Fee Tracker: Sex Scandals See Private School Legal Bills Rise
A look at some of the notable legal fees behind clients in the news.
November 17, 2017 at 09:17 PM
14 minute read
In this age of increased competition in the high-end market for legal services, it helps to know what your rivals are making—or missing—from certain engagements. Fee Tracker will periodically seek to help you sift through public records and other data showing the money behind the myriad bankruptcies, IPOs, lobbying engagements and other client matters that emerge each month. If you know of anything we missed or wish to share a confidential tip, contact me at [email protected].
While the national #MeToo campaign mints new clients for myriad law firms as it roils the entertainment and political establishment, as well as an increasing number of other industries, sex scandals shaking the corridors of elite prep schools are also continuing to generate work for even more lawyers.
The New York Times, in a late September story, noted the uptick in investigations at schools including Choate Rosemary Hall in Wallingford, Connecticut; Phillips Academy in Andover, Massachusetts; and the Pingry School in Basking Ridge, New Jersey. The story said one unidentified school had spent at least $2 million on a comprehensive report detailing decades of sexual indiscretions between faculty members and students.
New Hampshire's Phillips Exeter Academy has incurred more than $5.2 million in legal fees and other related expenses so far this year in commissioning its own inquiry into sexual misconduct, according to a report earlier this month by The Portsmouth Herald, which noted that the private school is being advised in litigation by Nixon Peabody. The American Lawyer reported earlier this year on Phillips Exeter's hire of Holland & Knight and Boston-based Choate, Hall & Stewart to conduct separate investigations into the school's handling of sex allegations.
St. Paul's School, another prep school in Concord, New Hampshire, released this month a 30-page report into a half-decade of sexual abuse cases, according to the Union Leader, which noted that the findings were compiled by former Massachusetts Attorney General Scott Harshbarger, now senior counsel at Boston's Casner & Edwards after joining the firm in 2015 from Proskauer Rose. Harshbarger's report will be reviewed by the New Hampshire Attorney General's Office. It was unclear by the time of this story how much Casner & Edwards had received for its work, although a tax filing by St. Paul's School shows that it paid $389,305 to Manchester, New Hampshire-based McLane Middleton for legal services in 2015-16.
The New York Times recently reported on The Brearley School in Manhattan admitting that four former faculty members had engaged in sexual misconduct with students between the 1950s and 1990s. Covington & Burling, retained earlier this year by the prestigious all-girls school to investigate the allegations, released its findings in late October. Legal fees related to Covington's work—the firm released another report earlier this year after being hired by Choate Rosemary Hall for a similar inquiry—are not yet available, although The Brearley School paid $110,797 in 2015-16 to New York's Rosenberg & Estis and $209,581 in 2014-15 to Fried, Frank, Harris, Shriver & Jacobson, according to federal tax filings by the school.
One private school that has resisted calls to conduct its own investigation is The Bronx, New York-based Horace Mann School, itself the subject of feature stories in The New York Times Magazine and The New Yorker, the latter of which touched on a legacy of alleged sexual misconduct involving just one former teacher. Tax records show that Horace Mann paid $1.55 million in 2014-15 to Schulte Roth & Zabel, which received another $2.67 million from the school for legal services in 2013-14. The firm's work for Horace Mann, which has been noted in previous stories about sex abuse survivors, has included representing the school in an insurance coverage dispute over monies paid to victims.
Skadden Sees Red Over Ukraine Work
Skadden, Arps, Slate, Meagher & Flom's work a few years ago for Ukraine's Ministry of Justice has come under scrutiny this year as a result of the U.S. Department of Justice's special counsel inquiry into President Donald Trump's former campaign manager Paul Manafort Jr., who was indicted late last month on federal conspiracy charges that kept the spotlight on Skadden.
The Kyiv Post picked up this week on a late September report by The New York Times that touched on a $567,000 sum refunded to Ukraine by Skadden over the summer. The firm reportedly received more than $1 million for its work putting together a 2012 report examining the legal basis for criminal charges against ex-Ukrainian Prime Minister Yulia Tymoshenko, who had run afoul of the country's former Kremlin-backed ruler Viktor Yanukovych. The latter was ousted in a popular revolt in early 2015 that had ramifications for several global law firms.
In the recent Kyiv Post report, the newspaper noted that London-based Skadden associate Alexander Van Der Zwaan, a son-in-law of Russian oligarch German Khan, was part of the firm's legal team probing Tymoshenko's incarceration. Van Der Zwaan's Skadden biography page notes his role “serving as a rule-of-law consultant to the Ministry of Justice of Ukraine and writing a report on due process issues associated with a high-profile prosecution.” Khan served as an intermediary between Skadden and Ukrainian officials, according to the Kyiv Post. One of Manafort's daughters, Andrea Manafort Shand, happens to be a former Skadden associate.
