and the New York attorney general has subpoenaed Bear Stearns, Deutsche Bank, Morgan Stanley, Lehman Brothers and Merrill Lynch.
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Venezuela threatens U.S. over Exxon fight
Legal World News |
2008/02/10 18:36
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| President Hugo Chavez on Sunday threatened to cut off oil sales to the United States in an "economic war" if Exxon Mobil Corp. wins court judgments to seize billions of dollars in Venezuelan assets. Exxon Mobil has gone after the assets of state oil company Petroleos de Venezuela SA in U.S., British and Dutch courts as it challenges the nationalization of a multibillion dollar oil project by Chavez's government. A British court has issued an injunction "freezing" as much as $12 billion in assets. "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said during his weekly radio and television program, "Hello, President." "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger." Chavez has repeatedly threatened to cut off oil shipments to the United States, which is Venezuela's No. 1 client, if Washington tries to oust him. Chavez's warnings on Sunday appeared to extend that threat to attempts by oil companies to challenge his government's nationalization drive through lawsuits. "I speak to the U.S. empire, because that's the master: continue and you will see that we won't sent one drop of oil to the empire of the United States," Chavez said Sunday. "The outlaws of Exxon Mobil will never again rob us," Chavez said, accusing the Irving, Texas-based oil company of acting in concert with Washington. A U.S. Embassy spokeswoman did not immediately return a call seeking comment. Venezuelan Oil Minister Rafael Ramirez has argued that court orders won by Exxon Mobil have "no effect" on the state oil company PDVSA and are merely "transitory measures" while Venezuela presents its case in courts in New York and London. Exxon Mobil is also taking its claims to international arbitration, disputing the terms it was granted under Chavez's nationalization last year of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits. Other major oil companies including U.S.-based Chevron Corp., France's Total, Britain's BP PLC, and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue on as minority partners in the Orinoco oil project. |
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Egypt Court Upholds Christian Conversion
Legal World News |
2008/02/09 22:38
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| Egypt's highest civil court ruled Saturday that 12 Coptic Christians who had converted to Islam could return to their old faith, ending a yearlong legal battle over the predominantly Muslim state's tolerance for conversion. The court overturned an April 2007 ruling by a lower court that forbade the 12 Muslims from returning to Christianity on the grounds that Islamic law would consider that apostasy. There is no Egyptian law against converting from Islam to Christianity, but in this case tradition had taken precedent. Under a widespread interpretation of Islamic law, converting from Islam is apostasy and punishable by death — though the state has never ordered or carried out an execution on those grounds. Judge Mohammed el-Husseini sidestepped the issue by saying the 12 should not be considered apostates since they were born Christian, said a judicial official on condition of anonymity because he was not authorized to speak to the media. The judge also ordered the Ministry of Interior to list converts' former and current religious status on identification cards, which the government body had previously refused to do. |
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