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Class-action lawyers rack up rare victory on fees
Headline News | 2007/10/24 10:36
In a decision closely watched by plaintiffs' lawyers, the 7th U.S. Circuit Court of Appeals has rejected the fees awarded to a class-action firm, but not because the payment was too high.

The court, in an opinion earlier this month, raised the possibility that the law firm, New York's Milberg Weiss, was undercompensated for its representation of shareholders of the now-defunct Chicago-based Internet consulting company MarchFirst Inc.

It's a rare victory for class-action lawyers, who have been vilified for taking excessive cash fees while their clients receive awards of little economic value. Indeed, Congress has twice created laws aimed at addressing abuses in the system.

In this case Milberg Weiss asked for 28 percent, or $5.04 million, of the $18 million settlement it reached with lawyers for the defendants, which included MarchFirst founder and former Chief Executive Robert Bernard. U.S. District Judge John Grady rejected the fee as excessive, considering that the settlement equaled a recovery of 19 cents per share. He reduced the amount to $2.6 million, or 15 percent of the settlement.

In support of his decision the judge cited the Private Securities Litigation Reform Act of 1995, which directs judges to determine attorneys' fees based on the results achieved for the class. Milberg Weiss appealed his 2006 ruling.

The 7th Circuit objected to Grady's method for coming up with the fee percentage, saying the judge did not consider anything besides the amount recovered for the class.

The court "did not factor into its assessment the value that the market would have placed on Counsel's legal services had its fees been arranged at the outset," Judge Ann Claire Williams wrote for the majority.

The ruling is consistent with previous decisions of the appellate court that have directed district courts to consider the market price for legal services.

That should take into account the risk that plaintiffs' lawyers will not be paid if they lose the case. Like other lawyers who work on a contingent-fee basis, class-action practitioners get paid only when litigation concludes successfully. These large-scale cases often require a steep upfront investment of time and money, with no guarantee of any return.

But Grady had dismissed that risk in his calculation, declaring that "this is a common argument in support of large fees in class actions, but it has no relationship to reality."

The appellate court did not make its own calculation of the attorneys' fees, instead sending the case back to the district court for further proceedings. Officials at Milberg Weiss were not available for comment.

Chicago lawyer Joel Chefitz, who represented MarchFirst, said the defense lawyers did not have a stake in the fees awarded to Milberg Weiss and did not support or oppose its original request for 28 percent.

He said he thinks most plaintiffs' lawyers will applaud the 7th Circuit decision because it will make fee awards less subjective. "It's sending a consistent message that we want to replicate a marketplace," Chefitz said. "What it means is that plaintiffs' lawyers will be less subject to the vagaries of which judge they get."


Panel: US Must Control Security Firms
Headline News | 2007/10/23 10:59
A panel recommended to the State Department that the U.S. government impose unified control over private security guards working for the U.S. in Iraq, an idea already floated by Defense Secretary Robert Gates, The Associated Press has learned.

The review panel found poor communication between diplomats and military officials and too little oversight of contractors like Blackwater USA, two people familiar with the report's findings told the AP on Monday.

The State Department risks another incident like the Sept. 16 Blackwater shooting of 17 Iraqi civilians unless it quickly installs closer management of the private army guarding diplomats in Iraq, the independent panel privately told Secretary of State Condoleezza Rice.

Rice said she wants to discuss the findings with Gates face to face and intends to act quickly.

"The recommendations point a very good way forward," Rice told reporters Monday night. She provided no details but said she and Gates would "discuss how we will carry out better coordination, how we will make certain that the United States government moves this forward with one voice."

The group strongly recommended that Rice coordinate her next move with the Pentagon, and she plans to speak with Gates by phone before he returns from an overseas trip late this week, a State Department official said. A face-to-face meeting would follow.

The panel, named by Rice in the wake of the Sept. 16 killings, made no specific recommendations about what should happen to Blackwater, whose guards were escorting an official from the U.S. Embassy when they fired on civilians in a Baghdad square, those familiar with the report said. The killings have outraged Iraqis and focused attention on the shadowy rules surrounding heavily armed private guards.

"There needs to be unity of effort so that whatever's moving in the battle space is coordinated, and it needs to be understood, especially, by the military out in that battle space," one person said.

Those familiar with the recommendations in the report spoke on condition of anonymity because Rice has not yet decided what changes she will make.

The recommendations would apply to management of all private security contractors in Iraq, and recognize that it is impractical to eliminate such protection altogether. The military has resisted assuming responsibility for guarding large numbers of U.S. officials, and the State Department's own security force is too small and already stretched too thin.

