Fueled by Weil Gotshal & Manges partner rates in the $950/hour vicinity, “fees for lawyers, accountants and financial advisers in the Lehman case may reach $906 million, according to [bankruptcy lawprof] Lynn LoPucki”. (Bloomberg, Oct. 9). Elie Mystal at Above the Law notes a recent fee survey and concludes that “Lehman is getting the most expensive bankruptcy money can buy”.

Actually, bankruptcy professionals might earn even a very rich keep if they provided a quick and decisive way to allocate losses from the failure, move Lehman assets to their most productive uses and bring relative certainty to all parties. The prospect instead of slow, chancy, and hard-fought wrangling is one major reason why the administratively assisted “speed bankruptcy” model of financial institution reorganization, seen in the Washington Mutual case, has been winning praise from knowledgeable observers (e.g. Alex Tabarrok). If speed bankruptcy seems well suited to the crisis, one reason is that conventional, protracted, lawyer-run bankruptcy seems so ill-suited. More: Roger Parloff, Fortune “Legal Pad”, American Lawyer.

Last year a Connecticut court convicted Illinois contractor Mark R. Koch of larceny and ordered him to repay nearly $40,000 given him by Connecticut businessman Mark Poveromo to construct a building to house the latter’s pet food shop. So why did a Missouri bankruptcy judge order Poveromo to pay the money back to Koch? (John Christoffersen, AP, “Bankruptcy judge orders victim to pay back thief”, Sept. 22).

• “Law school is not such a leap” for licensed Nevada prostitute’s next career move — hey, we didn’t say that, Robert Ambrogi at Law.com did [Legal Blog Watch, Bitter Lawyer]
• Today’s representative class-action plaintiff: “For five years, her diet consisted almost exclusively of Chicken-of-the-Sea tuna…” [PoL]
• Prolific California disabled-access filer Jarek Molski ordered to pay fees for “scorched-earth” tactics in one case, but wins a second [Metropolitan News-Enterprise via Bashman]
• Another sperm donor surprised by legal obligation to pay child support [Santa Fe, N.M. Reporter; earlier]
• “Lawyer Fees Jumped 50% After Bankruptcy Law Change” [ABA Journal]
• “Whatever it takes to win a case”, and checking out jurors’ Facebook profiles is the least of it [NLJ]
• High-profile U.K. attorney Nick Freeman registers his nickname “Mr. Loophole” [Times Online a while back]
• When can a plaintiff claiming sexual assault sue anonymously? Courts will apply mushy balancing test [NYLJ]
• Hold on to your hats, looks like Geoffrey Fieger is online [Fieger Time]

Asbestos litigation continued to grow during the 1980s: by 1992, fully 100,000 claims had been resolved, but another 100,000, yet unresolved, had been filed.

A novel means of processing asbestos claims was initiated in 1988, when the Johns-Manville corporation emerged from bankruptcy and established the Manville Personal Injury Settlement Trust, the first “bankruptcy trust” set up to pay out money to asbestos claimants. Unfortunately, plaintiffs’ attorneys controlled the trust’s claimants committee and set up procedures for the trust that were advantageous to themselves, rather than potential claimants. The trust rules minimized requirements of proof of actual injury or causation (exposure to Johns-Manville products). The trust thus paid out a lot of money quickly to the attorneys, all the while exhausting its funds for potential future claimants.

In just its first nine months of operation, the trust paid out some $500 million to 12,600 claimants — and by the end of 1989, 89,000 more claimants were outstanding. Eventually, the trust had to sharply curtail payments to claimants — to 10 percent in 1995, and 5 percent in 2001. Injured claimants were literally getting a nickel on the dollar. “As of June 30, 2006, the trust had received more than 773,000 claims and paid out about $3.4 billion–just $4,400 per claimant.”

