Dewey, Skadden, Blank Rome, Quinn Emanuel: Business of Law

Dewey & LeBoeuf LLP is preparing to liquidate its U.K. office while its U.S. practice plans to collect its bills and stay in business, a firm executive and two people familiar with the situation said.

The London office of the New York-based law firm has appointed a committee including restructuring lawyer Mark Fennessy and banking lawyer Bruce Johnston to review its options to wind down or close the business, said the people, who declined to be identified because the matter is private. More than 25 partners work at Dewey’s London operation, said one of the people.

In New York, the firm is near an agreement with banks about extending a credit line and intends to stave off bankruptcy by collecting bills to pay lenders and transferring employees and property to other firms, said Martin Bienenstock, one of four members of Dewey’s chairman’s office. Dewey is talking with potential merger partners and its lenders are being cooperative, he said.

“Bankruptcy is always a last resort and is not in current plans,” Bienenstock said in an e-mail yesterday. “If real property and equipment leases are assumed by other firms or renegotiated, and the lenders realize on their accounts receivable and inventory, there may be no need.”

More than 85 partners have left the U.S. firm in recent weeks, including three yesterday. Stuart M. Saft, a real estate attorney, joined Holland & Knight LLP as partner and co-chair of its New York real estate practice group. He was previously partner and chair of Dewey’s global real estate practice. Ilan S. Nissan and Christian C. Nugent joined Goodwin Procter LLP’s private-equity practice as partners in the New York office.

Angelo Kakolyris, a spokesman for Dewey in the U.S., didn’t return an e-mail or call seeking comment on the firm’s plans. Calls and e-mails to Fennessy and Johnston weren’t immediately answered. Peter Sharp, the managing partner of the London office, didn’t reply to requests for comment.

Dewey management sent a memo to all the firm’s partners April 30 informing them that they are free to explore other job opportunities, said a person familiar with the contents of the document. The firm is carrying on business as usual and at the same time trying to find employment for legal and non-legal staff, according to the person who saw the memo and who declined to be identified because the information is private.

“Our memo did not encourage people to leave,” Bienenstock said yesterday in his e-mail. “Rather, it explained that the partners who don’t want to be part of a merger could look elsewhere. This way they would not be otherwise inhibited by duties to the partnership.”

No single firm currently appears willing to buy all of what is left of Dewey, according to a person familiar with the situation. Dewey now is talking with several firms that might take parts of its specialized practice groups, as part of a bankruptcy plan devised with lenders’ consent, said the person, who declined to be named because the talks are private.

Patton Boggs LLP, based in Washington, is among the firms conferring with Dewey, said the person. SNR Denton, which has headquarters in Washington and London, is also in talks with Dewey on a possible merger, according to a person familiar with the discussions. The firm declined to comment.

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News Corp. (NWSA) Should Waive Law Firm’s Privilege, U.K. Lawmakers Say

U.K. lawmakers called on News Corp. to allow its former criminal defense firm to reveal details on a 2006 internal probe into phone-hacking at the company’s now-defunct News of the World tabloid.

News Corp.’s “legal privilege” with BCL Burton Copeland should be waived so the London-based law firm can defend claims it helped with a cover-up, the House of Commons Culture Committee said yesterday. News Corp. Chairman Rupert Murdoch told an ethics inquiry last week that lawyers and lower-ranking executives at its News International unit are to blame for his ignorance about the extent of phone hacking until late 2010.

Murdoch’s claim “that a cover-up has taken place at the company may mean that the investigations conducted by Burton Copeland have been used by people at News International to perpetrate a falsehood,” lawmakers said in a report about the scandal. “We believe there is a strong argument that the company has no right to restrain disclosure of the file.”

The committee, investigating the scandal for the second time in six years, said the tabloid’s former editor Colin Myler and legal manager Tom Crone misled Parliament and found Murdoch is “not a fit person” to lead a major international company. Police investigating hacking and bribery at News Corp.’s U.K. titles have made 45 arrests, while Britain’s media watchdog is probing whether the company should retain its stake in pay- television provider British Sky Broadcasting Group Plc. (BSY)

Legal privilege prevents a law firm from sharing notes, e- mails, reports and other documents related to its work without permission from the client. Judge Brian Leveson, who is overseeing the independent media-ethics inquiry triggered by the scandal, raised the issue of privilege preventing some remaining questions from being answered, such as how much information executives had about the scandal, and when they had it.

