Lehman Brothers employees signed in green a portrait of Lehman Brothers CEO Richard Fuld, Jr.,outside the New York headquarters, Sept. 15, 2008 in New York. (AP Photo/Mary Altaffer)

It’s a common scenario: Company is in trouble. Behind the scenes, management scrambles to right the ship while reassuring the public that everything will be just fine. Company crumbles. Investors claim they wouldn’t have bought — or would’ve sold — but for the public statements of strength. Questions of civil and criminal liability follow. (Remember Bear?)

And so it goes for Lehman Brothers, whose CEO, Richard Fuld, testified today before the House Oversight and Government Reform Committee. In a front-page story entitled “The Two Faces of Lehman’s Fall,” the WSJ reports that the FBI has launched a preliminary inquiry into whether Lehman or its executives committed fraud by misrepresenting the firm’s condition to investors. Meanwhile, prosecutors from the U.S. Attorney’s office in New York’s Eastern District are examining, among other things, whether Lehman execs misled investors by making upbeat comments to investors and research analysts on Sept. 10 — five days before the firm filed for bankruptcy protection.

Were Lehman execs talking out of both sides of their mouths? Here, according to the WSJ, is a summary of the events under scrutiny:

• On September 9, Lehman’s stock plunged 45% on news that a potential deal with Korea Development Bank fell through.
• As Lehman’s “clearing bank,” J.P. Morgan acted as the financial middleman between Lehman and its clients. Steven Black, co-CEO of J.P. Morgan’s investment bank, told Fuld that in order to protect itself and its clients, JPM needed $5 billion in additional collateral — over and above the $5 billion J.P. Morgan had demanded five days earlier, which had yet to be paid. Fuld persuaded Black to settle for $3 billion right away.
• That evening, top Lehman execs discussed the need to raise between $3 billion and $5 billion to shore up capital by early 2009. That evening, discussions with outside bankers about possible capital raising ended without any formal plan. Lehman execs arranged a conference call for the next day to announce earnings ahead of schedule and to disclose plans for a restructuring. The bankers counseled Lehman against holding the call, warning there were too many open questions about the firm’s finances.
• On next day’s conference call, the firm announced that it expected its largest quarterly loss ever, $3.9 billion, driven largely by declines in real-estate valuations. CEO Fuld said the firm intended to sell a majority stake in its investment-management division and would cut its dividend. Lehman executives didn’t say anything about needing to raise capital.
• On the call, a Deutsche Bank analyst asked whether Lehman would need to raise $4 billion as part of the plan. Lehman’s CFO, Ian Lowitt, replied: “We don’t feel that we need to raise that extra amount.” At another point, Lowitt said: “Our capital position at the moment is strong.”
• By Sunday, Sept. 14, Lehman, its lawyers and officials from the New York Fed determined that Lehman must file for bankruptcy.

Fuld and Lowitt declined to comment. One Lehman executive says the firm determined sometime during the night prior to the conference call that additional capital wouldn’t be needed because Lehman hoped to raise more money by selling additional assets.

Loyal LB’ers: Surely, more info will emerge on what occurred prior to Lehman’s fall. But based on what we know so far, will the government — or shareholders — have a case?

An extraordinary number of people, institutions, and inanimate objects have wronged Tyrone Hurt. In just the last couple of years, Hurt has sued the Declaration of Independence, Black’s Law Dictionary, the United Nations, agencies of the District of Columbia and the Federal Government, and various courts and their officers. Hurt has . . . demanded the deportation of a Spanish-speaking government employee. — Per curiam opinion of the U.S. Court of Appeals for the District of Columbia Circuit (HT: How Appealing)



Since 2006, Tyrone Hurt has filed more than seventy appeals with the U.S. Court of Appeals for the D.C. Circuit, but has managed to avoid filing fees in most of these cases. That’s because the district court routinely grants Hurt’s application to proceed in forma pauperis — or IFP.

For a roster of some of Hurt’s lawsuits, including his suit against the Declaration of Independence, click here.

Today, the Court of Appeals said enough is enough. Hurt must sue on his own dime. “Given Hurt’s history of filing frivolous claims and appeals,” the court writes, “he easily satisfies the standard for revocation of the IFP privilege. However, his penchant for litigation as a form of costless entertainment compels us to go one step further and ask whether we may bar him from proceeding IFP in all future civil appeals.”

The court holds that “the number, content, frequency, and disposition” Hurts filings is “aimed at taking advantage of the IFP privilege,” and concludes: “Hurt has brought numerous . . . while asking for sums of money dwarfing the size of the Federal Government’s annual budget. . . . If Hurt wishes to continue wasting this Court’s time by appealing dismissals of his absurd and frivolous claims, he should have to do it on his own dime.”