• Canada free speech: Islamic group files complaint against Halifax newspaper over cartoon of burka-wearing terror fan; two more libel suits aimed at online conservative voices; growing furor over complaint against Steyn/Macleans [National Post]
• More than 5,000 students committed crimes last year in Philadelphia schools, but none were expelled — consent decrees tying system’s hands are one reason [Inquirer]
• U.K.: Man threatened with legal action for flying pirate flag as part of daughter’s birthday party [Guardian]
• Bankruptcy judge doesn’t plan to accept at face value Countrywide’s claim that it generated false escrow documents by mistake in foreclosure [WSJ, WSJ law blog]
• Amid bipartisan calls to step down, Ohio AG Marc Dann [Apr. 19, May 6] hires an opposition researcher [Adler @ Volokh] on top of Washington lobbyist [Legal NewsLine], after being rebuked by judge for political suit [Dispatch]. And where’s that ethics form on the Chesley flight? [Dayton Daily News]
• Missouri med-mal claims fall sharply after legislated damages curb [Springfield News-Leader]
• More on Dartmouth prof Priya Venkatesan, the one who wants to sue her students — as suspected, she’s a devotee of deconstructionist Science Studies [Allen/MtC; earlier]
• Covert plan to sabotage Chinese economy? [Wilson Center event]
• What, never? Well, hardly ever: Docs continue to assail notion that various complications such as patient delirium, clostridium difficile infection, iatrogenic pneumothorax, etc. — not to mention falls — are “never events” [KevinMD various posts; earlier]
• Mich. high court agrees anti-gay-marriage amendment bars municipal health benefits for domestic partners, just what key proponents had claimed it wouldn’t do [Rauch @ IGF, Carpenter @ Volokh, earlier]
• Private service rates the safety of charter air providers — but can it afford the cost of being sued after giving a bad rating? [Three years ago on Overlawyered]

• Raelyn Campbell briefly captured national spotlight (”Today” show, MSNBC) with $54 million suit against Best Buy for losing laptop, but it’s now been dismissed [Shop Floor; earlier]
• Charmed life of Florida litigators Stanley and Susan Rosenblatt continues as Miami judge awards them $218 million for class action lawsuit they lost [Daily Business Report, Krauss @ PoL; earlier here, here, and here]
• Lerach said kickbacks were “industry practice” and “everybody was paying plaintiffs”. True? Top House GOPer Boehner wants hearings to find out [NAM "Shop Floor", WSJ law blog]
• It’s Dannimal House! An “office rife with booze, profanity, inappropriate sexual activity, misuse of state vehicles and on-the-job threats involving the Mafia” — must be Ohio AG Marc Dann, of NYT “next Eliot Spitzer” fame [AP/NOLA, Adler @ Volokh, Above the Law, Wood @ PoL; earlier]
• Sorry, Caplin & Drysdale, but you can’t charge full hourly rates for time spent traveling but not working on that asbestos bankruptcy [NLJ] More: Elefant.
• Fire employee after rudely asking if she’s had a face-lift? Not unless you’ve got $1.7 million to spare [Chicago Tribune]
• Daniel Schwartz has more analysis of that Stamford, Ct. disabled-firefighter case (May 1); if you want a fire captain to be able to read quickly at emergency scene, better spell that out explicitly in the job description [Ct Emp Law Blog]
• As expected, star Milberg expert John Torkelsen pleads guilty to perjury arising from lies he told to conceal his contingent compensation arrangements [NLJ; earlier]
• Case of deconstructionist prof who plans to sue her Dartmouth students makes the WSJ [Joseph Rago, op-ed page, Mindles H. Dreck @ TigerHawk; earlier]
• How’d I do, mom? No violation of fair trial for judge’s mother to be one of the jurors [ABA Journal]
• First sell the company’s stock short, then sue it and watch its share price drop. You mean there’s some ethical problem with that? [three years ago on Overlawyered]

We’ve reported before (Dec. 24-27, 2001; May 7, 2005; parallel case in New York, Jul. 10, 2004) on the lawsuit charging Michigan high school sports directors with sex discrimination for scheduling girls’ sports in different seasons than boys’. Such cases are subject to “one-way” attorney fee shifting (plaintiffs collect if they win, but need not fear paying if they lose) and the rules for fee calculations are generous. Now the judge has approved a plaintiff’s fee that the athletic directors’ association say threatens to push their group into bankruptcy; opponents say it’s their own fault for resisting so long. Nearly $3 million in fees plus interest are set to go to Kristen Galles, a solo practitioner in Alexandria, Va., whose large number of billed hours at $390/hour may relate to her having worked without a paralegal or secretary. (Julie Mack, “Michigan High School Athletic Association owes $7.4 million in legal fees, interest to lawyers who won case to change the girls sports season”, Kalamazoo Gazette, Apr. 21)(via ABA Journal); “Athletic Group Ordered To Pay $7M”, AP/LexisOne, Apr. 2).

