Reinventing Norms: Sullivan & Cromwell, Finalist for Litigation Department of the Year
No longer "your grandmother's" Sullivan & Cromwell, the firm is mixing things up, landing it a place as finalist for the Litigation Department of the Year.
December 19, 2017 at 06:55 AM
4 minute read
BlackBerry established its relationship with Sullivan & Cromwell for the first time when it hired the New York-based firm to litigate against Qualcomm. It is unlikely, however, to be the last time Canada-based BlackBerry taps Sullivan, given the outcome of that case.
In the dispute—over royalties paid for use of patented handheld device technology—a team led by partner Garrard Beeney won a binding arbitration award of $940 million for BlackBerry in April 2017.
Beyond welcoming the size of the award, BlackBerry's in-house department also embraced the advantage of the Sullivan team's efficiency and willing cooperation to develop a cost-conscious legal strategy for the company.
"I don't think I have ever worked with counsel that have worked as collaboratively on a litigation as big as this," says Edward McGah, BlackBerry's deputy general counsel and vice president. "They made it easy for us to be full partners in this endeavor. They were very efficient in everything and particularly in the staffing. They were expensive, but we were satisfied with the quality of work. If the award had gone the other way, we would still have thought we had the best representation we could have."
Despite the ebbing of financial crisis litigation, S&C has thrived, picking up some of the nation's highest-profile representations, in areas such as mass torts. S&C replaced other firms, worked cohesively with in-house law departments and won big at trial when its lawyers weren't negotiating Wall Street-pleasing settlements for clients. Much of this was done despite stiff odds and being pitted against teams for the government or private plaintiffs with far more lawyers.
"In a bet-the-company case, the lawyer's job is to land the plane safely, not to try a case for the sake of trying it. This is where the S&C generalist approach paid off; a large team of specialists never could have gotten the job done," says Robert Giuffra, the S&C partner who led in the negotiations to resolve the criminal and civil exposure for Volkswagen after the company admitted to altering 11 million diesel cars to evade environmental regulations. For VW, the Sullivan team replaced Kirkland & Ellis and Herzfeld & Rubin as the company's national coordinating counsel. Following the April 2016 announcement of the settlement, the company's stock rose 16 percent.
In the last two years, S&C negotiated a cost-saving settlement for BP plc, defending against claims related to the Deepwater Horizon spill. While BP initially tapped Kirkland & Ellis, Wilmer Cutler Pickering Hale and Dorr, and Arnold & Porter as lead counsel and S&C only to handle shareholder derivative and securities litigation (which was eventually dismissed), the company's board turned in April 2015 to S&C for its negotiations with the governments. In October 2015, after months of secret negotiations, the Department of Justice and five Gulf States unveiled an $18.7 billion agreement with a 15- to 18-year payment plan to settle BP civil liability for environmental and economic damages—BP's stock price rose 5 percent.
In the courtroom, S&C's wins went beyond the big payday for BlackBerry. The firm defeated a $2.4 billion claim against Argentina's central bank, reversing a lower court and preserving the institution's sovereign immunity. S&C lawyers also beat back allegations that Goldman Sachs sought to drive up the price of aluminum. Both wins came in the Second Circuit.
Once known largely as Wall Street's law firm of choice for deals and transactions, only handling litigation as a sideline, S&C has evolved in recent years. Litigation now accounts for nearly 40 percent of firm revenues.
Department Size and Revenue Partners: 52 Associates: 184 Other: 24
Department as Percentage of Firm: 34% Percentage of Firm Revenue, 2016: 35%
"This is no longer your grandmother's and grandfather's Sullivan & Cromwell," Giuffra says. For VW, BlackBerry and others, S&C partners make it a point to bring fewer but, they believe, more focused lawyers than their competitors do to solve the clients' problems.
"We are a group of 52 partners who work collaboratively," says executive committee member Sharon Nelles, referring to S&C's litigation department partner roster, which represents 30 percent of the firm's 173 partners.
Although Beeney was the only Sullivan partner on BlackBerry's team, McGah says he had no worries about being under-resourced.
He appreciated S&C offering the few and able. "I'm old enough to think that is the better way to do it. I was impressed by Sullivan & Cromwell," he says.
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