During one call-back interview at a New York law firm, the Law Blog suffered a bruising defeat. In the string of interviews, the first partner — a bank lawyer — glanced at our resume and saw that, years prior, we’d taken a screenwriting class. He asked the Law Blog if we were interested in screenwriting. We said we were. He said that, if we wanted to “write scripts” or “become an apprentice to Steven Spielberg,” then we’d come to the wrong place. The firm, he said, was interested in training lawyers who wanted to be lawyers.

We appreciated his candor (and, ultimately, his foresight). Particularly because we know that, in interviews, lots of promises can get made — Wanna be an IP lawyer? No problem, we do all kinds of copyright work here. Flex-time? Absolutely. — and it’s not always clear what they count for.

As the trusty AmLaw Daily blog reports, one former Dechert lawyer is eager to find out. Marc Lubin, reports AmLaw, jumped from Skadden to Dechert in 2002 because, according to a complaint he filed in New York state court last week, he felt “he should be gaining greater experience in a wider variety of structured finance deals.” Apparently, that never happened.

In the suit, Lubin reportedly alleges that Dechert exaggerated the extent of its corporate work in order to woo him, did not provide the touted opportunities, and then fired him in part because he is an Orthodox Jew. He says that when he decided to take the Dechert job, he turned down two other job offers and took a 20 percent pay cut from his $215,000 Skadden salary. He seeks nearly $6 million in back pay, lost earnings, and punitive damages.

Once he started at Dechert, Lubin claims, the lone deal the firm was involved in at the time soon collapsed, leaving him to do “glorified paralegal work.” Then, in 2004, he was fired because the firm didn’t like his work.

When Lubin pressed for written evidence of the firm’s displeasure, a partner told him there was none and added that Lubin “was different.” Lubin “understood this categorization to refer to his religious status as an Orthodox Jew, which required him to eat kosher food and precluded his attendance at various firm functions, including the then recent Christmas party.”

Dechert declined to comment to AmLaw on the suit.

Democratic vice presidential nominee Sen. Joe Biden, D-Del., right, listens to Republican vice presidential nominee, Alaska Gov. Sarah Palin, make a point during their debate at Washington University in St. Louis, Mo., Oct. 2, 2008. (AP/Don Emmert)

According to both the NYT and the WSJ, Sarah Palin was “folksy” last night. (Seriously, the adjective — meaning familiar in manner or style — appears in the lead of both news accounts.) And while Palin did throw off a few heck-of-a-lots, the media seems to agree that she held her own and that Joe Biden did a good job of remaining composed and avoiding direct attacks.

While we felt that the moderator, Gwen Ifill, could’ve pressed the candidates a bit harder with her questions, we enjoyed the sparring, even if the debate left the Law Blog feeling a bit unloved. We know that Iraq, and economic and energy policy are important, but what about the courts? Judges? The rule of law? Mention of these topics was sparse.

On bankruptcy — and energy?

When asked about bankruptcy law and mortgage-holders, Biden — after explaining away the fact the he and Barack Obama voted differently on the last bankruptcy bill — said, “we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you’re paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe . . . That would keep people in their homes, actually help banks by keeping it from going under. But John McCain, as I understand it — I’m not sure of this, but I believe John McCain and the governor don’t support that.”

Then Ifill turned to Palin and asked, “is that so?”

“That is not so,” Palin said, “but because that’s just a quick answer, I want to talk about, again, my record on energy versus your ticket’s energy ticket, also.”

Biden’s battle against Bork:

For the final question of the night, Ifill asked the veep candidates to think of a single issue in which they “were forced to change a long-held view in order to accommodate changed circumstances.”

Biden spoke about how his views on SCOTUS nominees changed over the years. “When I got to the United States Senate and went on the Judiciary Committee as a young lawyer,” he began, “I was of the view . . . that the only thing that mattered was whether or not a nominee . . . had a judicial temperament, had not committed a crime of moral turpitude, and was — had been a good student.”

He continued: “[I]t took about five years for me to realize that the ideology of that judge makes a big difference. . . . That’s why I led the fight against Judge Bork. Had he been on the court, I suspect there would be a lot of changes that I don’t like and the American people wouldn’t like, including everything from Roe v. Wade to issues relating to civil rights and civil liberties. . . .And that’s why I was the first chairman of the Judiciary Committee to forthrightly state that it matters what your judicial philosophy is. . .”

When it was Palin’s turn, she said she might’ve “quasi-caved” on some budget issues, but that, “on the major principle things, no, there hasn’t been something that I’ve had to compromise on, because we’ve always seemed to find a way to work together.”

LB Readers, what do you think? Any issues (legal or otherwise) that you wish the candidates had addressed?

This just in: Turns out, Brendan Sullivan and Co. didn’t get their wish in the corruption trial of Ted Stevens. The federal judge overseeing the trial blasted prosecutors Thursday for belated disclosures of evidence that could bolster the senator’s defense, but he refused to dismiss the government’s case or declare a mistrial, according to a report from Dow Jones Newswires (link not available). Click here and here for LB background from today (or, come to think of it, just scroll down a couple posts).