The group's closely held report also identified a gap that left private guards for diplomats in Iraq outside the direct control of U.S. civilian or military law, and outside Iraqi law, a U.S. official said. It was not clear whether the report recommends placing private contractors squarely under U.S. civilian law, but Congress has already acted to place such guards under military law when working for the Pentagon.

The Iraqi government is demanding that Blackwater be expelled from the country within six months and that its employees be subject to Iraqi law.

One person familiar with the report said the group did not focus on the specific events of Sept. 16, looking instead at the rules of engagement, responsibilities and oversight for all security contractors.



Law firm hosts seminar on immigration laws
Headline News | 2007/10/22 18:45

The Phoenix law office of Steptoe & Johnson LLP is hosting a forum for businesses this week related to immigration laws and new state and federal programs that punish employers that hire illegal immigrants. The conference will detail the Arizona employer sanctions law set to go into effect in January, as well as tougher federal enforcement and penalties against businesses that hire undocumented workers. The event will be held Thursday morning at the Ritz-Carlton hotel in Phoenix. A number of law firms have held similar immigration seminars for business clients and potential clients worries about the immigration issue.



When Law Firms Say It's Time to Retire
Headline News | 2007/10/18 10:31

The American Bar Association doesn't want them. Most lawyers apparently don't like them. But many law firms have them. Retirement policies exist in several forms, but the 65-and-older crowd isn't looking to hang up its hat as early as it once was. Only 38 percent of lawyers agree with mandatory retirement policies, while 50 percent of firms have them, according to a recent survey of nationwide law firms by Altman Weil.

Aside from the 38 percent who agreed with mandatory retirement provisions, 46 percent disagreed and 16 percent were not sure.

At its annual meeting in August, the American Bar Association adopted a recommendation proposed by the New York State Bar Association that calls for firms to eliminate mandatory retirement policies and evaluate older partners on individual performance.

Opponents of the recommendation said firms shouldn't be told how to run their internal policies, particularly ones that are a matter of private contracts.

"The profession's position on this seems to be moving towards getting rid of those things," James D. Cotterman, an Altman Weil principal who handled the survey, said of mandatory retirement policies.

Aside from any question of legality, Cotterman said it makes good business sense to do away with retirement policies.

People are living longer, are healthier, have wisdom to share and have a "tremendous" prominence in the community, he said.

"There's really no downside to that," Cotterman said.

Firms should be planning for the next generation regardless of age, Cotterman said.

"If you have mandatory retirement, it's easy because you can say, 'Well, you've reached the age and you're out,'" he said.

It's the job of a managing partner or executive committee, however, to make the tough decisions, Cotterman said. That's what evaluations are for, he said.

According to the survey, the majority of respondents (61 percent) plan to continue working in some capacity after retirement. Of those who continue to work, 48 percent will continue to practice law and 35 percent will pursue another line of work. Seventy five percent will work part time, according to the survey.

If any of the respondents are Pennsylvania attorneys, their future career plans may depend on where they work.

At Stradley Ronon Stevens & Young, for example, partners are required to retire at age 65, 66 or 67, depending on their date of birth and how that coordinates with Social Security payments, managing partner Jeffrey A. Lutsky said.

On its face, the policy doesn't provide for retirement-age attorneys to simply leave the equity partnership tier; they must leave the firm.

Lutsky said that from time to time, partners ask for exceptions and they are granted on an individual basis. If extensions are granted, they are generally done on a one-year to two-year term. Extensions are based on the partner's current contributions to the firm, but not necessarily just his or her book of business, Lutsky said.

There have been occasions when the firm has transitioned partners into a senior counsel role when they plan on working part time, he said.

"This is an issue that's obviously being framed by demographics," Lutsky said.

Issues surrounding retirement, he said, aren't things the firm talks to partners about on their 65th birthday. That planning starts a couple of years out.

Despite the increasing talk about the morality and legality of firm retirement policies, Lutsky said he thinks the firm's policy works for the firm.

It allows Stradley Ronon to transition both client matters and leadership roles to a younger generation, he said.

"We're creating opportunities for younger people," he said.

That doesn't mean the firm has left it's older attorneys empty-handed. Stradley Ronon pays "significant" retirement benefits to its partners that are firm-funded, which is something many large firms no longer do, Lutsky said.

That pool is partially funded by the firm from year to year, and the rest is paid out of partner profits, he said.

Thorp Reed & Armstrong has what its managing partner Jeffery Conn calls a "flexible" policy. The firm requires that partners retire -- but not necessarily leave the practice -- at age 67.

Conn said partners can either request to stay on longer as an equity member or they can take another role as of counsel or senior counsel, for example. He said pretty close to all of those attorneys at retirement age stay on in another role.

