Dec. 9 (Bloomberg) -- The Virginia State Bar is seeking to ease the pain for clients who find themselves caught in the middle of a lawfirm breakup or their own attorney’s departure from a law office.
A new rule proposed by the regulatory body would create procedures for contacting clients who face “the acrimony that often accompanies a firm departure or dissolution,” according to a statement posted with the draft measure on the Virginia State Bar website Dec. 2.
The rule would prohibit either the departing lawyer or the firm from contacting a client unilaterally unless the lawyers can’t agree on a joint communication. When they can’t agree, clients must still be notified of the departure and their options for continued representation.
According to the statement, the rule was based on a Florida provision and noted that the American Bar Association has no similar rule. Comments must be filed by Feb. 14.
Michael Frisch, an adjunct professor at Georgetown University Law Center who wrote about the rule on his “Legal Profession Blog,” said that this area has concerned lawyers for years.
“The rule is trying to give notice to clients in a reasonable fashion,” he said. “It’s also trying to lower the possibility of what happens a lot in real life -- when departing lawyers leave, one side often tries to bad mouth the other to get the client’s business.”
Independent Law Schools Hurt by Enrollment Decline, S&P Says
Credit quality for independent law schools that aren’t affiliated with larger universities is deteriorating as enrollment declines, Standard & Poor’s said in a report.
Standalone laws schools “are more susceptible to credit deterioration than law schools that are nested within comprehensive universities,” S&P, a division of McGraw-Hill Financial Inc., said in the report released Dec. 5.
Credit quality will probably diverge between the most and least selective schools as the weak job market since 2009 depresses enrollment nationwide, the ratings firm said. It identified five accredited law schools that are independent of larger universities: Albany Law School, Brooklyn Law School, New York Law School, Thomas Jefferson School of Law and Thomas M. Cooley Law School.
“Independent law schools have a unique situation,” Anthony Crowell, the dean of New York Law School for the past 18 months, said in a phone interview Friday. He said steps his school is taking, such as an operational review and a strategic plan focusing on academics, “are validated by this report.”
Law schools other than the five independents typically are incorporated into larger universities, so their finances can’t be analyzed for the purposes of credit markets, S&P lead analyst Robert Dobbins said. S&P began working on the report because law schools historically contributed to universities’ financial health, he said.
“Law schools became more of a topic because of the weakness in demand,” he said. “Profitability was no longer at historic levels and we thought it was important to speak to this.”
Brooklyn Law, New York Law, Thomas Cooley and Thomas Jefferson have negative outlooks, S&P said. Albany, with a BBB rating, was listed as stable.
David Singer, an Albany spokesman, declined to comment on the report. Representatives of Thomas Jefferson and Thomas Cooley didn’t respond to e-mails seeking comment.
“There isn’t a law school in the country that isn’t taking a hard look at the new world of law,” Nicholas Allard, Brooklyn Law’s dean, said in a phone interview Friday.
Brooklyn Law School is “in a sound position,” he said. “We’ve cut costs and have monetized some real estate assets that we don’t need.”
BP Investors Can’t Sue as Group Over Losses, Judge Says
BP Plc’s U.S. investors can’t pursue as a group claims that the company inflated its shares with misleading statements before and after the Gulf of Mexico oil spill, a judge ruled, citing a recent Supreme Court decision.
Shareholders sought permission to sue in two groups, the larger including all buyers of BP’s American depositary receipts from Nov. 8, 2007, to May 28, 2010. The second subgroup would cover about 900,000 individual investors, who purchased BP ADRs from March 4, 2009, to April 20, 2010, the date BP’s Macondo well blew out, triggering the biggest U.S. offshore oil spill.
U.S. District Judge Keith P. Ellison in Houston denied the investors’ request for group, or class, status on Dec. 6. Ellison had earlier set a trial date for August 2014.