Late Wednesday night, prosecutors gave Stevens’ lawyers portions of an unredacted FBI report that detailed an agent’s conversation with the government’s star witness, Bill Allen, the former chief executive of Veco Corp., an oil-services company that allegedly gave Stevens more than $250,000 in gifts.

The report addressed a key issue in the case: Veco’s extensive work on renovations at Stevens’s Alaska home, and whether the senator paid for it. According the report, Allen believed Stevens would have paid Veco for the work if he had been billed for it.

Stevens’s lawyers said the report’s contents were the exact opposite of what the government had told them previously. Prosecutors apologized repeatedly for the late disclosure, calling it an honest mistake. But they said the information was not new and did not conflict with what they had told Stevens’ lawyers previously. Brenda Morris, one of the DOJ prosecutors, said they had self-reported to the Office of Professional Responsibility for the Brady violation.

Stevens’ lead lawyer, Brendan Sullivan, was none too pleased.

“The integrity of this process has been breached,” the lawyer said, adding, “I’ve never seen anything like it.”

“In Denver, if you’re going to be a federal trial lawyer, one stage is to be yelled at by Judge Matsch. I’ve also seen agents of the Federal Government deeply regret they have come up short.” — a Denver trial lawyer speaking to Time about U.S. District Judge Richard Matsch



Civ pro profs love Rule 11. Lucky for them, patent lawyers are providing some good exam fodder.

Outside patent lawyers for Medtronic have had a rough go of things. Earlier this year, in the span of two weeks, two different teams of outside litigators representing Medtronic in two different patent trials, heard in two different jurisdictions, were both fined attorneys fees. On Tuesday, U.S. District of Colorado Judge Richard Matsch (pictured) put a price tag on those sanctions for one of the teams: McDermott, Will & Emery (and Medtronic) must cough of up $4.3 million. Here’s a report from the Recorder.

The common offense, if you remember, was a big no-no in the patent world: The lawyers were found to have argued outside the “claim construction” as determined by the “Markman hearings” in the cases. (In the second case, in Massachusetts, Medtronic and their Dewey & LeBeouf lawyers were hit with a $10 million sanction.) What’s the heck is a “Markman hearing”? It’s held prior to a patent trial to in essence identify the parameters of the supposedly infringed patent. This takes that determination away from the jury, and defines what the claims mean as a matter of law.

Markman hearings were intended to streamline cases — a function that patent judges enjoy. But when McDermott lawyers argued outside the claim construction, they made life harder for Judge Matsch. “The [McDermott] lawyers artfully avoided the limitations of the patent claims and created an illusion of infringement. They did so with full awareness that their case was without merit,” Matsch wrote at the time.

Now, McDermott and Medtronic must pay Renner, Otto, Boisselle & Sklar — the lawyers for BrainLAB, the defendant — for nearly three years of work, reports the Recorder. But that’s not all. They also have to pay attorneys fees to Orrick, Herrington & Sutcliffe, which provided a second opinion.

McDermott is appealing, but a firm spokeswoman did not return the Recorder’s call seeking comment. Lawyers for McDermott reportedly argued that the court had an obligation to stop any litigation conduct that stepped over the line, according to the ruling. McDermott’s lawyers also argued that the judge could have granted BrainLAB’s summary judgment motion for dismissal if the case really didn’t hold any water.

LB Readers: Should it have been up to Judge Matsch to call the McDermott lawyers out during trial if he felt they were arguing outside the claim construction?

On Monday, in a move that left colleges scrambling, Wachovia said it was limiting the access of nearly 1,000 colleges to $9.3 billion the bank has held for them in a short-term investment fund.

So what’s next for loan-seeking law students? The NLJ reports that, while the credit crisis won’t eliminate the type of government-backed loans that many laws students rely on to finance their educations — presumably, those subsidized and unsubsidized government loans that, in our day, amounted to about $18,500 per year — the price of private loans is likely to go up.

Because banks are doling out less money to lenders, private loans are getting harder to come by, New York Law School Dean Richard Matasar, who is also chairman of the board of directors of education lender Access Group, told the NLJ. “It’s a time for caution,” said Matasar, who also cited an uncertain 2009 job market. “It’s a time for students to plan well for how much debt they are taking on and how they will pay for it,” he said.

While the financial future may look a bit bleaker for some soon-to-be law school graduates, Matasar told the NLJ that increased enrollment in law schools overall could be a positive side effect of the slowing economy. Many people look to higher education as a way to wait out tough economic times and bad employment markets, he said.

Law Blog Readers: We know that those bar-takers with BigLaw jobs lined up can ask their firms for a hefty advance on their first year salaries. But others must rely on private loans to fund the two or three month stretch between graduation and the bar exam. We’re curious: Have rates on those loans gone up? Are post-grads still relying on them?

The McAfee backdating trial, which began with a big to-do over a certain discovery gaffe, appears to have come full circle.

