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Jeremy Hodges legalweek

Jones Day has promoted two new partners in London out of a global total of 36 in the firm’s annual partnership round.

The new City-based partners are international litigation and arbitration specialist Nicholas Cotter and Barnaby Stueck (pictured) in the US firm’s trial practice.

The promotions increase Jones Day’s London partner headcount to 50, a decrease of three on the same point last year, despite the firm making a number of lateral hires during 2009. Im September, Hamish Lal joined from Dundas & Wilson as construction head, while in August the firm recruited Mayer Brown’s London competition and antitrust head Frances Murphy.

The bulk of this year’s promotions come in the firm’s New York and Chicago offices, which receive five apiece, while the Cleveland office sees four new partners. Internationally, Brussels, Singapore, Paris, Munich, Hong Kong and Tokyo all gain one new partner while Sydney receives two.

The total number of promotions represents a slight decrease on last year, when 40 lawyers were made up, including four new partners in London.

London office head Russell Carmedy said: “These appointments demonstrate Jones Day’s commitment to the ongoing development of its global platform in whatever circumstances may exist at any particular time.”

Yesterday (12 January) K&L Gates promoted 24 lawyers to the partnership, with just one promotion coming in the firm’s London office – the only promotion outside of the US.

More news, deals and comment on Jones Day

Lynne Marek legalweek

McDermott Will & Emery has become the latest firm to move away from lockstep and introduce a merit-based pay system for associates, reports The National Law Journal.

The process will result in pay cuts for some of the firm’s associates, with first-year salaries set to drop from $160,000 (£98,000) to $145,000 (£89,000) this year, according to Jeffrey Stone, the chairman of the firm’s management committee.

Associates who started at the 1,000-lawyer firm last year will see their salaries reduced as of 1 April, while those starting this year came in at that lower level, said Stone, although he added that there will be opportunities to earn more through a bonus.

By next year, associates and senior associates will be placed in one of three pay levels based on skills achieved and business experience. Partners will evaluate associates to determine at which level they belong.

Stone emphasised that the change is not a cost-cutting move, but rather an effort to reward associates who are the best performers and to provide greater value to clients by encouraging such work.

“The old lockstep system rewarded longevity. It failed to reward increases in competence,” Stone said.

Stone also said that some associates’ hourly billing rates may be lowered as part of the change, making their services more competitive.

McDermott follows a number of other US firms in shifting associates away from the lockstep model, including Reed Smith, Wilmer Cutler Pickering Hale and Dorr, and DLA Piper.

McDermott’s training will also be adjusted to focus on the core competencies deemed the most significant at each pay level. Individual practice groups will set distinctive criteria appropriate to their areas.

The National Law Journal is a US sister title of Legal Week.

Sofia Lind legalweek

K&L Gates has maintained a high number of partner promotions this year with 24
set to join the senior rank.

The total number of appointments is only slightly down on the previous year, when the US firm made up 28.

The firm’s London office will receive just one new partner – dispute resolution lawyer Sarah Turpin. All of the remaining promotions come in the firm’s US offices, with Washington DC receiving the highest number of new partners with four.

Eight of the new partners practise dispute resolution or litigation, while intellectual property, corporate, finance, real estate, regulatory and tax are also represented.

The promotions are effective as of 1 March.

K&L Gates chairman and global managing partner Peter Kalis (pictured) commented: “Again this year, we are fortunate at K&L Gates to have an infusion of top-notch lawyers from our associate ranks into our partnership. As with past years, we are delighted that our new partners are drawn from multiple offices and practice areas.”

Meanwhile, Cadwalader Wickersham & Taft has appointed four new partners as of 1 January. Three new partners were made up in Washington DC and one in the firm’s New York headquarters.

Two of the new partners come from the US firm’s litigation practice, with the other two promotions coming in regulatory and financial restructuring. The total of four is a slight reduction on last year, when the firm made up six to its partnership.