Andrew M. Grossman and James L. Gattuso analyze the CPSC Reform Act, S. 2663 (the update to S. 2045). We discussed Feb. 20 and Feb. 25, as well as briefly Jan. 1. Update: After the jump, Senator DeMint’s office provides the “Top Ten Reasons to Oppose the CPSC “Reform” Act (S. 2663)”

Continue Reading »

The high-profile Los Angeles attorney, who’s made frequent appearances in these pages, is headed to federal prison following his conviction for tax evasion, money laundering and bankruptcy fraud (see Jun. 24). U.S. District Judge Stephen V. Wilson chided Yagman for testimony “so transparently untrue in so many areas.” (Scott Glover, “Attorney Yagman sentenced to 3 years for tax evasion, fraud”, Los Angeles Times, Nov. 28). Best known for his lawsuits against police departments, the much-criticized Yagman has also represented the principals in a famous Americans with Disabilities Act filing mill that launches mass complaints against small businesses and settles them for cash (Mar. 18, 2005; Nov. 4, 2006). According to the L.A. Times account, he “twice was suspended by the state bar for charging clients ‘unconscionable’ fees.” When a retired police sergeant sent him a letter expressing “glee” over his indictment, Yagman promptly sued him (Jan. 5, 2006). Norm Pattis (Nov. 29) reflects: “I wonder whether Yagman became a Leona Helmsley-type figure. The law is for little people, he appears to have thought.”

John L. Smith, whom the Las Vegas Review-Journal describes as its most widely read columnist, “has filed for bankruptcy after a two-year legal battle with Sheldon Adelson, owner of The Venetian resort. Adelson is suing Smith and his book publisher, Barricade Books, and alleging libel based upon Smith’s 2005 book ‘Sharks in the Desert: The Founding Fathers and Current Kings of Las Vegas.’ The Review-Journal was not named in the lawsuit.” Smith concedes the muckraking book contained inaccuracies about Adelson but takes issue with the tycoon’s claim of damages: “in the time since this book was published, Adelson has gone from 15th richest man in the world, according to the Forbes annual ratings, to sixth, so it’s hard to see how he has been harmed.” Barricade Books, associated with the late Lyle Stuart, also filed recently for bankruptcy. (A.D. Hopkins, ” Columnist pursues bankruptcy protection”, Las Vegas Review-Journal, Oct. 12) (via Romenesko).

“Three and a half years after launching a high-profile legal attack on Linux, The SCO Group has filed for Chapter 11 bankruptcy protection. …the company’s legal case was dealt a crushing blow in August, when the federal judge overseeing its case, Dale Kimball, concluded “that Novell is the owner of the Unix and UnixWare copyrights.” Presumably the law firm of Boies, Schiller & Flexner, which was pursuing SCO’s ambitious anti-Linux claims on contingency, has had to scale back its expectations of a payday (Stephen Shankland, CNet, Sept. 14). Earlier: Nov. 6, 2003, Nov. 13, 2004. More: Roger Parloff, Fortune “Legal Pad”.

• Pearson Pants update: dry cleaners offered to drop their fee demand if Pearson would end case, but he declined [Marc Fisher, other Washington Post coverage, Beldar]
• Check your oil, ma’am? On second thought, if it’s going to get us sued, never mind [Reiland/Pittsburgh Tribune-Review]
• “Surprising and uncommon” resolution of med-mal case: Nebraska Methodist Health System admits error, cooperates with family on video memorializing victim and educating other hospitals about aortic dissection [Omaha World-Herald, Chamber reprint]
• Heated email exchange between perennial Overlawyered favorite Jack Thompson and Take Two game company exec [Ambrogi]
• Putting her image on a Hallmark card? Now that’s degrading and exploitative enough to make Paris Hilton want to sue [K.C. Star]
• Uncle sues nephew over season tickets to Chicago Bears at 40-yard line [Crain's Chicago Business]
• Hurt her teeth on McDonald’s cherry pie, hurt her teeth on cheeseburger soon after — and what’s this about forged dental-work receipts? [Seattle Times]
• Wisconsin snuff users may soon be rolling in coupons following settlement of antitrust class action, lawyers to pocket $17 million [AP/Green Bay Press-Gazette]
• New at Point of Law: fiasco of UC Irvine’s withdrawn offer to Chemerinsky; judge says $500/hr is enough for lawyers in Northwest bankruptcy; law firm advertises for heart attack victims to sue over lack of defibrillators in public places; Astroturf detected in Washington-state insurance-suit referendum fight; NY Times takes skeptical look at Mount Sinai’s Selikoff Center; Jerry Brown sure fooled us, says San Diego paper; Ted expands his empire; and much more;
• A topic on which we’ve had a lot to say over the years — to what extent does the Americans with Disabilities Act apply to websites? — may be heating up again [Corporate Counsel]
• Thanks for the incoming links from, among others, Instapundit (on Ted’s reclining-car-seat post, which has drawn a bodacious number of comments), Patterico (on Jarek Molski), Bainbridge (on animal welfare laws), and Adam Smith Institute (on lawyers suing each other: “Such a pity that only one side can lose”.)

