Blue Ribbon Red Flag?
November 30, 2006 | Filed Under Regulation, Governance
The Wall Street Journal is providing a preview this morning of an interim report from the Committee on Capital Markets Regulation. The New York Times also gives it a once-over.
The full report is here (danger: 152 page pdf). The three page press release is here for those of us who preferred Cliff’s Notes to Canterbury Tales.
The punch line: excessive regulation and transactional costs are making U.S. companies less competitive in global capital markets.
You think?
Sarbanes-Oxley reform is mentioned, although some say that issue is too hot of a political potato. (Or is it potatoe?)
This nugget warmed my heart (from the WSJ):
The report’s overarching theme is a change in regulatory philosophy. The revised philosophy is one based more on general principles than prescriptive rules, more aware of costs as well as benefits of new rules and less intrusive. It lauds Britain’s Financial Services Authority, which uses “principles”-based regulation and oversees all British financial firms, in comparison with the U.S.’s multiple federal and state banking and securities regulators.
The Wired GC studied philosophy and is a big fan of principles over rules. Why?
– You can never have enough rules.
Many members of Congress, and most regulators I have met, prefer rules. Rules need regs and regs need interpretive guidance and all that needs lawyers inside of government to legislate and promulgate. Then lawyers outside of government are needed to postulate and navigate.
A great example is the aforementioned Sarbanes-Oxley, largely a knee-jerk reaction to notorious financial shenanigans like Enron and WorldCom. But much of what happened in those cases was already actionable under current law. The business community (99%+ of whom try to do the right thing) gets punished for the misdeeds of the errant few.
If nothing else, the Committee report reminds people that it isn’t Fortress America any longer. Companies can go private, or organize or raise capital under laws of more market-friendly jurisdictions. Don’t think for a minute that many members of the Committee (with a heavy New York tilt) aren’t aware of the acsendancy of London as a premiere world capital market. Hence the mention of Britain’s FSA.
Former Goldman CEO and current Treasury Secretary Henry M. Paulson Jr., while not a member of the Committee, has already made these issues a priority.
The report, according to the New York Times, gets it right on the issue of corporate prosecutions:
The report calls on the Justice Department to change its policy on corporate prosecutions. That approach is contained in a memorandum by Larry Thompson, who was deputy attorney general when the corporate scandals erupted. At the moment, prosecutors, in determining whether to bring criminal charges against a company, are permitted to consider whether the company waived lawyer-client privileges to aid the government’s investigation and whether the company is paying defense costs for current or former executives facing criminal charges.
Instead, the report said, the Justice Department should prohibit prosecutors from seeking waivers of lawyer-client privilege or the denial of legal fees for company officials.
Abusing privilege waivers, now there’s a real crime.
Lawyers on the 22 member Committee included Ira Millstein of Weil Gotshal and Thomas Russo, chief legal officer of Lehman Brothers.
The Committee also utilized a Legal Advisory Group:
– John Bostelman, Sullivan & Cromwell
– Adam Chinn, Wachtell Lipton
– Kris Heinzelman, Cravath
– Leslie Silverman, Cleary Gottlieb
– Jeffrey Small, Davis Polk
At least the Committee was able to find seven lawyers who really want reform…
(Update 1 Dec 06): Walter Olson agrees that it’s London Calling. Soon-to-be Gov. Spitzer says of the status quo: worked for me.
Why Partners Leave II - It’s Not About You
November 29, 2006 | Filed Under Law Firm Trends
One name mentioned this year in notable law firm departures was James Sprayregen of Kirkland & Ellis, who left the partnership to join the Chicago office of Goldman Sachs.
WSJ Law Blog had the initial scoop. The National Law Journal recently mentioned Mr. Sprayregen as departing for an in-house position, and the context left open an inference that it was a legal one.
But Crain’s Chicago Business reported earlier this year that Mr. Sprayregen was joing Goldman in a turnaround advisory capacity, not as a lawyer. The Chicago Sun Times further quoted Mr. Sprayregen at the time:
He went on to say that while he’ll always have great affection for the firm, the opportunity at Goldman “is a new challenge that I could not resist.”
Goldman is wildly successful in no small part because it hires and develops extremely talented people. Whether it entered into Mr. Sprayregen’s calculus or not, Goldman is also a place that allows lawyers to develop the business side of their skills. For Exhibit A on this, you need to look no further than CEO Lloyd Blankfein. Mr. Blankfein is also an attorney, who made the jump to the business side at Goldman years ago. (An Exhibit B: Vice Chairman Suzanne M. Nora Johnson is also a lawyer, and practiced with Simpson Thacher).
