Apple Objects to Fees in E-Books Case: Business of Law
Apple Inc. said a monitor appointed by a judge to oversee antitrust compliance in its electronic books price-fixing case is charging too much money.
“Of all known past Apple matters,” no lawyer has had a higher rate than Michael Bromwich’s proposed hourly fee of $1,100, the world’s most valuable technology company said in a Nov. 27 filing in federal court in Manhattan.
“Mr. Bromwich appears to be simply taking advantage of the fact that there is no competition here or, in his view, any ability on the part of Apple, the subject of his authority, to push back on his demands,” lawyers for Cupertino, California-based Apple said in the filing.
Bromwich, a former U.S. Justice Department inspector general who is a partner at Goodwin Procter LLP, is charging a 15 percent administrative fee on top of his hourly rate, as well as on the cost of hiring other lawyers to assist him, according to the filing.
U.S. District Judge Denise Cote appointed Bromwich as a monitor in October following her July ruling that Apple played a “central” role in a conspiracy to fix prices for electronic books. Cote barred Apple from entering into anticompetitive contracts with e-book publishers.
Bromwich justified the administrative fee on the grounds that he’s handling the assignment through his consultancy, the Bromwich Group, rather than through his law firm, according to Apple’s filing.
The distinction “seems slippery at best” given that Goodwin Procter issued a press release “clearly meant to drum up more business” announcing Bromwich’s appointment as Apple’s antitrust monitor, Apple’s lawyers wrote.
Bromwich’s invoice for his first two weeks of work was $138,432, the equivalent of 75 percent of a federal judge’s annual salary, Apple said in its filing, which described the administrative surcharge as “unprecedented in Apple’s experience.”
Melissa Schwartz, a vice president of the Bromwich Group, said Nov. 28 that Bromwich was out of the country and unavailable for comment. She declined to comment on Apple’s claim.
The Justice Department’s press office didn’t immediately respond to a phone call seeking comment on the filing.
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Dewey Creditors Sue Two Executives for $21.8 Million
The Dewey & LeBoeuf LLP creditors’ trust filed a $21.8 million lawsuit last week against Stephen DiCarmine, the defunct law firm’s former executive director, and Joel Sanders, the chief financial officer.
The trust, created under the firm’s liquidating Chapter 11 plan, argues for return of the money partly on the notion that the firm was insolvent when the payments were made.
Compensation for the top managers was “far above the value of the services” they rendered and was “atypical” compared with salaries for “comparable law firm management administrators,” according to the complaint.
The firm was insolvent by January 2009, preceding the Chapter 11 filing in May 2012, the trust alleged. Although revenue was dropping, the firm was making income promises to partners not in line with profitability.
Ned Bassen of Hughes Hubbard & Reed LLP, an attorney representing DiCarmine and Sanders in another lawsuit, didn’t return a call seeking comment on the complaint last week.
Dewey’s liquidating Chapter 11 plan was approved by the bankruptcy court in February and implemented in March. The firm estimated that midpoint recoveries for secured and unsecured creditors under the plan would be 58.4 percent and 9.1 percent, respectively. The plan created a trust to collect and distribute remaining assets.
Dewey once had 1,300 lawyers. The liquidation began under Chapter 11 in May 2012. At the outset of bankruptcy, there was secured debt of about $225 million and accounts receivable of $217.4 million, the firm previously said. The petition listed assets of $193 million and liabilities of $245.4 million.
The new lawsuit is Jacobs v. DiCarmine, 13-01765, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The bankruptcy case is In re Dewey & LeBoeuf LLP, 12-bk-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
FX to Libor Probes Mean Shortage of Top Lawyers for U.K. Traders
U.K. traders who’ve come under investigation for rigging benchmark rates may find themselves in another difficult situation -- unable to find a good lawyer.
The top attorneys at specialist white-collar crime firms say that, in the past few months, they’ve seen the largest number of finance workers ever seeking advice as probes into the London interbank offered rate, or Libor, expand to the manipulation of currency, derivatives and precious metals benchmarks.
About half a dozen law firms in the British capital specialize in advising individuals facing regulatory and criminal probes, while the largest London- and U.S- based firms generally represent institutions. The increase in probes means that in a growing number of cases, the most experienced lawyers for individuals are turning traders away.
“There is an unprecedented increase in the number of individuals who need specialist legal advice,” said David Corker, a defense lawyer at Corker Binning. “The supply of such lawyers is limited because hitherto white-collar crime has been seen as largely a boutique or highly specialist area.”
Corker Binning is one of the top U.K. firms that specialize in advising people in criminal fraud cases, along with Kingsley Napley LLP, BCL Burton Copeland and Peters & Peters Solicitors LLP, according to the legal directory Chambers and Partners. Some larger firms, such as Stephenson Harwood LLP, also specialize in advising individuals over banks.
Lawyers, and sometimes entire law firms, can often only take on one person or one firm in a regulatory probe to prevent conflicts of interest with other clients in an investigation. At times, firms build so-called Chinese walls internally to allow them to work for multiple institutions or people, with the lawyers keeping information private from their colleagues advising other parties in the case. While London-based Clifford Chance LLP advised both Barclays and the Royal Bank of Scotland Plc in the Libor investigation, this is rare and generally requires client consent.