K&L Gates on the Legal Week Wiki

Amy Miller legalweek

Insurance giant AIG has asked the former top lawyer at Lehman Brothers to be its new general counsel, reports Corporate Counsel.

Thomas Russo was chief legal officer at Lehman for more than 15 years until the company’s collapse in 2008.

During his last year at Lehman, Russo’s total take-home pay – including salary, bonuses, and stock sales -  was more than $10m (£6.2m), while three years earlier, he took home just over $21m (£13m).

In spring last year he took up a new role as senior counsel at the New York office of US law firm Patton Boggs.

The Wall Street Journal reports that AIG has given Russo a written offer and is discussing his compensation with the office of US Government pay czar Kenneth Feinberg. It is not known if Russo has accepted the offer. A spokesperson for AIG declined to comment.

Prior to joining Lehman in 1993, Russo worked at Cadwalader Wickersham & Taft. He was also a former deputy general counsel at the Commodity Futures Trading Commission, a regulatory agency of the US Government.

If he accepts the offer, Russo will succeed AIG’s former GC Anastasia Kelly, who resigned on 30 December after her salary was cut in the wake of new curbs on pay at companies receiving federal bailout money.

Kelly received a severance package of about $3.9m (£2.4m), while the US Government has handed out a total of around $182bn (£113bn) to AIG.

Corporate Counsel is a US sister title of Legal Week.

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Jeremy Hodges legalweek

Arnold & Porter has strengthened its London intellectual property (IP) practice with the addition of a team from Milbank Tweed Hadley & McCloy.

The Washington firm has picked up IP veteran David Perkins and three associates from fellow US firm Milbank, which will now no longer practice IP law in the City.

Perkins, who specialises in patent litigation, joined Milbank after retiring from Clifford Chance in 2003.

He will become Arnold & Porter’s fifth City IP partner alongside Jonathan Day, Richard Dickinson, Ian Kirby and Clive Thorne.

Tim Frazer, Arnold & Porter’s London managing partner, said: “We are very strong in IP in the US so this very much follows our strategy to build out across all our practice areas in the City.

“This team has been involved in many high-profile European litigations and has considerable experience in industry sectors that are key to our clients, including medical devices, pharmaceutical, and life sciences.”

Arnold & Porter did not bring in any partners in 2009, but in 2008 made hires including M&A partner Carl Liederman from the Geneva arm of Winston & Strawn, employment partner Henry Clinton-Davis from Wilmer Cutler Pickering Hale & Dorr and Paula Levitan, former vice president and associate general counsel of retail chain Gap.

More US news, comment and analysis

Brian Baxter legalweek

Allen & Overy (A&O) has recruited a Latham & Watkins litigation partner in Paris in one of four partner departures from the US firm, reports The Am Law Daily.

Jean-Christophe Tristant, an intellectual property (IP) licensing and litigation lawyer, is set to join A&O in Paris after the magic firm yesterday (7 January) announced the hire of a six-lawyer Clifford Chance team in the French capital.

Meanwhile, three other partners are leaving Latham – New York M&A specialist David Schwartzbaum, San Diego commercial and IP litigator Kenneth Fitzgerald and Paris-based IP litigator Emmanuel Baud.

Schwartzbaum is set to join Greenberg Traurig in New York. During his time at Latham he advised CV Therapeutics on its $1.4bn (£870m) sale to Gilead Sciences last March, and Merrill Lynch as financial adviser to US military electronics company DRS Technologies on its $5.2bn (£3.2bn) acquisition by Italian arms manufacturer Finmeccanica in 2008.

Elsewhere, Baud is set to join Jones Day along with two Latham associates, while Fitzgerald will become a name partner at San Diego litigation boutique Chapin Fitzgerald Sullivan.

The quartet of lateral moves appears to be unrelated, as each of the four left to pursue their own career choices.

“I wanted to manage and run my own firm,” said Fitzgerald. “I had a great time at Latham, which I think is the Four Seasons of law firms. But given what I like to do and the kinds of clients that I like to work for, I thought [a boutique] would be a better environment.”