Having a policy in place allows a firm to address the issue of retirement at a set, and known, time.

Mark Alderman said he wasn't quite sure he'd call his firm's policy mandatory. At Wolf Block Schorr & Solis-Cohen, the partnership agreement calls for attorneys at age 68 to transition out of the equity partner tier, he said.

"It does not require retirement or any particular alternative status," Alderman, Wolf Block's chairman, said.

Some attorneys retire before 68 and others continue in various capacities well into their 70s, he said.

There are also exceptions to nearly every rule. It is possible to waive the mandatory transition, Alderman said. Many partners have asked for the waiver and the firm has asked many partners if they were interested in the waiver, he said.

Eckert Seamans Cherin & Mellott Chief Executive Officer Timothy Ryan said up until about 15 years ago, his firm had a retirement policy.

"We jettisoned it with the belief that our members continue to be contributing past the age of 65," he said.

The firm's former system would take 10 percent of a member's equity away for a five-year period and then another 50 percent at age 70, which meant they were no longer a member, Ryan said.

"Sixty-five just seemed to be almost a random date selection," he said, calling the time frame an "unnecessary restraint."

The firm hasn't had any problems without a retirement policy and there hasn't been any talk of bringing one back, Ryan said. When Ryan, 48, transitioned into leadership, there were no problems with older members and the firm still has some of the same clients it did when it opened 50 years ago, he said.

Altman Weil's survey, conducted in September 2007, includes responses from 521 lawyers in management positions in U.S. law firms, including 28 percent from firms with 50 to 99 lawyers, 35 percent from firms with 100 to 249 lawyers, 17 percent from firms with 250 to 499 lawyers and 20 percent from firms with 500 or more lawyers.

The results show that lawyers in smaller law firms and women lawyers were less likely to support mandatory retirement.

In the firms where retirement was mandatory, 38 percent force retirement at age 65 and 36 percent say age 70. The smallest firms tend to use 70 as the retirement age, while most other firms look to 65.



Defections lead to new law firm
Headline News | 2007/10/18 08:28

Three lawyers split from personal injury attorney William Mattar and formed their own practice.

Dean Smith, Joseph Bergen and Todd Schiffmacher broke from the Law Offices of William Mattar on Oct. 15 and opened Smith Bergen & Schiffmacher LLP the next day.

The office is located at 1207 Delaware Ave., Suite 219, in Buffalo.

Bergen said the three left because of differences in business practices including "increasing pressure on the attorneys to settle cases."

Mattar said the three "quit by their actions" and that their claims "are pure opinion and not substantiated."

Mattar said Bergen was employed there for several years while Smith and Schiffmacher were there for one year each.



Philadelphia Law Firm Accused Of 'Pay To Play'
Headline News | 2007/10/15 14:54
Attorney Pat Biswanger filed a federal complaint last month in the Eastern District of Pennsylvania against the Philadelphia law firm Cozen O'Connor P.C. Ms. Biswanger claims she was the victim of sexual discrimination and fired illegally from the firm in retaliation for her involvement in Haverford Township politics. Ms. Biswanger claims in her accusation that Delaware County Common Pleas President Judge Kenneth Clouse had inappropriately involved himself in Haverford Township politics led to Judge Clouse contacting Cozen O'Connor and demanding her firing.

In 2004, Judge Clouse hired the politically powerful and well-connected attorney Richard Sprague to sue Ms. Biswanger and Haverford Township Commissioner Andy Lewis on grounds they had defamed him.

Ms. Biswanger alleges Mr. Sprague threatened to include Cozen O'Connor as a defendant in the defamation suit unless the firm agreed to fire her.

In July 2005, the same month former Philadelphia City Treasurer Corey Kemp was sentenced by a federal judge for his role in helping to direct city bond work to firms willing to contribute to, among other things, the mayor's reelection campaign, Ms. Biswanger was asked if she would be interested in applying for the general counsel position in the School District of Philadelphia.

She claims she spoke with Mr. O'Connor about the opportunity. He told her he wanted to recommend someone to the district who would be loyal to his firm and continue to send it bond work.

He allegedly told her he considered the job a "corporate opportunity."
Mr. O'Connor, she says, told her he would recommend her to district CEO Paul Vallas and School Reform Commission Chairman James Nevels. She claims that after she was fired Mr. O'Connor no longer supported her application.

A check of school district records shows corporate bond work was an economic opportunity for the firm. Cozen O'Connor attorneys Alan Wohlstetter and Steven Goldfield served as special council to the district between 2003 and 2005. During that time the firm received fees of $390,000 for its participation in bond issues for the district.


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