Messages left at Burton Copeland and News International seeking comment on the privilege issue weren’t returned.

Burton Copeland was hired by News International to conduct a probe after the News of the World royal reporter Clive Goodman was arrested more than five years ago. News Corp. claimed the firm’s investigation, where it reviewed e-mails and financial records, found no evidence of widespread phone hacking.

Burton Copeland parted ways with News Corp. last year and said in September its role was limited to providing documents to the police and that it wasn’t asked to carry out a full probe.

Harbottle & Lewis LLP, another law firm that worked for News International, denied claims made by Murdoch to the committee last year that it gave the company a clean bill of health after reviewing the matter. The law firm wrote to lawmakers saying Murdoch was “confused or misled” in his testimony.

Murdoch told lawmakers last year he “rested” on findings from the two law firms, as well as from police, that phone hacking had been limited to a single “rogue” reporter. He told the ethics inquiry last week he should have taken matters into his own hands.

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Diet-Drug Lawyers Lose Appeal of Convictions for Fund Theft

Two disbarred Kentucky lawyers sentenced to prison for stealing from a $200 million fen-phen diet-drug settlement fund failed to persuade a federal appeals court to lighten their punishment.

“The evidence of the defendants’ guilt in this case was overwhelming,” the U.S. Court of Appeals in Cincinnati said yesterday in upholding the 2009 convictions and sentences of William Gallion and Shirley Cunningham Jr.

Gallion was sentenced to 25 years and Cunningham to 20 years for their April 2009 conviction on nine criminal counts including wire fraud and conspiracy. The appeals court also upheld the trial judge’s order requiring the two men to pay more than $127 million to former clients who were victims of the fraud.

The criminal charges were connected to a $200 million settlement between American Home Products Corp. and Kentucky residents who claimed they were harmed by the once-popular fen- phen diet drug combination.

During the trial, prosecutors showed jurors evidence that Gallion and Cunningham had contracts entitling both men to fees of as much as one-third of the settlement. The lawyers tried to keep more than twice that amount, prosecutors said.

Gallion will seek a hearing by the entire appellate court, his attorney, H. Louis Sirkin, said in a phone interview yesterday. If that fails, Gallion will seek review by the U.S. Supreme Court, he said.

“We’re not done yet,” Sirkin said.

T. Clifton Harviel, Cunningham’s lawyer, said he was disappointed by the decision.

“We’re considering our options,” Harviel said in a phone interview. “Most likely, the next move is asking for an en banc hearing.”

The case is U.S. v. Cunningham, 09-5987/5988, U.S. Court of Appeals for the Sixth Circuit (Cincinnati).

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Fees

WexTrust Judge Says He’s ‘Deeply Concerned’ About Fee Bids

A judge overseeing the liquidation of WexTrust Capital LLC, whose founders are serving prison terms for fraud, told lawyers he’s “deeply concerned” about the professional fees that have been charged in the case.

Denny Chin, a former federal district judge who continued to supervise the WexTrust case after his 2010 promotion to the U.S. appeals court in New York, told lawyers yesterday that he has received complaints about the fees from victims of the WexTrust fraud.

In a report to Chin in February, Timothy Coleman, the lawyer appointed as receiver for WexTrust and related companies, said that the estate had paid about $15.9 million in professional fees through the end of last year, including $9.4 million to his former law firm, Dewey & LeBoeuf LLP; $136,350 to his current firm, Freshfields Bruckhaus Deringer LLP; and $4.1 million to Deloitte Financial Advisory Services LLP.

Joseph Shereshevsky, 55, and Steven Byers, 49, the founders of Chicago-based WexTrust, were arrested in August 2008 and charged with fraud. A lawsuit by the U.S. Securities and Exchange Commission claimed they defrauded investors of $255 million. In 2009, Chin approved a distribution plan under which Coleman estimated the defrauded victims would receive between 5 percent and 50 percent of their losses.

The receiver, who was selected to oversee WexTrust in August 2008, has so far distributed $5 million to about 1,300 victims, he said in the February report.

Several of the victims have complained about what they consider excessive charges for legal and accounting work.

“There are many objections to the payment of any further fees,” Chin said yesterday.

