How Pandemic Stress Can Turn Good Lawyers Bad | Why Big Firms' Nonequity Tiers Have Ballooned | An Uptick in SPAC-Related Securities Suits: The Morning Minute
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February 25, 2021 at 06:00 AM
5 minute read
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WHAT WE'RE WATCHING
DESPERATE MEASURES - While the overall financial story for the legal industry in 2020 was surprisingly positive, plenty of attorneys around the country took a revenue hit thanks to COVID-19. And, as Law.com's Charles Toutant reports, some experts are concerned that the strains of struggling to pay bills may push some lawyers over the edge into theft or unethical conduct. With the pandemic now heading into its second year, it's easy to overlook its cumulative impact on one's state of mind, said Stacey Dougan, a former Big Law attorney with a masters in mental health counseling who now provides "attorney well-being" services in Atlanta. "When you're not taking care of yourself, there can be a gradual deterioration of your mental health and your moral compass. Any time judgment is impaired, lawyers are impaired," said Dougan. Meanwhile, the fear of losing financial stability can have a profound impact on the nervous system, she added: "It's stress upon stress upon stress until you start feeling you don't have other options."
A TIER SWELLS - The nonequity partner tier ballooned in 2020 at dozens of large law firms, while far fewer firms shrank their nonequity tier. Meanwhile, the equity partner ranks at many big firms stayed flat or contracted, Law.com's Lizzy McLellan and Christine Simmons report. Several factors are behind the trend: a movement of young lawyers into the partnership as others in the equity tier retire; hesitancy among firm leaders to let lawyers go when demand isn't dramatically dropping; and the pandemic stiffening the criteria for equity partner decisions, first out of a concern to keep up profits. So the phenomenon makes sense—but it still poses risks, according to Tim Corcoran, a consultant who advises law firms on profitability and compensation. "Ultimately if you have a small equity partner class and a large nonequity tier, you end up creating a diamond-shaped firm, instead of a pyramid, and that can be a challenge in its own right," he said.
SPAC-LASH - When Law.com's Vanessa Blum interviewed Sidley Austin partners Joshua DuClos and Michael Heinz last November for a very special Legal Speak episode on the rise of special purpose acquisition companies, the attorneys noted that they were anticipating SPAC-related securities litigation to increase but hadn't seen much up to that point. Now it looks like that prediction is starting to come to fruition. Yesterday, Robbins Geller Rudman & Dowd and Johnson Fistel LLP filed a securities class action in New York Southern District Court against MultiPlan Corp. and other defendants. The suit, filed on behalf of investors in a SPAC called Churchill Capital Corp. III, centers on public disclosures related to the blank check company's 2020 acquisition of MultiPlan, a health care technology and cost analytics business. And earlier this month, Insurance tech firm Clover Health Investments and its top executives were hit with a securities class action in Tennessee Middle District Court. over public disclosures related to Clover's $1.2 million reverse IPO via merger with a SPAC. Stay up on the latest deals and litigation with the new Law.com Radar.
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