Wall Street Now Fears the Lawyer Who Used to Defend ItBy
Quinn Emanuel partner takes cut of $30 billion in settlements
Confronting Goldman, Citigroup -- and his fellow attorneys
Ten years ago, lawyer Dan Brockett and his colleagues opted for the equivalent of ditching an office job for a career as a big-game hunter.
As Wall Street cratered during the financial crisis, Brockett helped lead the firm’s move away from representing the world’s biggest banks and forgoing $1,000-an-hour defense work. Instead, he would earn his keep by suing the very companies that used to pay his bills. He’d be paid only if he won -- on contingency, in which lawyers get a cut of a client’s recovery.
On a recent weekday at his firm, Quinn Emanuel Urquhart & Sullivan LLP, Brockett said he couldn’t be happier that he made the switch to what he calls “success-based” billing. The 61-year-old senior litigation partner, wearing jeans and a sweater, pointed to a framed photo of a $250 million legal fee award that hung like a trophy over the desk of his office on Manhattan’s Madison Avenue.
“I like the fees,” he said, with a laugh. “Hourly rates are boring.”
Brockett has become a kind of securities watchdog-for-hire, a role that could grow even more prominent in the anti-regulatory era of President Donald Trump. He is feared on Wall Street and envied by his peers, who also question some of the aggressive tactics he uses to snag clients. Brockett says he has won 90 percent of his cases, counting settlements.
The windfall over his desk resulted from his triumph in a $2 billion Wall Street antitrust settlement last year from banks such as Citigroup Inc. and Bank of America Corp. Over the last four years, Quinn Emanuel figures it has won more than $30 billion in financial-fraud settlements.
“They’re making big bets and have a roster of real stars,” says John Coffee, a law professor at Columbia University. He called Brockett’s $2 billion settlement “a dramatic victory.”
Quinn Emanuel, which has 650 lawyers, doesn’t miss the Wall Street defense work. (Outside Brockett’s group, the firm still bills hourly.) Its profits per partner last year were $5 million, higher than any other plaintiff’s shop and second among all U.S. firms, according to legal researcher ALM Intelligence. It lagged only 261-lawyer Wachtell, Lipton, Rosen & Katz, one of the go-to firms for corporate takeovers and all manner of complicated transactions. Quinn Emanuel pays first-year associates $180,000 annually, among the most in the business.
Brockett has an unusual background for a Wall Street lawyer. He grew up in Alliance, Ohio, a Rust Belt city an hour outside Cleveland. His father was a high school social-studies teacher, principal and coach who stoked his competitive streak. Brockett was a three-sport athlete who held a county high-jumping record.
He studied philosophy at Kent State University and enrolled in law school at the University of Pittsburgh, where he was editor of the law review. Brockett then worked briefly at New York’s top-ranked Davis Polk & Wardwell LLP, before joining Quinn in 2004.
Today, Brockett lives in a Park Avenue apartment and has houses in the Hamptons and Florida. Until recently, he inhabited a marquee building on Central Park West whose residents include Sting and Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein, a frequent target of his litigation. “We’d say hello in gym,” Brockett said, “but we weren’t best friends or anything.”
Brockett isn’t best friends with everyone on the plaintiff’s bar, either. He rubbed some the wrong way because he kept much of that $250 million check for his firm, stiffing smaller shops that had also been working on the case, according to a person familiar with the other attorneys’ complaints.
In that case, Brockett says he earned every dollar. It involved banks’ sales of credit-default swaps, or contracts that let investors bet on the creditworthiness of companies.
For years, the U.S. Justice Department and the European Commission had investigated Wall Street banks for blocking competition. But they never took action. Brockett picked up where they left off. Armed with the millions of pages of documents that the government had collected, Brockett and his team obtained damaging admissions during depositions, he says.
At first, the banks sought a joint settlement, negotiating as a block. Brockett targeted a few of them, hoping they would break ranks. In the summer of 2015, while sipping a drink by his pool in the Hamptons, he got a call from a lawyer representing Citigroup.
The bank wanted a deal. The 13 others followed.
Brockett’s aggressiveness once inspired an extraordinary statement from the bench. In 2014, U.S. District Judge Lorna Schofield rejected his team’s appeal to be lead counsel in a case alleging that banks including Barclays Plc manipulated foreign exchange rates.
“Quinn Emanuel cannot serve as lead counsel in every major litigation in the country,” the judge said.
Still smarting from that loss, Brockett is considering opting out of a proposed $2 billion settlement in that case, according to a court filing. That would let large investors seek higher payments. In a filing, Hausfeld LLP and Scott and Scott, the lead law firms, said Brockett contacted plaintiffs in the class-action suit, giving them incorrect information “that could compromise their rights” -- something Brockett denies.
No matter the infighting among lawyers, the government is undoubtedly taking cues from Brockett. In 2015, attorneys at the Commodity Futures Trading Commission noticed one of his lawsuits -- involving another kind of swaps, which let investors bet on the direction of interest rates.
The agency reached out, and Brockett laid out his case. The commodities regulator is now investigating Goldman Sachs and Citigroup for allegedly blocking fund managers from trading the swaps with each other, the companies disclosed in SEC filings.
Brockett has developed a network of sources across Wall Street who send disgruntled bankers his way. A former bank senior managing director sparked another Quinn Emanuel lawsuit that Brockett won’t detail. Some of his whistle-blowers also file claims with regulators. They’re then eligible for a cut of the government’s financial recovery. That route can reap huge pay days of as much as $30 million.
Those kinds of rewards may be rarer, since Trump is cutting back on hiring and travel for SEC enforcement officials. Quinn’s whistle-blowers can enjoy the “boring” rate he offers: $600 an hour.
“It’s a sure thing instead of waiting years for the government,” Brockett said. “Most people are looking for money or to do the right thing.”
Brockett is no Robin Hood. Though he represents pension funds such as the Los Angeles County Employees Retirement Association, the parties who end up with the most money -- along with the lawyers -- are hedge-fund plaintiffs who sustained the most losses in trading the securities that are the subjects of his cases.
Consider the experience of one of his clients in the $2 billion antitrust settlement, the Essex Regional Retirement System. Executive Director Charles Kostro figures his pension fund, which invests for more than 5,000 Massachusetts teachers and other public employees, spent $10,000 in staff time cooperating with attorneys.
In the end, the lawyers walked away with $250 million. The pension fund’s cut: $624.54.