The stock-option backdating case against former McAfee GC Kent Roberts went to the jury without the defense calling any witness. According to this report by the Recorder’s Dan Levine, Roberts’s lawyer, Cooley Godward Kronish partner Stephen Neal, merely informed the jury about McAfee’s late production of relevant e-mails at the beginning of trial. In his closing argument, Neal (pictured) referenced the gaffe again, saying at one point that the jury was Roberts’ last guardian against “a system that hasn’t worked the way it was supposed to work.”

Here’s what he might have had in mind: At the beginning of trial, Robert Gooding Jr., the Howrey partner who headed the firm’s internal investigation into backdating at McAfee, blamed contract lawyers for the firm’s failure to turn over relevant e-mails. Gooding said he was sorry. “In a document production this size, these things do happen,” he said. But the Cooley Godward defense lawyers, who filed a motion to dismiss shortly after the hearing, were incredulous. “It is fanciful for [Howrey] to get up and say it is inadvertent,” Cooley Godward’s Neal said in court. “This is one of the most irresponsible searches in history.”

Whether the jury will consider that important is anyone’s guess.

In her closing, AUSA Laurel Beeler, according to the Recorder, hammered home the point that Roberts, as GC of the company, knew the rules. And regardless of what former controller Terry Davis might have told him, Beeler said Roberts knowingly broke those rules when he changed his grant date without board approval. “Saying someone said it was OK doesn’t make it true,” the prosecutor said. “It makes no sense. His story makes no sense.”

Most of Neal’s argument focused on evidence that Davis had the authority to change Roberts’ grant. If that’s the case, no crime was committed, he said. Neal also used the discovery gaffe, reports the Recorder, to raise questions about another document — a list of stock option grants that might show that the board actually signed off on the change after all. But since the company never produced the list, Neal said, the government can’t prove Roberts’ grant was unauthorized. “It’s not [the government’s] fault they don’t have it,” Neal said of the list, “but they don’t have it.”

Yesterday, as we read what we believed to be a lawyer-free WSJ story, entitled “How Voter Fury Stopped Bailout,” we came to this nugget:

“The proposal’s defeat was also cheered on by a number of blogs that in recent days have posted links to lawmakers’ telephone and fax numbers and urged citizens to oppose the plan. They included Stop The Housing Bailout!, a Web site organized by a 37-year-old Los Angeles attorney named Morgan Ward Doran . . .”

A Googling of Doran turned up SEC complaints with his name on them — as a representative of the SEC. Could it be, we marveled, an attorney for the SEC spending his spare time railing against the Bush administration’s plan to provide the Treasury Secretary with $700 billion to bailout Wall Street?

It’s true. Doran confirms that he works at the SEC. An SEC spokesman told the Law Blog that Doran’s extracurricular blogging breaks no SEC rules.

Here’s a disclaimer that Doran sent to the reporter on the story:

The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner.
My remarks today as well as those on my website express my views and do not necessarily reflect those of the Commission, the Commissioners, or other members of the staff.

Yesterday, AG Michael Mukasey named Nora R. Dannehy, acting U.S. attorney in Connecticut, to oversee the probe into “whether any prosecutable offense was committed with regard to the removal of a U.S. Attorney or the testimony of any witness related to the U.S. Attorney removals.” Today, Dionne Searcey, the newest addition to the WSJ’s legal gang, delivers us some background on the career prosecutor, who will have to turn around her investigation in a mere 60 days:



In this Oct. 25, 2005 file photo, Assistant U.S. Attorney Nora Dannehy speaks to reporters outside U.S. District Court in New Haven, Conn. (AP Photo/Bob Child, File)

In her 17 years in the U.S. Attorney’s office in Connecticut, Nora Dannehy has sent a governor and a state treasurer to prison. Is she up for tackling such a lengthy and politically dicey investigation? Legal peers and former bosses say the long-distance runner is up to it.

“She’s stubborn as hell and very, very smart,” said William Gerace, who went up against Dannehy in the investigation of his client, Lawrence E. Alibozek, who as a deputy chief of staff for Gov. John G. Rowland was accused of taking payoffs. “She doesn’t play politics.”

Because of the litany of public corruption cases Dannehy, 47, has prosecuted, she has a reputation as a pitbull, say attorneys. But in actuality, they say, she’s merely meticulous, hard-working and dedicated to her job. To that end, lawyers involved in cases with her know she sometimes calls meetings on Sunday evenings. And given Mukasey’s request for a report in 60 days, Nora might well log some weekend work between now and Thanksgiving.

“Nora is a grind it out lawyer, she’ll just sit there and work… she’s a real pro,” said William Dow III, the attorney who represented former Gov. Rowland in his criminal case.

Dannehy’s father was a Connecticut Supreme Court Justice and her brother was appointed as a superior court judge. Her husband, Leonard Boyle, is Connecticut’s former commissioner of public safety and now is director of the FBI’s Terrorist Screening Center, which manages a watch list of suspected terrorists.