Maybe at the end of the day, when somebody leaves a law firm, it’s less about the firm and more about the person. Sort of like this…
Why Partners Leave
November 28, 2006 | Filed Under Law Firm Trends
Two last items from Leigh Jones’ excellent article in the National Law Journal. Both involve partners departing law firms rather than the more common trend tilted at last week involving associates.
Today, we look briefly at law firm partners departing to become GC. A number of these departures are mentioned:
Some of the more notable moves in recent months from firms to their clients include James Sprayregen from Kirkland & Ellis to Goldman Sachs Group Inc.; Robert Osborne from Jenner & Block to General Motors Corp., and Kurt Wimmer from Covington & Burling to Gannett Co.
Although having top performers join clients is better than a defection to a competing firm, law firms should not overstate the advantages, said Mitchell Dolin, a partner at Covington & Burling in Washington.
After all, the firm has already won over the client before it hires the attorney to join its own ranks.
“The hiring of a general counsel is a really singular decision,” he said. “It’s more of a tribute to the individual and the skill set of the individual.”
I think Mr. Dolin has it exactly right. A partner with a major law firm leaving to become a GC may do it for a lot of reasons. The reality is that as a GC you will get closer to a client’s business consistently than you can ever get as an outside counsel. True, you may be an uber-counselor with the gravitas to be consulted on major acquisitions or a go-to trial lawyer who gets the call when bet-the-company litigation is filed.
But you aren’t in there every day, seeing the law in every way. And when it’s good, there’s nothing better.
And when it’s not, watch out. After all, as a GC you only have one client. If a problem develops, there’s no remaining “book of business” to fall back on.
We will close out this fixation with law firm departures tomorrow, with one that has been looked at, but not on 100x magnification.
Why Associates Leave III, or “The Ol’ Bait-and-Switch”
November 24, 2006 | Filed Under Law Firm Trends
We’ll say goodbye to the subject of associates departing early with a look at the beginning (here are parts one and two).
The American Lawyer will report next week that some law firm summer associates wonder what life will be like “when the party’s over.” Writer Tamara Loomis digs in to the survey results to serve up the real world view of pre-lawyers in their second season. Some firms call these lucky clerks “summers.”
A sample of why things may have changed over the years (the named quote is from Jennifer Gotch, director of recruiting at Arnall Golden Gregory in Atlanta):
There’s also a generational difference. These aspiring lawyers want to have a life, too. “They’re really looking for a balance — they’re not interested in the churn-and-burn,” Gotch says. Summers want to know about alternative work arrangements, such as part-time work and telecommuting, and the firm’s family-friendliness, including child care facilities and paternity leaves. “Work-life balance is not some faddish buzzword, but a pending crisis that will, eventually, affect your firm’s prosperity and longevity,” warned a clerk at Cadwalader, Wickersham & Taft.
Does this clerk expect an offer of $150,000 per year to start? Nights and weekends off, too?
While there seems to be an admirable attempt to provide a dose of reality for summers, sometimes it was a bit too real:
At other firms, things sometimes got too authentic. “Keep summers away from the horrendous partners that are hard to work with and make people cry,” whimpered one summer at fifth-ranked Cozen O’Connor. A clerk at 156th-ranked Cadwalader grumbled about the “torture of working for an associate who is notoriously awful to work with.” Apparently, there’s reality, and there’s reality, summer-style.
Cry?
In my world, this is 100% wrong. Any firm that wants summers to make an intelligent decision should have them work with a curmudgeon or two, not just the stunt Perfect Partner called up from central casting.
The top three firms in TAL’s survey of summers satisfaction:
Congratulations to these firms. It would be interesting if TAL goes back in two years and sees how associate satisfaction correlates with the summers 2006 hit list.
The Wired GC has obtained a copy of the training manual used at one of the top-ranking firms:
And, in a stunning coup, The Wired GC also was emailed a photo from an event for summers earlier this year at a cellar-dwelling white-shoe firm in Gotham City (note: update firm policy on cellphones with cameras):
If you’re partner material and you know it clap your hands….
Pardon Me
November 23, 2006 | Filed Under In the News
President Bush grants legal pardon to this year’s turkey, Bill.
As in Bill Able Hour:
Hooray! Another year of stuffing envelopes with big invoices. And don’t forget the sauce.
(The Wired GC actually prefers slow-roasted lame duck; the President apparently had a Plan B for Camp David.).
Happy Thanksgiving to all!
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