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Emerging markets fuel firms' global growth
Attorney Blogs | 2008/01/03 10:10
Chicago mayer Brown's global ambitions received a much-needed boost late last month when the Chicago law firm announced it will join forces with a 260-lawyer Hong Kong-based firm.

The deal, a rare trans-Pacific legal merger, reflects how the forces of globalization and consolidation are transforming the business models of the largest U.S. law firms. Mayer Brown joins an elite group of firms with major offices in some of the world's financial centers: New York, London and Hong Kong. They are jockeying for position on the world stage, a battle that shows signs of heating up in 2008 as concerns about the American economy grow.

"There's a war going on out there in terms of world position," said Kay Hoppe, a Chicago legal consultant and recruiter. "The game is moving very fast, and not everybody is going to survive."

The world is getting flatter, to borrow a metaphor, for the legal profession in part because of strong economic growth in emerging markets. China, for example, had nearly $70 billion in foreign direct investment in 2006, creating demand for international legal expertise in transactions, trade and disputes. Investment and commercial banks and other multinational clients also want lawyers on the ground, versed in local laws and business customs.

"If your clients need sophisticated legal advice we want to be there so they don't go to another firm," said Robert Dell, chairman of Latham & Watkins, which has more than 2,100 lawyers in 24 offices around the world. His firm's globalization, he said, "is partially offensive and partially defensive."

Mayer Brown's merger capped a busy year for global expansion, especially in Asia. McDermott, Will & Emery, a 1,000-lawyer firm founded in Chicago, kicked off 2007 by entering a strategic alliance with a law firm in mainland China. McDermott said the deal was the first of its kind because it overcame restrictions in China that bar foreign firms from practicing Chinese law. U.S. lawyers in China cannot represent clients in Chinese courts or sign formal opinions, so they generally partner with local firms on a case-by-case basis.

Despite tight regulations mainland China remains the most attractive market for foreign law firms, experts said. More than 40 opened offices there between 2004 and 2006, according to legal consultant Hildebrandt International Inc.

Up to now Mayer Brown, despite boasting that it is one of the world's pre-eminent law firms, had a limited presence in Asia. It had a trade office in Beijing and opened a legal practice in Hong Kong in late 2006 that it planned to increase to 100 lawyers in three years.

Building that kind of scale that quickly was an "aggressive" goal, acknowledged Mayer Brown's vice chairman, Paul Maher, who led the team in merger talks with Johnson Stokes & Master.

Developing foreign offices from scratch is expensive. Firms can expect to invest several million dollars over three to five years before they can hope to make a profit, legal consultants said.

Instant major player

The merger with Johnson Stokes & Master, one of Hong Kong's oldest and largest firms, instantly makes Mayer Brown a major player in the Asia-Pacific region. Johnson Stokes, whose clients include financial institutions such as Bank of China, HSBC Holdings PLC and Cathay Pacific Airways, also has three offices in mainland China. Most of its lawyers are based in Hong Kong, which has more Western-style business regulations and legal practices.

Ralph Savarese, a retired chairman of Howrey & Simon law firm who is now a management consultant, applauded Mayer Brown for making a bold move to achieve critical mass in a new market, but he also cautioned that the merger has risks.

"The challenge is integration and making the new group of lawyers fully integrated into your operation," Savarese said. "It's the execution part that's very difficult."

Mayer Brown has a lot of experience combining law firms. In 2002 it merged with London's Rowe & Maw, which had 250 lawyers. Maher, 48, emerged from London to become one of three partners in the new Office of the Chairman created in 2006 to help manage the firm.

Before the London deal Mayer Brown had about 1,000 attorneys, more than half in Chicago, and revenue of about $600 million. When the Hong Kong merger is completed Jan. 28 the firm will have 1,800 lawyers and revenue of more than $1.2 billion.

Global scope

Only a handful of firms can match or exceed Mayer Brown in terms of numbers of lawyers and geographic scope. They include DLA Piper; Baker & McKenzie; Latham & Watkins; Jones Day; Skadden, Arps, Slate, Meagher & Flom; White & Case; and Sidley Austin.

Interestingly, three of the firms -- Baker & McKenzie, DLA Piper and Sidley Austin -- are based in Chicago or have strong Chicago roots. Yet Chicago does not have a strong identity as an international legal center, said Carole Silver, a senior lecturer at Northwestern Law School who focuses on globalization and the legal profession.

"People outside of the U.S. tend to think of New York before Chicago," she said.