Latham’s profits dropped by 21% in 2008, with profits per partner falling from nearly $2.3m (£1.4m) to $1.8m (£1.1m) a year ago. The firm laid of 190 associates and 250 staff members last February, but in recent months the firm has opened an office in Beijing and raised associate salaries that were frozen last year.

The Am Law Daily is the website of The American Lawyer, Legal Week’s US sister title.

Latham & Watkins on the Legal Week Wiki

Amy Miller legalweek

The general counsel of US mortgage giant Fannie Mae is set to receive almost $3m (£1.9m) in pay and bonuses after the US Goverment announced it will provide uncapped support to the company over the next three years, reports Corporate Counsel.

Fannie Mae GC Timothy Mayopolous – who was fired as legal chief of Bank of America last year during the Merrill Lynch merger talks – is set to earn up to $2.95m (£1.85m), including an incentive bonus of nearly $1m (£630,000), according to regulatory filings.

On 24 December last year, the US Government announced that it would provide uncapped support to Fannie Mae and fellow mortgage company Freddie Mac over the next three years and pay out a total of $42m (£26.4m) in compensation to top executives at the companies.

General counsel have until now largely avoided the spotlight in the ongoing controversy over executive compensation.

Officials at the Federal Housing Finance Agency, Fannie’s regulator, defended the pay packages in an official statement, saying they are on average less than they were before the US Government took over.

“As this debate progresses, it will be essential that the enterprises continue to perform their current role,” acting director Edward DeMarco said. “The enterprises must attract and retain the talent needed to accomplish these objectives.”

Susan Hackett, GC of the Association of Corporate Counsel, said that legal heads at bailed-out companies may work long hours seven days a week to earn their lucrative pay packages, but added that “it is tone deaf in today’s environment to not recognise that a lot of people are going to say that [this level of pay] is inappropriate.”

Mayopolous is not the only legal chief caught up in the controversy over compensation. American International Group GC Anastasia Kelly, who resigned in December after her salary was cut, will reportedly receive a severance package worth several million dollars.

Corporate Counsel is a US sister title of Legal Week.

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Brian Baxter legalweek

A new report has found that securities class action suits fell by 24% in 2009 as litigation related to the credit crunch and subprime crisis began to slow, reports The Am Law Daily.

According to the study, compiled by Stanford Law School’s Class Action Clearinghouse and Cornerstone Research, the number of companies sued on stock fraud claims dropped from 223 in 2008 to 169 last year, compared with an annual average of 197 over the previous decade.

The year-end study follows a similar report released last month by NERA Economic Consulting, which also showed that the surge in securities class actions may have peaked.

“That pig has moved through the python,” said Stanford Law professor and former SEC commissioner Joseph Grundfest. “All of the major cases that were profitable have already been filed. The pool is in effect fished out.”

Clearinghouse researchers previously concluded in a mid-year assessment that class action filings had fallen off because most major financial institutions linked to the economic downturn had already been hit with suits in 2008.

The study also found that 2009 filings were also marked by an unusually long delay between allegations of wrongdoing and ensuing legal action. The study suggests that the time lag is a result of law firms revisiting old cases, particularly in the second half of the year, when the median delay of 100 days tripled its historic average.

In addition, the the study reports that only 53 securities class action filings in 2009 involved the subprime crisis, a sharp drop from the 100 such suits filed in 2008.

“It looks like the credit crisis cases are not disappearing, but they are slowing down,” said NERA senior consultant Stephanie Plancich. “It looks like they are winding down, and I would expect to see fewer in 2010.”

This article first appeared on The Am Law Daily blog on americanlawyer.com.

Amy Miller legalweek

The former general counsel of Comverse Technology has been ordered to pay $1m (£625,000) to partially fund a class action settlement stemming from alleged stock option backdating, reports Corporate Counsel.

William Sorin has already spent a year in prison for his role in stock option backdating at the company, making him the first corporate executive to serve time for options-related crimes.