From 1986 to 1988, Dannehy (Wellesley ‘83, Harvard law ‘86) served as a law clerk to Senior U.S. District Judge T. Emmet Clarie. Then Dannehy worked as an associate at Day Berry & Howard from 1988 to 1991, according to the firm, now called Day Pitney. “Not only was she extremely bright, capable and hard-working, but she had an unmatched work ethic, never being afraid to work tirelessly to get to the solution of a legal problem,” said David J. Elliott, who at one point was Dannehy’s boss.

Did Williams & Connolly’s push last year to $180,000 for first-year associates signal a market-top?

According to a report just put out by Legal Times, it looks that way. “Instead of triggering another salary boom—one that might have pushed first-year associate pay through the $200,000 barrier—the Williams & Connolly increase appears to have ended a three-year salary streak for Big Law associates,” writes Legal Times.

Given the market turmoil, lawyer layoffs and at least one law firm dissolution, the end of associate pay-hikes shouldn’t come as much of a surprise. What’s worth considering, though, is how a depression (do we call it that yet?) in firm business could impact associate lifestyle (dare we call it that?).

As Legal Times notes, “If anything, associates may have to work harder for their money. Legal consultants predict a sharp drop in profits for many firms over the next year, and with associate pay hikes adding costs to the bottom line,” — pay hikes added $1 billion to 2007 law firm overhead, according to AmLaw — “partners are going to be pushing harder for more hours.”

Some are also pushing for a move to performance-based pay. McGuireWoods, for instance, is keeping market-rate pay for first- and second-years, but moving to performance-based pay for mid- and senior-level associates. “There’s a difference between someone who is doing just OK and someone who is doing really great work and that difference is not just a couple of thousand dollars,” says Thomas Cabaniss, managing partner of McGuireWoods. (Last week, Above the Law reported that Wilson Sonsini is moving to performance-based bonuses, or, in the words of a firm memo, a “bonus program focused on qualitative performance factors.”)

Howrey, notes Legal Times, is also close to launching a pay system “that will attribute salary increases to performance.” Robert Ruyak, Howrey’s managing partner, said associates who don’t meet performance and competency standards will be counseled by the firm. Then, he says, if performance doesn’t improve, the firm’s recruiters “will help them find another place that’s a better fit.”

Yesterday, Ted Stevens’s defense team, headed by Williams & Connolly’s Brendan Sullivan, threw Stevens’s corruption trial into a temporary tailspin when they requested a mistrial based on allegations of withheld evidence. Stevens is facing charges that he accepted more than $250,000 in gifts — including home renovations — from Veco Corp., an oil-services company.

Rocky Williams, a construction foreman who was involved in the renovations on Stevens’s home and who was supposed to be a witness for the prosecution, had, according to defense lawyers, returned to Alaska without explanation. But it seems there was an explanation, according to the government’s memorandum in opposition to the request for a mistrial. Williams, they say, was too sick to testify. From the government’s papers:

True to form, defense counsel continues with their “win at all cost” tactics. . .This time, defendant has gone too far, accusing the government of Brady violations and of proffering misleading evidence at trial. Nothing could be further from the truth . . .At the time when Mr. Williams was subpoenaed, the government anticipated that he would be one of the first witnesses in the government’s case-in-chief. However, when Mr. Williams arrived in Washington, D.C. and met with government counsel to prepare for his testimony, it was apparent to counsel that Mr. Williams had serious, health-related issues that warranted medical attention. . .Mr. Williams had lost a substantial amount of weight, his abdomen was distended (and had been previously drained of excess fluid), he appeared jaundiced, his face was gaunt, he had substantially aged, he had chronic coughing spells, and he was frequently short of breath. . . The government informed Mr. Williams that he should return to Alaska to attend to his health and to meet with his doctors.

As for the defense’s claim that Williams told them he spent much less time working on Stevens’s home than Veco’s accounting records indicate, undercutting the government’s argument that Veco spent $188,000 of its own money on Stevens’s house, the government responds: “The issue is not whether the work was worth more than $188,000 or less. The key issue is whether it was worth more than the threshold amounts triggering disclosure on defendant’s financial disclosure forms.”

Yesterday, as the markets appeared to be falling apart, Vice Chancellor Stephen Lamb (pictured) of the Delaware Court of Chancery was busy putting a private equity deal back together. Judge Lamb issued an opinion refusing to allow PE firm Apollo to walk away from its $6.5 billion acquisition of Huntsman Corp. Here’s the WSJ report, from our own Peter Lattman, and here’s the opinion.

Here’s what happened: In July 2007, just before the credit crunch hit, Hexion — a chemicals company based in Ohio and owned by Apollo — struck a deal to buy Huntsman. Then, a year later, in June 2008, Apollo sued Huntsman, asking the Delaware Court of Chancery to kill the transaction because a combined Hexion-Huntsman would be insolvent, which, Apollo claimed, would prevent the financing banks (Credit Suisse and Deutsche) from lending the $15.35 billion in financing that would fund the deal.