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Weil Lawyer Says Ex-UBS Executive Ready to Confront U.S. Charges
A lawyer for former UBS Global Wealth Chief Executive Officer Raoul Weil, who is accused of failing to implement effective restrictions to stop the bank’s U.S. clients from evading taxes, said in e-mail that Weil has never “run or tried to hide.”
Weil, 53, was arrested Oct. 19 in Bologna after checking into a hotel under his own name and triggering an alert to Italy’s authorities.
U.S. federal prosecutors said in a 2008 indictment that Weil and other executives failed to implement effective restrictions to stop UBS’s U.S. clients from evading taxes after the bank agreed in 2001 to identify account-holders and tell the Internal Revenue Service about their income. Weil, who at the time ran UBS’s wealth management business, resigned and was declared a fugitive by the U.S. government in 2009. UBS said the same year that Weil left to focus on his defense.
UBS avoided U.S. prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over data on 250 accounts. It later disclosed information on about 4,450 more accounts.
“We expect him to be fully vindicated when we have the opportunity to present our case to a fair and impartial jury.” Aaron R. Marcu, a lawyer for Weil at Freshfields Bruckhaus Deringer LLP in New York, said in the e-mail.
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EU Commission Lawyers Rebut Financial-Transaction Tax Opponents
Lawyers for the European Commission stood by their analysis of a proposed financial-transaction tax against criticism by attorneys representing European Union member governments.
“It is wrong to assert that the ‘financial markets’ of non-participating member states ‘would be burdened’ with the FTT,” the lawyers said in a rebuttal to the Council of the European Union, which represents the executives of 28 EU states, according to a planning document prepared for upcoming meetings. In a Sept. 6 opinion, lawyers for the group of nations said the tax plan goes too far and would discriminate against countries that don’t participate.
EU officials are due to discuss the transaction-tax plan on Dec. 12, the first such discussion since September. Germany wants speedy action on a European Union financial-transaction tax, the German Finance Ministry said last week.
The Brussels-based commission says the tax is appropriate in affecting companies based in a participating nation and those they do business with, even if business partners are located in a nation that isn’t taking part.
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Kleinberg Kaplan Adds Bankruptcy/Workout Partner in New York
Hedge fund law firm Kleinberg, Kaplan, Wolff & Cohen PC said Dov R. Kleiner joined the firm as a partner in the bankruptcy/workout practice. He previously was a partner at Vinson & Elkins LLP in the New York office.
Kleiner has more than 15 years of experience representing creditors, debtors, committees and others on restructuring and reorganization matters, the firm said.
His practice will focus on representing creditors in financial restructurings, workouts and reorganizations, with a special focus on funds involved in asset sales and distressed company purchases, and portfolio company restructuring.
Government Names Snyder to Replace Hammond as Antitrust Deputy
The Justice Department’s antitrust division picked Brent Snyder as deputy assistant attorney general for criminal enforcement. Snyder replaces Scott D. Hammond, who left the department in October.
In his new position, Snyder will be responsible for overseeing the division’s criminal enforcement efforts. He has been a criminal trial attorney in the Antitrust Division since 2003, first in the National Criminal Enforcement Section and since 2011 in the division’s San Francisco office.
Snyder was involved in criminal investigations involving the liquid crystal display, coastal water freight and air transportation industries, according to a government statement.
Snyder was previously a partner at Perkins Coie LLP.
Detroit Judge Delays Lighting Proposal on Law Firm Question
Detroit’s bankruptcy judge put off ruling on a proposal to spend as much as $12.5 million annually on street lighting until a law firm explains why it represents both the city and a public lighting district the city created.
U.S. Bankruptcy Judge Steven Rhodes initially appeared set to overrule objections to the proposal, telling creditors at a hearing Nov. 27 “the dark you’re in doesn’t compare to the dark” faced by residents.
When he learned that law firm Miller, Canfield, Paddock & Stone PLC represented both Detroit and the Public Lighting Authority, a separate legal entity, Rhodes put the proposal on hold. He said that having one firm on both sides of the transaction gave the appearance of a conflict of interest, even though Detroit set up the lighting authority and would be funding it with city taxes.
“It is most unfortunate that this issue came to the court in the way that it did,” Rhodes said. He asked the city and objectors to file briefs about the law firm’s work by Dec. 4.
Thousands of streetlights in Detroit don’t work, creating a public safety hazard, officials have said. The city is seeking court permission to divert $12.5 million in taxes to the Public Lighting Authority, which would use the money to repay what it intends to borrow so it can add streetlights, according to court papers.
The authority would borrow about $60 million in the form of a bridge loan and issue as much as $153 million in bonds with the help of the state of Michigan.
Detroit filed for bankruptcy in July saying decades of economic decline had left it without enough money to pay creditors owed $18 billion and still provide basic services to about 685,000 residents. Rhodes set a hearing for tomorrow to announce whether Detroit is eligible to remain under bankruptcy court protection.
The case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).
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