New York's dominance as a financial center weighs heavily in its recognition. The top Chicago firms have established offices in New York but penetrating the market has been more difficult for some, including Mayer Brown.

DLA Piper also is not considered one of the top-tier New York firms. But it has found that its international legal work can help gain credibility with investment banks and other financial institutions that fuel the legal market in New York.

"Because we weren't an elite New York firm we decided we would look at emerging markets like China, India and the Middle East," said Lee Miller, a joint chief executive officer at DLA Piper. "You can penetrate the investment banks in those markets and circle back to New York."

Maher acknowledges that Mayer Brown is "keen" on increasing its size in New York, after losing a number of New York lawyers to other firms in the last two years. It's a critical piece of Mayer Brown's strategy.

"Our strategy has been focusing on our client base in sophisticated financial markets," Maher said. "We don't think there are that many places at the table for major global legal players."


Lawyers try to catch up in tech world
Attorney Blogs | 2007/12/30 23:56

Technology was late to come to the world of lawyers and law firms, long known for quill pens and steno pads. But now that it has arrived, it is spreading briskly.

Modern-day law firms, especially megafirms with offices around the world, rely heavily on a vast array of specialized software that helps them run nearly every aspect of their operations. From docketing cases to tracking hours to managing litigation to calculating bills, most legal practices depend on technological solutions.

"Within the past five years, technology in law firms has really, really advanced," said Randi Mayes, executive director of the International Legal Technology Association, an Austin, Texas, group that represents 1,700 US law firms and legal departments.

A primary driver of this evolution is the need for law firms to keep pace with the technology used by their corporate clients.

The explosion of electronic discovery has also forced law firms to become more tech-savvy.

And new federal statutes that require extensive financial reporting and electronic record-keeping, such as the Sarbanes-Oxley Act, have forced the rapid adoption of technology in the legal profession.

Technology has become critical to most industries, of course. But the legal profession resisted the age of technology much longer than many others.

"When I became a lawyer in 1990, the legal profession was a paper-and-pen business, and almost everything was done by typewriter and forms," said Alan Klevan, a Wellesley lawyer who chairs the Massachusetts Bar Association's law practice management section, which helps law firms use technology to enhance the practice of law.

Last month, the association hosted a legal technology expo in Needham that attracted several dozen technology firms that pitched their products to lawyers.

Now, however, the management of cases can be so complicated and time-consuming that technological assistance is critical. Software programs used by law firms handle receipts, billings, expenses, negotiating leases and insurance, personnel issues, time keeping, word processing, cost recovery, conflict checking, marketing, scanning, docketing, and data storage. Special tax-reporting software exists for trusts and estates departments, and financial software aids bankruptcy groups.

During electronic discovery, countless documents, files, phone records, and electronic correspondence are mined in civil litigation. Software can be used to comb through e-mail systems and identify key information, sparing lawyers or legal assistants the task of reading through hundreds or even thousands of e-mails in search of important data.

"Before, we'd get boxes of paper, and paralegals would go box by box by box, coding and figuring out what was important on each page," said Henry Chace, chief information officer at the Boston law firm Burns & Levinson, whose 125 lawyers collectively use about 70 software applications. "Now we just scan those documents and use algorithms to determine what's important or not."

As law firms increasingly become global operations, their multiple offices worldwide must also have time-and-billing software that works with multiple currencies.

At large firms, conflict checking, to ensure that the firm does not represent a client whose interests clash with the interests of another potential client, is also done electronically.

"If you're opening a matter in San Francisco, you have to find out if you have any conflicts with the Tokyo, New York, Singapore, and London offices, and you can't start billing till you know," said Chace, a former president of the International Legal Technology Association. Without software that runs such checks, the process would be unmanageable, he said.

Litigators tend to be at the cutting edge of technological advances because they rely on high-tech software to manage their cases and impress juries during trials.

But other types of lawyers remain well behind the curve. Many real estate lawyers, for example, still make in-person visits to courthouses and registries of deeds to file paper documents.

But that, too, is changing.

"Real estate lawyers used to have to trudge to the registry with a check and documents in hand," said Paul Roth, regional sales director for Simplifile, a system that enables real estate documents to be filed electronically. "Now they just have to sign on [to a computer] and send them in."

Simplifile sells its product in 20 states, but in Massachusetts the only registries of deeds that allow electronic filing so far are in Lowell, Springfield, and Plymouth, Roth said.