Chin was asked yesterday to approve new fee requests, including those of Freshfields and Deloitte. He said he will rule on the requests this week.

The SEC case is Securities and Exchange Commission v. Byers, 08-cv-7104. U.S. District Court, Southern District of New York (Manhattan).

Firm News

Boutique Firm Closes; Blank Rome and Manatt Take Partners

Washington white-collar litigation boutique Janis, Schuelke & Wechsler has closed its doors with two name partners, Henry F. Schuelke III and Lawrence H. Wechsler joining Blank Rome LLP as partners. N. Richard “Dick” Janis joined Manatt, Phelps & Phillips LLP as a partner in the corporate investigations and white-collar defense practice in Washington.

Janis, Schuelke was involved in investigations including Adelphia Communications Corp., Enron Corp. and WorldCom Inc., Blank Rome said in a statement.

The three partners, in a letter on their website, said the decision to shutter the office stemmed from “the need to accommodate differing goals and time commitments for the remainder of our careers, as well as a desire to ensure that all of our employees are well situated in the coming years.”

Schuelke and Wechsler have more than 40 years’ experience in white-collar criminal defense, FCPA, antitrust, corporate internal investigations and compliance, fraud and abuse, health- care fraud and environmental matters, Blank Rome said.

Janis focuses his practice on the defense of white-collar investigations and prosecutions of corporations and individual clients. He also handles a variety of civil matters and often counsels corporations, their officers and boards on matters ranging from antitrust enforcement to shareholder derivative claims, Manatt said in a statement.

Blank Rome has 12 offices with more than 500 attorneys. Manatt has five offices in California, two in New York and one in Washington.

Quinn Emanuel Opens Second German Office in Hamburg

Quinn Emanuel Urquhart & Sullivan LLP opened an office in Hamburg, the firm’s second office in Germany.

The office, which will focus on intellectual property and related antitrust litigation, will open with 11 lawyers following the hiring of a team from Allen & Overy LLP. Nadine Herrmann, the former head of Allen & Overy’s German intellectual property group, will be the Hamburg office’s managing partner, Quinn Emanuel said.

“In today’s world, big intellectual property disputes are global. Any major patent dispute includes an EU component,” firm managing partner John Quinn said. “Germany is the epicenter of EU patent litigation. The EU is at the forefront of antitrust implications of patent litigation. Nadine has the ideal background to deal with these complex issues.”

Former Allen & Overy patent litigation partner Marcus Grosch joined Quinn Emanuel two years ago to open the firm’s Mannheim office.

Quinn Emanuel has more than 600 lawyers with offices in Los Angeles, New York, San Francisco, Silicon Valley, Washington, Chicago, Tokyo, London, Mannheim, Moscow and Hamburg.

Moves

OFAC Chief Counsel Thornton Joins Skadden in Washington

Sean M. Thornton, chief counsel of the Office of Foreign Assets Control of the U.S. Treasury Department, has joined Skadden, Arps, Slate, Meagher & Flom LLP’s financial institutions regulation and enforcement group in the Washington office.

Thornton joined the Treasury Department in 2001 and has been OFAC’s chief counsel since 2005. He has supervised high- profile legal matters for OFAC, including global settlements with U.S. and foreign banks and the successful defense of OFAC’s authorities in relation to counterterrorism issues and sanctions against Cuba and Iraq, the firm said.

“Sean’s ability to help clients navigate the evolving international financial regulatory landscape and new enforcement regime will be a tremendous asset to our clients,” William J. Sweet Jr., head of Skadden’s financial institutions regulation and enforcement group, said in a statement.

Skadden has more than 1,800 lawyers in 23 offices worldwide.

Competition Practice Lawyer Joins Bird & Bird in London

Peter Willis is joining the London office of Bird & Bird LLP as a partner in the international EU and competition practice group.

Willis was previously at Dundas & Wilson LLP, where he headed the EU and competition practice, the firm said. Willis has competition and regulatory experience in the energy sector, and competition experience in the pharmaceuticals and technology industries, Bird & Bird said.

Bird & Bird said its EU and competition team has about 40 lawyers around Europe who work closely with international sector groups, particularly within information technology, communications, media and energy. The firm has more than 900 lawyers in 23 offices across Europe.

To contact the reporter on this story: Elizabeth Amon in New York at eamon2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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