Capital Markets Cash
Everett, Washington-based figurine maker Funko Inc., a staple in the pop culture toy market, had one of the worst stock market debuts in years after raising roughly $125 million through an initial public offering earlier this month on the Nasdaq exchange. Funko's lawyers from Latham & Watkins incurred roughly $3 million in legal fees and expenses through the offering, according to securities filings, which show that Wilson Sonsini Goodrich & Rosati took the lead for underwriters and Hogan Lovells advised certain selling stockholders. Ex-Sidley Austin partner Tracy Daw serves as Funko's general counsel, a position that paid him $519,049 between July 18, 2016, and Dec. 31, 2016, according to securities filings.
Biotechnology company Allena Pharmaceuticals Inc., which develops enzymes used to treat kidney disorders, raised $75 million through an IPO earlier this month on the Nasdaq. Securities filings show that the Newton, Massachusetts-based company, advised by Goodwin Procter, incurred $1.25 million legal fees and expenses for its IPO, which saw the underwriters turn to Davis Polk & Wardwell for counsel.
Spero Therapeutics Inc., an antibiotic biotech firm developing treatments for drug-resistant bacterial infections, raised $77 million through its recent listing on the Nasdaq. Mintz, Levin, Ferris, Cohn, Glovsky and Popeo advised the Cambridge, Massachusetts-based company on its IPO, which securities filings show generated $1.55 million in legal fees and expenses. Latham took the lead for underwriters on the listing.
Sogou Inc., a Chinese search engine backed by Hong Kong-based conglomerate Tencent Holdings Ltd., raised $585 million through an IPO earlier this month on the New York Stock Exchange to achieve a valuation of some $5 billion. Goulston & Storrs, offshore firm Conyers Dill & Pearman and China's Commerce & Finance Law Offices advised Sogou on the listing, one that securities filings show generated $990,000 in legal fees and expenses. Davis Polk and China's Global Law Office took the lead underwriters on the IPO.
Beijing-based online financial planning platform Jianpu Technology Inc. raised $180 million this week through an initial public offering on the NYSE. Securities filings show that the listing generated at least $1.8 million in legal fees and expenses for Jianpu's lawyers from Skadden, offshore firm Walkers and China's Fangda Partners. Underwriters on the listing were advised by Simpson Thacher & Bartlett and China's Haiwen & Partners.
Bandwidth Inc., a Raleigh, North Carolina-based company that helps businesses with voice and text communication, raised $80 million through an IPO earlier this month that generated $2.5 million in legal fees and expenses for its lawyers from Latham, according to securities filings. Davis Polk counseled underwriters on the listing by Bandwidth, which in 2010 hired its general counsel W. Christopher Matton, a former partner at a predecessor of Kilpatrick Townsend & Stockton.
Davis Polk also counseled the underwriters on an IPO last month by Metropolitan Bank Holding Corp., the parent of New York-based Metropolitan Commercial Bank, which raised $101 million and yielded $400,000 in legal fees and expenses for the issuer's lawyers from Washington, D.C.-based banking boutique Luse Gorman Pomerenk & Schick, according to securities filings. Michael Guarino is Metropolitan Bank's general counsel.
Loose Change
The fallout from the water crisis in Flint, Michigan, has reportedly cost the city more than $15 million in legal bills. Reed Smith has billed Flint for more than $361,000 for its role representing former emergency manager Darnell Earley, according to MLive.com, which notes that the Am Law 100 firm has billed up to $375 per hour for its services. Detroit's Perkins Law Group has billed another $136,000 to Flint for its work on behalf of Earley.
Ropes & Gray announced on Nov. 15 its hire of investment funds counsel Keren Rimon in Boston, where she was most recently senior vice president of private funds at the Harvard Management Co. Inc. The most recent federal tax filing for the Harvard University endowment reveals that it paid $2.845 million in legal fees to Ropes & Gray in 2014-15.
The U.S. Court of Federal Claims ordered the federal government this month to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer in a long-running case over the denial of a permit to fill in wetlands, as reported by sibling publication The National Law Journal.
Newsday reports that the town board of Oyster Bay, New York, has approved the payment of $676,716 in fees to Paul, Weiss, Rifkind, Wharton & Garrison for the firm's work in a dispute with former concessionaire Harendra Singh, who has been embroiled in a litigation battle with the Long Island municipality. Singh was arrested in 2015 and charged with bribing Oyster Bay employees in exchange for guaranteeing loans to operate food concessions in the town. Quinn Emanuel has received $2.2 million for its work representing Oyster Bay, according to Newsday.