Despite these technological advances, "I still drag a lot of solo practitioners kicking and screaming into the technological age," Roth said.

"Most of them say they're fine the way they are, and they really want to leave it to the next generation to change."



Class-Action Cases Rise, Fueled by Subprime Troubles
Attorney Blogs | 2007/12/24 17:23

The subprime mess is turning out to be a boon for class-action lawyers. Litigation stemming from the housing crisis is driving an increase in class-action filings, according to a study to be released Friday by the NERA Economic Consulting company. Through Dec. 15, filings were up 58 percent from 2006, according to the study. A total of 198 class actions were filed this year through Dec. 15, and 38 of them were securities class actions related to subprime mortgages. No shareholder class actions related to subprime loans were filed in 2006, according to the report.

“There is no question,” said Gerald H. Silk, of Bernstein Litowitz Berger & Grossmann, that the subprime market has led to an increase in litigation. His New York firm has class actions pending against the subprime lenders Fremont General, Accredited Home Lenders and American Home Mortgage Investment.

Stuart M. Grant of Grant & Eisenhofer, a firm in Wilmington, Del., said, “All you are seeing now is the low-hanging fruit.” His firm has a shareholders’ derivative lawsuit pending against Countrywide Financial, the mortgage giant.

Class-action filings, excluding subprime cases and those stemming from the backdating of stock options, have increased almost 40 percent from 2006. Average settlements have also jumped, to $33.2 million from $22.7 million.



Another U.S. court rules against auto industry
Attorney Blogs | 2007/12/14 11:32

Another federal court has ruled against the auto industry in its attempt to block regulation of greenhouse gas pollution from cars.

The ruling today from U.S. District Judge Anthony Ishii in California supports a September decision by a federal judge in Vermont.

Both courts upheld the rights of states to use the federal Clean Air Act to control greenhouse gases from cars.

Steven Hinchman is a lawyer for the Conservation Law Foundation, which intervened in the Vermont case.

Hinchman points out that both the California and Vermont cases followed a U.S. Supreme Court decision in April that affirmed the government's power to regulate global warming pollution.

This is strike three for the automakers. They've now lost in this year alone three different federal cases trying to block regulation of greenhouse gas emissions from motor vehicles. When the best scientists in the whole world are saying this is an urgent crisis, and when the governments are responding, it's time for the automakers to quit litigating and start innovating and producing clean cars.

More than a dozen states have followed California's lead and have adopted tough new emissions standards.

Both Vermont Attorney General William Sorrell and Governor Jim Douglas praised the ruling.

They said the California decision upholds the right of states to require aggressive pollution control measures for vehicles.



Florida Lawmakers Sue Dean, DNC
Attorney Blogs | 2007/10/04 12:57

A federal lawsuit to be filed tomorrow by Florida lawmakers against Democratic Party Chairman Howard Dean alleges that Dean and the national party are violating the equal protection provisions of the U.S. Constitution and the Voting Rights Act by refusing to recognize the state's Jan. 29 presidential primary. In a draft of the lawsuit circulating among congressional aides and legal experts, Dean is accused of disenfranchising more than 4 million voters in a scheme that the lawsuit contends would also reduce minority voting. The DNC and the Florida Secretary of State are also named in the suit.

"The defendants have combined to create a Presidential primary election with a stunningly anti-democratic scenario - every one of the more than 4.25 million registered Democratic voters in Florida will be completely disenfranchised and their constitutional rights with respect to that election will be rendered meaningless," the suit alleges.

The suit is being filed by Sen. Bill Nelson and Rep. Alcee Hastings in response to the DNC's decision last month to disqualify all of Florida's delegates to next year's national party convention. A spokesman for Nelson declined to comment and said the senator will make a statement on Thursday.

Dean had pushed for the punishment because Florida violated the party's rule against holding presidential primaries before Feb. 5. Both parties are struggling to retain control of the primary calendar even as states attempt to become more relevant by holding their voting at the beginning of the process.

By punishing Florida, Dean hopes to stave off other defections from the approved calendar.

"Their primary essentially won't count, " Democratic National Committee chairman Howard Dean told a Florida newspaper in June. "Anybody who campaigns in Florida is ineligible for delegates."

The Democratic presidential candidates have responded by pledging not to campaign in states which break the party's rules, like Florida.

The lawsuit alleges that taking such a drastic action violates the Constitution and the law in several ways.