Lamb criticized the so-called insolvency opinion that Apollo obtained from advisory firm Duff & Phelps. Lamb deemed the opinion “unreliable” because it “was produced with the knowledge that the opinion would potentially be used in litigation, was based on skewed numbers provided by Apollo, and was produced without any consultation with Huntsman management.”

A Hexion spokeswoman said, “We are disappointed by the court’s decision. We are reviewing the decision and our options.”

David Harvin, a partner at Vinson & Elkins in Houston was Huntsman’s lead trial lawyer. He was assisted by V&E’s Bruce Blefeld, James Reeder Jr. and Harry Reasoner. Kathy Patrick, a lawyer at Gibbs & Bruns in Houston, also worked on the case.

Marc Wolinsky, a Wachtell partner, was Hexion’s lead trial lawyer. He got help from Wachtell’s Peter Hein and Elaine Golin. Kevin Shannon and Donald Wolfe Jr., partners at Potter Anderson & Corroon in Wilmington; and Vineet Bhatia, a partner at Susman Godfrey in Houston, also worked on the trial.

Notably, Wachtell partner Andrew Nussbaum, one of the lead corporate lawyers on the deal for Hexion, made a cameo in the trial — as a witness. It was the second case this year in which Nussbaum took the stand before Lamb to defend a corporate contract he’d helped craft. He also testified in John Malone’s suit against Barry Diller and IAC/Interactive Corp that went to trial in March.

An unexpected twist at the Senator Stevens trial today: The defense, according to this WSJ report, has alleged that prosecutors withheld key evidence.

U.S. District Court Judge Emmet G. Sullivan expressed concern about the allegations and blasted prosecutors for secretly sending Rocky Williams, a construction foreman who was involved in renovations on Stevens’s home and a witness for the prosecution, back to Alaska. Stevens is facing charges that he accepted more than $250,000 in gifts — including the home renovations — from Veco Corp., an oil-services company.

“I’m peeved about that,” Judge Sullivan said. “What gives the government the authority to do that?”

Defense lawyers say Williams contacted them over the weekend and provided them with significant evidence that undermines the government’s case. Defense lawyers said Williams told them he spent much less time working on Stevens’s home than Veco’s accounting records indicate. That evidence, they said, “gravely undercuts” the government’s argument that Veco spent $188,000 of its own money on Stevens’s house.

Williams had been in Washington, D.C., preparing to testify, but prosecutors sent him to back to Alaska last Thursday, saying they no longer needed his testimony. Prosecutors didn’t alert the defense or Judge Sullivan that Williams was leaving town. Judge Sullivan said he was “flabbergasted” by the government’s actions.

Prosecutor Nicholas Marsh told Judge Sullivan that the government didn’t withhold evidence from Stevens’s lawyers and that Williams’ testimony wouldn’t have changed the basic issues in the case. “We believed we disclosed exactly what we needed to,” Mr. Marsh said.

In light of the developments, Stevens’s lawyers have asked Judge Sullivan to declare a mistrial or dismiss all charges. Judge Sullivan said he was “not inclined at this point” to take either action, but he indicated that he will recall witnesses who already testified and let Stevens’s lawyers question them again.

Kyle Sampson, former chief of staff of Attorney General Alberto Gonzales, testifies on Capitol Hill in Washington. (AP Photo/Dennis Cook, File)

While Alberto Gonzales is breathing a sigh of relief after discovering that he will not be referred to a grand jury for his alleged role in the 2006 firings of nine U.S. attorneys, Kyle Sampson has quite a bit less to be happy about. The report focused a lot of its attention Sampson, who, as Gonzales’s chief of staff, carried out the firings of eight prosecutors.

Today, Sampson’s attorney, Sidley Austin’s Bradford Berenson, seems to be ruing the decision to let Sampson cooperate with and be interviewed for the IG’s investigation. In a statement, Berenson wrote:

It is mystifying and disappointing that the Inspector General chose to impugn Mr. Sampson’s candor and integrity when, virtually alone among significant participants in this matter, Mr. Sampson at all times cooperated fully and voluntarily with any and all investigators, without preconditions, and provided his best, most honest and complete recollection of these events. He has behaved with honor and dignity throughout this difficult episode and has never attempted to shirk his responsibility for problems in the U.S. Attorney firings.

For instance, Footnote 17 (on page 34), which follows the list of people Sampson recommended removing, reads:

As noted below, Sampson said he came up with these 14 names based on his own “quick and dirty” review of U.S. Attorneys and said he intended that the names would be subjected to further vetting “down the road.” We did not investigate the circumstances of each U.S. Attorney who appeared on Sampson’s initial list, and we believe no conclusions can or should be reached about the performance of these U.S. Attorneys based on Sampson’s inclusion of their names on his list.