Ellison ruled that the investors failed to show that their damages could be calculated on a class-wide basis in a way that was consistent with their legal theory on BP’s culpability. If they could’ve done so, he said, he’d have been “inclined” to give the investors permission to sue as a class.
Ellison gave lawyers for the investors 30 days to revise their motion and supplement it. He said he declined to certify the class based on the high court’s ruling in a case involving Comcast, in which investors weren’t allowed to sue as a group because the court found a disconnect between the investors’ class-wide damages model and the company’s liability.
“We got pretty clear direction from the court,” Richard Mithoff, one of the lead investors’ attorneys, said in a telephone interview Dec. 6. “I’m confident we will be able to address the issues raised by the court and by the recent U.S. Supreme Court ruling” in order to certify the class.
The “order confirms BP’s view, as noted in our brief and at oral argument, that plaintiffs failed to establish that this case is appropriate for class treatment,” Geoff Morrell, BP’s spokesman, said in an e-mail.
The case is In Re BP Plc Securities Litigation, 4:10-md-2185, U.S. District Court, Southern District of Texas (Houston).
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BofA’s Merrill Wins Final Approval of Race-Bias Suit Accord
Bank of America Corp.’s Merrill Lynch brokerage won final court approval of a $160 million settlement of a lawsuit in which it was accused of denying black financial advisers the same opportunities as their white counterparts.
U.S. District Judge Robert Gettleman in Chicago overruled the sole objection to the agreement announced in August at a hearing Dec. 6 and said he’d immediately sign an order ending the lawsuit filed by Nashville broker George McReynolds in 2005.
Over its lifespan, McReynolds’ case grew to include 16 more name plaintiffs and a class of at least 1,000 who claimed Merrill Lynch wasn’t giving them the same support and same business development opportunities as white advisers.
Bank of America, the second-biggest U.S. bank by assets, acquired the brokerage for $33 billion in 2009. The Charlotte, North Carolina-based lender denied discriminating against its black brokers. The case was set to go to trial next month.
The accord is the third largest in U.S. race-bias litigation according to data compiled by Bloomberg.
In agreements that included non-cash consideration, Coca-Cola Co. agreed in 2001 to pay $192.5 million. Texaco Inc. paid $176 million in 1997.
The lead plaintiffs’ lawyer, Linda Friedman, said in a September interview that operational changes agreed to by Merrill Lynch might increase the value of her clients’ settlement above those prior settlements. Friedman is a partner in the Chicago law firm Stoll & Friedman Ltd.
“These new initiatives, developed in partnership with African-American financial advisers and their legal team, will enhance opportunities for financial advisers in the future” Bill Halldin, a Bank of America spokesman, said Dec. 6 in an e-mailed statement.
The judge, who three times rejected bids to recognize a claims class, agreed to grant preliminary approval to the pact after a Sept. 3 hearing.
The case is McReynolds v. Merrill Lynch Pierce Fenner & Smith Inc., 05-cv-06583, U.S. District Court, Northern District of Illinois (Chicago).
Supreme Court Says Contracts Rule When Forum Issues Arise
The U.S. Supreme Court last week decided a seemingly routine question that has prompted much litigation: how a choice of law provision should be resolved.
A unanimous court, in an opinion written by Justice Samuel Alito, held that when a contract states where a dispute should be resolved, the courts must defer. Cases filed in jurisdictions other than that specified must be transferred, not dismissed.
The court said that only in exceptional circumstances will dismissal be warranted.
Resolving cases filed in jurisdictions other than the one specified in a contract had vexed courts and litigants, said Randy Lipsitz, a partner at Kramer Levin Naftalis & Frankel LLP.
“It was frustrating to tell a client that you’ve got a contract but you’ve just been sued in another place. Now I can assure a client that we’ll take care of it -- the Supreme Court has your back.”
He added that “it’s not an earthshattering decision, but brings back to reality a situation that has gotten out of hand.”
The case is Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas, No. 12-929.
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