The suit says the decision imposes "geographic discrimination" that violates the equal rights provisions of the Constitution and effectively eliminates the free expression of speech by the state's residents on behalf of the candidates.
Also, the suit alleges that minority voters will be hurt because the Republican primary will go forward as usual, while the Democratic primary will not count.

"Minority members who are predominantly registered as Democratic voters, will suffer a disproportionate impact by virtue of the exclusion of Democratic voters," the suit alleges.

The suit asks the court for an injunction that would ban the DNC from going forward with their threatened punishment. In addition to legal arguments, the suit uses harsh language to accuse the DNC of violations.

"In the annals of modern politics, no national party has inflicted so devastating and sweeping a "geographic discrimination" upon an entire state's electorate consisting exclusively of members of its own party," the suit says.

A spokeswoman for the DNC declined to comment on the suit, saying they had not "been given the courtesy of seeing the claims" made against the national party.

"It's disappointing that after months of trying to resolve this situation, they have chosen this path," said spokeswoman Stacie Paxton.



Too-close-to-call cases at Supreme Court
Attorney Blogs | 2007/10/01 09:01

It is called the Supreme Court, but this year in key cases the institution might just as well be called the supreme realm of Justice Anthony Kennedy. Such is the power of the centrist swing voter among eight other justices who often split 4 to 4 on the most contentious disputes in the nation. After nearly two decades on the high court, Justice Kennedy has never been more important and powerful, and – in the view of some – dangerous.

Liberals fear him. Conservatives distrust him. But all eyes will be on Kennedy as the court opens its 2007-08 term Monday with a string of major cases on the horizon that appear headed for 4-to-4 deadlocks.

Among them is a dispute over gun rights in Washington, D.C., a battle over the legal rights of terror suspects at the Guantánamo detention center, and a challenge to the president's power to order state judges to uphold international court rulings.

In addition, the high court will examine whether execution by lethal injection in Kentucky is a form of cruel and unusual punishment, and whether the Constitution forbids Indiana from requiring voters to produce photo identification prior to casting a ballot.

The same internal dynamics among the justices that produced a string of conservative victories on abortion, affirmative action, and campaign finance last term will again be on full display. But this term, Kennedy's positions on pending cases are less clear.

Some analysts say the highest-profile cases this year are likely to bring a broader mix of both liberal and conservative victories. But several of the cases appear too close to call, court watchers say.

One of the most anticipated cases involves a landmark legal dispute over the meaning of the Second Amendment right to keep and bear arms. The justices are being asked to decide whether this is an individual right that belongs to the people or a collective right bestowed by the states through organized militias.

The court has not yet agreed to take up the issue, but many constitutional scholars believe it soon will. If so, it would mark the first time since 1939 that the Supreme Court has examined the meaning of the Second Amendment.

Two related cases, District of Columbia v. Heller (07-290) and Parker v. District of Columbia (07-335), involve challenges to gun-control laws in the nation's capital. The disputes will take the justices back to the drafting of the Bill of Rights and the foundations of the republic, analysts say.

"This is 1791 for the Second Amendment," Georgetown Law Center Prof. Nicholas Rosenkranz told a recent conference at the Cato Institute in Washington.

Among cases already on the court's docket, one of the most important involves terror suspects at Guantánamo Bay and to what extent they are entitled to challenge their open-ended detention as enemy combatants.

Lawyers for the detainees filed habeas corpus petitions asking federal judges in Washington to examine the legality of their clients' continued confinement. The Bush administration says that because the detainees are foreign enemy combatants being held outside the United States, they are not entitled to the protections of habeas corpus. In 2006 Congress, then controlled by Republicans, passed a law that stripped federal judges of jurisdiction to hear cases brought on behalf of detainees at Guantánamo.

When lawyers for the detainees first asked the Supreme Court to take up the issue, the justices refused. Then, in a highly unusual move, the justices agreed three months later to hear the appeal. This has led to speculation that the court is primed to overturn an earlier federal appeals court ruling upholding the Bush administration's position and the 2006 law.

Some analysts go even further. "The court took this case to make a larger statement of who we are as a people," says Neal Katyal, a law professor at Georgetown Law Center, who also represents a Guantánamo detainee in a pending case.

Professor Katyal, speaking on a recent panel at Georgetown, said the court will probably rule that fundamental rights apply at Guantánamo. "I expect a broader holding than we have had in the past," he added.

Supporters of the Bush administration say the court is unlikely to take such a dramatic step – even six years after the 9/11 attacks. The US is still at war, they say.



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