Mike Elston, who served as chief of staff to former Deputy AG Paul McNulty until his resignation in June 2007, also cooperated with the investigation. Meanwhile, Akin Gump’s John Dowd declined to let his client, Monica Goodling, cooperate. And even though the last IG’s report singled her out for blame, this report has relatively little information about Goodling’s role in the firings compared to the mass of information about the roles of Elston and and Sampson.

Neither Sidley Austin’s Berenson nor Akin Gump’s Dowd returned calls. Though Akin Gump released this statement today. A call to Mike Elston, who’s now a partner at McGuire Woods, was not immediately returned.

The L.A. Times’ Tech blog is reporting that Ted Ullyot — a former chief of staff to former AG Alberto Gonzales, a former AOL in-house lawyer and a former Kirkland & Ellis partner — is moving to San Fran to take the top legal job at Facebook.

“Ted has extremely strong connections with the Republican party, and we think that’s a good thing,” Elliot Schrage, Facebook’s vice president of communications and public policy (and himself a lawyer), told the LAT.



The 41 year-old Ullyot (Harvard, U. of Chicago law) began his legal career clerking for Justice Scalia and the Fourth Circuit’s J. Michael Luttig (who is now Boeing’s senior vice president and GC) before being recruited by Kenneth Starr to K&E. He then went to work for another K&E alum, AOL general counsel Paul Cappuccio, who’s now the GC of Time Warner. Ullyot later became senior vice president and general counsel for AOL Time Warner Europe.

After stints in the White House and the DOJ, he joined Eddie Lampert’s ESL Investments. In May, Ullyot returned to K&E as a partner, focusing on appellate litigation, administrative law and antitrust law.

Will Ullyot send Facebook business to K&E’s new Palo Alto office, the LAT asks? “I think of the firm in the highest terms, and I have used the firm in previous stints as general counsel,” he said. “I just look forward to getting into Facebook to see what the legal needs are.”

We just got off the phone with a junior associate who works in one of Heller’s satellite offices. According to an e-mail sent out today to Heller Ehrman employees, the firm plans to wind up its affairs and stop doing business by November 28.

So what’s the mood like? “People are generally pretty sad,” said the associate, “particularly the ones that have been here for a big part of their career. The chairman, Matt Larrabee, when he spoke yesterday, you could tell he was a little shaken up.” He continued: “There’s definitely been a pattern of attrition among the partnership ranks, and we’ve had the sense that things were unstable. Later, I realized through various blogs and information presented by various partners that the firm needed a merger to stay afloat. As far as the dissolution, I didn’t think it would come to that until the Mayer Brown merger failed.”

What comes next? As for the impending job hunt, the associate said there’s been no organized effort to place lawyers. “I guess it’s a bit of a waiting game,” he said, “because shareholders of the firm are still shopping themselves and their practice groups.” At yesterday’s meeting, the associate said, Larrabee indicated Baker & McKenzie was interested in “taking some lawyers from all of the domestic offices.” But the associate was not optimistic that he’d be included in a practice-group move. “Being so junior, I’m not holding out much hope,” he said. “I haven’t worked so closely with any one partner that I’d be viewed as indispensable.”

[When we ran this by Matt Larrabee, he declined to mention specific firms but said that a “significant number of firms are actively pursuing groups of lawyers in several of our offices.” He added: “I believe the vast majority of our lawyers are going to land on their feet.”]

And what about the paychecks? The associate told us that the 60-day severance comes with no “qualified assurances that the checks will clear,” though the expectation is that they should be able to pay everyone. He added: “I definitely think people are really worried. This is not really a great job market for anyone, and we don’t even have an assurance that we’ll get paid for the next 60 days. Many of my law school colleagues have debt, and don’t necessarily have a huge reserve of savings that can carry them through several months.”

[To this, Larrabee responded that the “cash is in hand and the checks are good.” He said: “The plan of dissolution, which we’re voting on right now, is built on the premise that we’ll pay them. We held a shareholder meeting today, and presented a formal plan of dissolution for the firm. It was unanimously approved by our policy committee last night, and is now being voted upon by the shareholders.”]

For the next two months, does he need to come in? “I think at this point I just need to go clear out my office,” he said. “I don’t need to show up anymore.” [He later clarified: “My expectation is that there won’t be much for me to do over the next couple of months. This doesn’t mean that I will approach my responsibility with a careless attitude.”]

[But according to Larrabee, “Dissolution doesn’t mean there’s not going to be a firm. We’re winding down the business, but we’re doing it in a way where we’re going to continue to serve our clients as our lawyers find new homes.” As for his own future, he said, “I’m still absolutely focused on finding jobs for our people across the firm. That’s my number one priority right now.”]

Many believe that, some time ago, legal education in the United States arrived at a sorry junction, where it’s been stuck ever since. Schools proliferating without regard to the job market, churning out debt-strapped students with limited ability to repay loans. Little preparation for practice. Administrators who, increasingly, govern according to the U.S. News rankings rather than pragmatic decision-making. Graduates allegedly misled about the true earning-potential of their JD. Look no further than this WSJ page-one story from last year for some of these critiques.