Assisted by Loyola lawprof Dane Ciolino, critics are now before a Fifth Circuit panel trying to uncover the supporting documents that back up the division of fees among lawyers following a fuel-gauge-damage settlement against Shell; the case drew national attention after the lawyers in charge prevailed on a federal judge to conceal the allocation of fees from public scrutiny, including scrutiny by members of the client class as well as dissident lawyers (Apr. 9, Jun. 7).

When Little [fee committee attorney F.A. Little] contended that naming someone other than the committee to evaluate four years of work by lawyers in the case wouldn’t yield the best result, Judge Edith Jones shot back, “Well, at least you get disinterestedness.”

That quality, Jones said she learned from her days as a bankruptcy attorney, is essential to “anyone who is dividing up the debtor’s money.”

In an interview after the hearing, Ciolino said the public needs to know everything that went into deciding attorney fees in the Shell class action. “The public distrusts lawyers, especially in class-action cases, because it looks like it’s all about fees,” he said.

(Susan Finch, “Data used to split fees sought”, New Orleans Times-Picayune, Aug. 10).

• Criminal charges dropped against Oregon 13-year-olds over fanny-swatting in school corridors [CBSNews.com, Malkin, KGW.com and AP; earlier]


• Elasticity of “medical error” concept: Medicare will stop paying hospitals for treatment of “reasonably preventable” injuries that happen in hospitals, such as patient falls — we all know those are preventable given enough duct tape [NCPA, Right Side of the Rainbow; and before assuming that bed sores invariably result from negligent care, read this](more: Turkewitz)


• Yale University Press beats back libel suit in California court by Muslim charity over allegations in book scrutinizing terrorist group Hamas [Zincavage]


• Law firms, including Philadelphia’s senatorially connected Kline & Specter, already advertising for clients following Mattel toy recall [Childs]


• First class action against RIAA over its scattershot anticopying suit campaign [P2PNet]


• Four Oklahoma inmates claim copyright to their own names, demand millions from warden for using those names without permission, then things really start getting wild [UK Telegraph and TechDirt via Coleman]


• UCLA’s Lynn LoPucki, scourge of corporate bankruptcy bar, has another study out documenting soaring fees [WSJ Law Blog]


• Man who knifed school headmaster to death is expected to win right to remain in Britain on grounds deporting him would violate his human rights [Telegraph]


• Among targets of zero tolerance bans: jingle of ice cream trucks in NYC, screaming on Sacramento rollercoasters [ABCNews.com]


• Does California antidiscrimination law require doctors to provide artificial insemination to lesbian client against religious scruples? [The Recorder]


• Alabama tobacco farmers got $500,000 from national tobacco settlement, though fewer than 300 acres of tobacco are grown in Alabama [five years ago on Overlawyered]

“An en banc Superior Court panel has ordered a new trial in a case in which a western Pennsylvania trial judge awarded $102.7 million in 2003 to one of the owners of a property company identified as being at the center of a mid-1980s Ponzi scheme.” Two couples, Thomas and Barbara Reilly and Edward and Karen Krall, each jointly owned half the stock in Canterbury Village Inc., a property development that was oversold in what was later described as a Ponzi scheme that bilked thousands of investors. When Canterbury Village landed in bankruptcy proceedings, an Ernst & Young predecessor was called in to organize the books, which were in great disarray. According to a judge’s footnote, “the male halves of Canterbury Village’s two couple-owners pleaded guilty to criminal charges stemming from the Ponzi scheme.” Mr. Reilly served about four years on fraud and tax evasion charges. The eventual reorganization plan approved by the court barred the Reillys and Kralls from any stake in the emerging business entity.