A police wiretapping case in South Bend, Indiana, has generated $802,859 in attorney fees for Faegre Baker Daniels and Osceola, Indiana-based Dixon, Wright & Associates, as well as another $283,535 for May Oberfell Lorber, according to the South Bend Tribune.
And Detroit-based Am Law 200 firm Miller, Canfield, Paddock and Stone has put forth a $15,000 proposal to serve as bond counsel for Imlay City, Michigan, according to the Tri-City Times Online. Miller Canfield's leadership told The American Lawyer this summer that nearly 60 percent of its annual income is derived from alternative fee arrangements.
Out of Pocket, In the Red
Sibling publication Legal Week reports that Locke Lord has been hit with a record $656,018 fine by the U.K.'s Solicitors Disciplinary Tribunal over the actions of former London-based partner Jonathan Denton, who left the firm in mid-2015 after being accused of illicit activities with client accounts. The SDT's judgment revealed the details of Denton's £21 million investment scheme and subsequent arrest at Birmingham Airport in England. Locke Lord hired Denton in March 2012 from private lender Berkeley House Investments to bolster its office in London, which had opened a few months before. Locke Lord has since brought in new management in London.
Arnold & Porter Kaye Scholer, formed earlier this year through a merger, filed on Nov. 15 in a Manhattan federal court a suit against Equatorial Congo Airlines SA seeking the repayment of more than $1 million in unpaid legal fees, as noted by legal newswire Law360. The firm's nine-page complaint against the Republic of the Congo's national airline states that the company used to be a client of predecessor firm Kaye Scholer, which was engaged to advise on the financing of an aircraft purchase from The Boeing Co. Mentioned in the complaint is the Bank of Utah, in the news earlier this month for its aviation industry expertise following the release of the so-called Paradise Papers leaked out of leading offshore firm Appleby.
Sibling publication Texas Lawyer reports that Tony Buzbee, a high-flying Lone Star State litigator who recently bought himself World War II era tank, is suing three unnamed Louisiana lawyers and another named defendant in a Houston court, claiming that that quartet interfered with a contract that could have earned him up to $10 million in fees.
Ellwood City, Pennsylvania-based Appalachian Lightning Systems Inc. filed for bankruptcy on Nov. 3 in Pittsburgh, where the company had provided replacement lighting for the Steel City's airport. In court papers, the debtor said it owed $300,000 to Arent Fox; $50,000 to Buchanan Ingersoll & Rooney; $32,831.70 to Pittsburgh's Meyer, Unkovic & Scott; and $17,822.92 to Ogletree, Deakins, Nash, Smoak & Stewart. Pittsburgh lawyer Robert Lampl is representing Appalachian Lighting in bankruptcy court.
So far 2017 has proven to be a big year for yoga bankruptcies. Bikram Choudhury Yoga Inc. filed for Chapter 11 protection on Nov. 9 in Santa Barbara, California, owing $5.1 million to ex-president and CEO Petra Starke and another $8 million to former top in-house lawyer Minakshi “Miki” Jaffa-Bodden, according to court filings. Jaffa-Bodden has spent more than two years trying to collect on a judgment against the company's namesake, the founder of Bikram Yoga. Bikram Choudhury, who has been accused of sexual harassment and assault, has also been embroiled in litigation with Starke, a former deputy associate White House counsel and ex-O'Melveny & Myers counsel.
Miami lawyer Bernardo Roman III filed for Chapter 7 this month in the same city, owing $735,265 to Florida's Lewis Tein, which recently secured a judgement against him for $562,264 in attorney fees, as noted by sibling publication the Daily Business Review. Roman, a former attorney for the Sunshine State's Miccosukee Tribe, also owes another $199,000 to Dexter Lehtinen, a Florida lawyer married to U.S. Rep. Ileana Ros-Lehtinen.
Of course, not everyone in bankruptcy court these days is looking to recoup sunk costs. The American Lawyer noted in September a $47.5 million payment to Kirkland & Ellis for its work on behalf of bankrupt offshore driller Seadrill Ltd., a Bermuda-based company controlled by Norwegian shipping billionaire John Fredriksen that has proved to be a gold mine for professional advisers. Dow Jones Newswires recently reported that other firms like Cadwalader, Wickersham & Taft ($10 million) and Fried Frank Fried ($12 million) are reaping the benefits from their roles as counsel to the company and Centerbridge Partners LP, respectively.
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