The company’s former CEO, Jacob Alexander, will also pay $60m (£38m) to Comverse as part of the settlement. Alexander, an Israeli citizen, fled to Namibia in 2006 to avoid prosecution. In return, New York-based Comverse will drop its lawsuit against the former executives, and the executives will drop their countersuits against the company.

Comverse will use the money to help fund a $225m (£141m) class action settlement. “We’ve now gotten another million dollars for the company, and we think that’s a good result,” said Eric Zagar, a partner at Barroway Topaz Kessler Meltzer & Check, which represented derivative plaintiffs in New York State Supreme Court.

Comverse, the world’s largest maker of voicemail software, was one of the first companies caught up in the stock option backdating scandal.

In 2006, Sorin, Alexander and another Comverse executive were charged with a scheme to reap millions of dollars in profits by changing the grant dates of stock option awards from 1998 to 2002.

According to the US Government, Sorin exercised options and sold stock worth about $17m (£10.6m) between 1991 and 1999. He allegedly made $14m (£8.8m) in profits, about $1m of which was due to backdating.

In 2007, Sorin pleaded guilty in federal court to conspiracy to commit securities fraud, mail fraud, and wire fraud as part of a plea agreement, and was sentenced to a year and one day in prison. Without admitting or denying guilt, Sorin also paid just over $3m (£1.9m) in penalties to the Securities and Exchange Commission (SEC) to settle civil charges related to backdating. He was also barred from ever serving as a lawyer, officer, or director of a public company, and suspended from practising.

Comverse has settled charges regarding the allegations of improper backdating of stock options and other accounting problems with federal regulators. The company, which did not admit or deny guilt to the SEC, was not fined. But the company has agreed to undertake significant corporate governance reforms, including making the chairman of the board an independent director, and separating the positions of chairman and CEO.

In 2008, Sorin’s lawyers submitted a motion asking the court to vacate the SEC settlement and judgment, saying that government prosecutors violated promises they made as part of his plea deal. Sorin claimed that when he agreed to plead guilty to criminal charges and pay the SEC $3m to settle civil charges, government prosecutors in turn agreed not to object to his request to avoid jail time.

But two days before he was sentenced, Sorin says in court documents, the government “reneged on this promise” and opposed his request, saying the statutory maximum of five years in jail was an “appropriate” sentence. The SEC has opposed the motion, which is still pending.

Corporate Counsel is a US sister title of Legal Week.

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Nate Raymond legalweek

Willkie Farr & Gallagher has unveiled a new leadership structure that sees two partners take co-chair roles at the head of the firm, reports The New York Law Journal.

Corporate partners Thomas Cerabino and Steven Gartner took up their new roles on 1 January after former chair Jack Nusbaum handed over the reins after leading the New York firm for more than two decades.

The handover had been planned since April 2008, when Cerabino and Gartner were promoted to vice-chair roles that put them in line to succeed Nusbaum.

Both plan to maintain active practices, which was a consideration in naming two leaders instead of one chairman. “Operationally it makes sense to have two people at the helm when they have active practices,” Gartner said.

Gartner and Cerabino previously co-chaired the corporate and finance practice together. Gartner, a private equity lawyer, is in charge of the firm’s relationship with longstanding client Warburg Pincus, while Cerabino, an M&A partner, counts Zurich Financial Services, Colony Capital and Fortress Investment Group as clients.

Nusbaum, who served as Willkie Farr’s chairman for 23 years, has focused on M&A throughout his time at the 700-lawyer firm. He has no plans to retire, having four years ago received one of the few waivers the firm has made of its mandatory retirement age of 65. He will also retain a seat on the firm’s nine-partner executive committee.

“What I really hope is it will allow me in my fading years to concentrate on what I like to do best, which is large M&A transactions and board counselling,” he said.

During the last two years, Willkie Farr has avoided the layoffs and associate deferrals seen at many other law firms. Profits per partner fell by 5.4% to $2.1m (£1.3m) in 2008, a less severe drop than many other leading New York law firms.

This article first appeared on New York Law Journal, a US sister title of Legal Week.