The Reillys then proceeded to sue Ernst & Young, alleging that its report had contained inaccuracies which had injured their business interests. When the Reillys filed requests for admissions in support of their allegations, Ernst first missed a deadline to respond and then, granted a do-over, omitted to include a required verification from its lawyer. The judge in response deemed Ernst to have agreed to all the requested admissions — in effect, preventing the firm from contesting the key elements of the Reillys’ case. A verdict was then entered on behalf of Barbara Reilly that “included $34 million for her ownership interest in Canterbury Village — half of the $68 million appraised value — plus an additional $50,945,222 in interest, based on a rate of 6 percent per annum beginning in 1986, for a total compensatory damage award of $84,018,989. Yeager also awarded her $18.17 million in punitive damages for a total verdict of $102,718,989.” The appeals panel has now decided, however, that loss (in effect) of its right to mount a substantive defense is too harsh a sanction for Ernst’s procedural fumblings, so a retrial is on its way. (Asher Hawkins, “Retrial Ordered in Nine-Figure Fraud Case”, Legal Intelligencer, Jul. 27; Karen Kane, “Seven Fields developer faults Ernst & Young in lawsuit”, Pittsburgh Post-Gazette, Aug. 25, 2002).

• Patent suit by firm called Parallel Processing demands that all Sony PlayStation 3 consoles be impounded and destroyed [ArsTechnica, Slashdot]


• It’s not all going to Edwards: a scorecard on presidential campaigns’ law-firm fundraising [National Law Journal]


• Link roundup on Oregon criminal charges against fanny-swatting 13-year-olds [Right Side of the Rainbow; earlier]


• New at Point of Law: Spitzenfreude is mirth derived from ethical pratfall of NY’s moralist governor; Florida’s insurance fiasco; more on those “medical” bankruptcies; Alabama judge appoints special prosecutor in Dickie Scruggs affair after feds take a pass; and much more;


• One hurdle for court action by survivors of slain Middle East contractors against Blackwater: the four men had signed contracts agreeing not to sue their employer [Henley; W$J]


• Saying swim diaper should suffice, Akron mom and “fair housing” advocates sue condo that barred pre-potty-trained kids from pool [AP/FoxNews.com]


• Not only are those punitive new Virginia traffic laws unpopular, but a judge has just declared them unconstitutional as well [Washington Post; earlier here and here]


• Pepsi settles class actions over minute quantities of benzene that might form when soft drink ingredients combine [Reuters, Food Navigator, Journal-News]


• U.K. considers making it easier for unmarried cohabitators to go to court when their households break up [Times Online]


• Did a securities fraudster use protracted depositions to browbeat his victims? [Salt Lake City Tribune]


• “Victims’ Rights Amendment” to U.S. Constitution, promoted as giving crime victims a fairer shake, is bad idea for lots of reasons [eight years ago on Overlawyered]

A jury has convicted prominent attorney Stephen Yagman, who’s prospered greatly filing police-misconduct and civil-rights lawsuits in Los Angeles, of 19 counts of attempted tax evasion, bankruptcy fraud and money laundering. Prosecutors said Yagman led a lavish lifestyle while declaring bankruptcy, hiding assets from creditors, and failing to pay payroll tax. (”Famed SoCal civil rights attorney found guilty of tax fraud”, AP/Riverside Press-Enterprise, Jun. 22; Patterico, Jun. 22 and Jun. 23 (not sharing Duke lawprof Erwin Chemerinsky’s somber view of the verdict)). Last year (Jul. 5, 2006) Yagman sued a retired police detective who in a letter expressed “glee and profound satisfaction” over the lawyer’s indictment. For Yagman’s other appearances on this site, see Feb. 23, 2000, Mar. 18, 2005, Apr. 3, 2006, and Nov. 4, 2006.

Meanwhile, the city attorney of Los Angeles, Rocky Delgadillo, who’s figured in these columns a couple of times (grandstanding on Grand Theft Auto, Jan. 28 of last year; defending the city’s $2.7 million settlement of the firefighter dog food case, Nov. 22) seems to have landed in an ethical spot of bother himself (more).

More things that it’s really inadvisable to do if you’re a lawyer:

• Tell a judge to her face in open court that you consider her “a few French fries short of a Happy Meal” (William Smith of McDermott Will & Emery LLP, facing possible exclusion from the right to practice in the bankruptcy court in question; Crain’s Chicago Business);


• Show up in a hospital room to recruit as client a heavily medicated crash victim, then discourage him from going after the other driver’s personal assets in the case, without mentioning that the other driver is your own wife’s grandfather (Jeffrey Hark of Cherry Hill, N.J., referred for a state-bar ethical investigation although a legal-malpractice claim against him failed for lack of a showing of damages; NJLJ);


• As part of a $59 million settlement of Benlate fungicide-damage cases, accept a secret $6 million side payment from defendant duPont in exchange for (among other services) agreeing to file no more cases (Roland R. St. Louis Jr. and Francisco R. Rodriguez of Miami, disbarred and given a two-year suspension respectively; NLJ, Elefant).