Others believe (and these views aren’t necessarily in conflict) that students share the blame for the system’s shortcomings — self-delusional on everything from lawyer-lifestyle, to salaries, to the nature of competition in the industry.

We were reminded of all of these takes today when reading once again about the American Justice School of Law (recently renamed the Barkley School of Law, and formed as a new entity). On Tuesday, reports the NLJ, the for-profit Paducah, Kentucky-based law school filed for bankruptcy in the U.S. Bankruptcy Court for the Western District of Kentucky, listing its assets at $1.6 million and its debts at $5.2 million.

According to a February report in the Courier-Journal, there are about a dozen for-profit law schools nationwide, but only five have been accredited. Critics say the schools admit students who aren’t capable of passing the bar exam in order to maintain revenue to keep the school running. Proponents of such schools counter that, regardless, there’s an incentive to get graduates through the bar because if they don’t then enrollment will go down.

In any event, it’s been a short, strange trip for AJSL/BSL. The timeline:

2004: The school is formed.

2007: A group of students file a wannabe class action in federal court in Kentucky against against the school, alleging that one of the deans, Paul Hendrick, who was the school’s majority stockholders, acted with others to withhold student loan money, apply for student loans in students’ names without their knowledge, lower grades to punish students they perceived as disloyal and keep them from transferring, and delay telling students last fall that the school had been denied ABA accreditation until it was too late for them to leave. (Graduates of non-accredited schools can’t take the Kentucky bar.) The students said they paid $13,250 a semester for tuition, but there was no toilet paper in the restrooms, copiers and printers often had no paper, and the lights were once turned off in the library because the school couldn’t pay its bills. In court papers, the two deans, Hendrick and Jarrod Turner, denied the allegations and noted that students were never guaranteed the school would win accreditation.

February 2008: The suit is settled. The owners of the school — two deans and an accountant — agree to transfer ownership to an investor group headed by a local physician, and to play no role in the future administration of the school. No money is exchanged in the transfer, but the new owners agree to take on the school’s roughly $2.8 million in debt. At the time, the physician, Dr. Laxmaiah Manchikanti, told the Law Blog: “The decision was made in 15 minutes . . . It’s a great opportunity if we can get accreditation, and I’m about 90 percent certain we can get it with the right people.”

July 2008: A school spokesman told the Paducah Sun that classes will be canceled if the new $5 million library and the renovation of a classroom building are not completed in the next two months. The school has only 10 full- and part-time students.

September 2008:Dean Larry Putt tells the NLJ that, while the bankruptcy filing puts a dark cloud over the Barkley School of Law, it will not have a direct impact on the school, since, technically speaking, it is a separate entity from the The American Justice School of Law. “Even as I speak, we are building the school up and moving forward,” Putt said. Though the NLJ notes Barkley could potentially face problems with its facilities and buildings, which are still owned by the American Justice School of Law and could be sold off to pay creditors.

A cautionary tale for your consideration, Dear LB Readers: According to this report in the Boston Globe, the feds allege that a former exec at Biopure, a Cambridge-based biotech company, lied to a federal judge when he said he was gravely ill from colon cancer. He was allegedly trying to dodge a suit over problems with an experimental synthetic blood product.

Howard P. Richman, 57, allegedly falsified letters from a doctor and had his lawyers report to a judge that he had less than a 15 percent chance of survival, delaying an SEC lawsuit. Richman was indicted yesterday in federal court in Boston on one count of obstruction of justice.

Here’s the indictment.

“Anyone who lies to the SEC and the court must be held accountable,” said David Bergers, regional director for the SEC’s Boston office. “The integrity of our process and the judicial process demands complete honesty,” he said.

The alleged lies, notes the Globe, were an apparent attempt to force a settlement in a case brought by the SEC alleging Richman and other Biopure execs mislead investors in 2003 by hyping a flagging synthetic blood product called Hemopure. The FDA had reported safety concerns with Hemopure, a blood substitute made from cow hemoglobin, citing studies that suggested it caused heart attacks and heart failure in some patients. But Biopure allegedly never told investors.

Tiana Gorham, a spokeswoman for Biopure, said the company would not comment on the indictment because Richman has not worked there since 2003. Richman’s lawyer, Thomas E. Dwyer Jr., declined to comment to the Globe.

Heller Ehrman is on the eve of dissolution. Tomorrow, reports the Recorder, Heller partners will vote to dissolve the firm.

At a meeting this afternoon, Heller Chairman Matthew Larrabee told all attorneys and staff that dissolution is unavoidable and that the partnership is expected to vote to voluntarily dissolve, for which a two-thirds vote is reportedly needed.

He reportedly described the dissolution of the firm as a tragedy for the entire legal industry and, after about ten minutes, turned the meeting over to partners in each of the firm’s offices for in-person question-and-answer sessions.

Staff will be paid on Friday, Larrabee said, and indicated that under the federal WARN Act, associates and staff would be paid for the next 60 days.