Posts on ‘February 12th, 2009’

After investing $150,000 in a day spa meant to contain a doctor’s office, Robert M. Stapleton encountered something he didn’t anticipate: a law office in the spa instead. Stapleton took attorney Richard E. Brook to court, saying he had been duped into backing the business and demanding his money back. Finding the law office “was detrimental to the peace and tranquility associated with the day spa,” a New York judge has ruled that Brook must pay his erstwhile business partner rent for his use of the spa space.

The Department of Justice and the SEC have won the second-largest
penalties — totaling $579 million — for violation of the Foreign
Corrupt Practices Act against an American company involved in a 10-year
scheme to bribe Nigerian government officials to obtain engineering and
construction contracts. Kellogg Brown & Root agreed to pay a $402
million criminal fine. KBR’s parent company, KBR Inc., and its former
parent company, Halliburton, jointly agreed to pay $177 million in
disgorgement of profits.

A federal judge has refused to grant what prosecutors claim was an “unprecedented” request by Texas billionaire Sam Wyly to obtain protected documents in the government’s criminal kickback case against the Milberg law firm. Wyly was seeking to preserve documents which are related to the criminal case and which are now under a protective order. In that case, prosecutors alleged that Milberg and several of its partners obtained more than $200 million in attorney fees by paying kickbacks to name plaintiffs.

Federal law enforcement officials said Wednesday they are targeting lawyers, mortgage brokers and other “gatekeepers” who perpetrated fraud that contributed to the current economic crisis — a clear warning shot as the federal government pumps billions of dollars into the financial sector. “They have the most to lose, they’re the most likely to flip, and they make the best examples,” said Neil Barofsky, the special inspector general for the Troubled Assets Relief Program, during a congressional hearing.

In “Freakonomics,” co-authors Steven Levitt and Stephen Dubner mention
the “troubling allegation” that John R. Lott — a conservative scholar
who wrote the book “More Guns Less Crime” — invented some of the survey
data that supported his theory. Lott sued Levitt and the book’s
publisher, HarperCollins, for defamation. At the district level, Levitt
and Harper won a dismissal, which Lott appealed to the 7th Circuit. On
Tuesday, the federal appeals court affirmed the lower court’s dismissal
of the case.

A group of 33 law professors, former state Supreme Court justices and practitioners are urging the attorney general and the heads of the Senate and House judiciary committees to consider four major changes in the operation of the U.S. Supreme Court, including regular appointment of justices and the involvement of appellate judges in the selection of cases. A law professor in the group said that the proposals stem from the thought that “the Supreme Court has gotten a little too big for its britches.”

Irell & Manella has settled a $150 million legal malpractice lawsuit with one of its largest clients, Charter Communications Inc., following two months of mediation. Irell had represented Charter and its chairman, Paul Allen, while both were looking to acquire cable systems to build a nationwide cable television company. In 2000, while working on an acquisition, an unnamed Irell associate deleted two important paragraphs of the contract, giving Allen an unintended type of stock.

My Rich Uncle is broke. That’s because New York-based MRU Holdings, the student lender that popularized the brand My Rich Uncle, filed for Chapter 7 liquidation on Feb. 6 and suspended operations. Facing the credit crisis, the specialty finance company began having trouble raising capital, stopped making new loans and then breached a debt covenant. That’s bad news for the 18 law firms owed nearly $2 million in fees from MRU for work they did for the company.

Dechert has confirmed that it laid off 19 attorneys Thursday across its U.S. offices. The group included associates and of counsel. Several practice areas were affected, though the firm would not specify which ones. In a statement issued by the firm, it said the layoffs were “primarily due to a reduction in demand that has affected most, if not all of the legal industry.” The majority of Dechert’s layoffs in 2008 were focused on staff, with 72 U.S. positions cut and 15 in the United Kingdom.

Public universities have begun furloughing employees in an effort to reduce costs, and law schools aren’t exempt from the unpaid leave policies. Following a growing trend, Arizona State University has implemented a university-wide furlough program that applies to the Sandra Day O’Connor College of Law. The move is expected to save the university about $24 million at a time when Arizona lawmakers are looking at significant cuts to state university funding.