Category: News Feeds

In 2012, Morgan Stanley had a great idea to pitch to clients: A wrap-fee program. Pay a simple asset-based fee and it covers everything: investment advice, brokerage services, trade execution, you name it. A nice, flat, “transparent” fee structure, “streamlining and simplifying the expense associated with such a portfolio,” it said. The only problem is, it may not have known the meaning of those words when it used them, and so now it has to pay a flat fee of its own.

A unit of Morgan Stanley agreed to pay a $5 million fine to settle U.S. Securities and Exchange Commission charges it misled retail investing clients about the costs of a “wrap fee” program, the regulator said on Tuesday….

The SEC said that while Morgan Stanley Smith Barney promised wrap fee clients a “transparent” fee structure, some managers sent most or all of their client trades to third party brokers, causing clients to pay extra fees they could not see.

What irritates me (and we agree that there are many, many things that can provoke a rant) is when people say that something can’t be done and offer no alternatives. Here’s Exhibit A:

The president of the Law School Admissions Council has pooh-poohed the idea of putting the bar examination online this year. She says that it’s not impossible but that it is a “really big lift for states” as they are not testing organizations. Duh. Tell us something we don’t already know.

So, what are alternatives? The clock is ticking. What would she suggest instead? No one disputes that states are not testing organizations, so what should be done? Give law school graduates a pass? That’s not going to happen, at least not here in California.

Don’t just tell us what can’t be done. Tell us what can be done and how to do it. Offer alternatives, suggestions, something. Don’t just be “yes, but,” be “yes, and.” This attitude is like throwing a bomb in the middle of a crowded city square (not right now, though) and then cavalierly walking away, not looking back and not at all concerned about the damage done. As we all know from painful experience, it’s so easy to criticize, to reject, but much harder to find solutions or, at least, ideas that may lead to solutions.

Issues abound: testing security, how to ferret out cheaters (hmm … what about ethics here?), issues with leveling the testing field for those who need reasonable accommodations under the ADA, what if your kid interrupts you while you in the midst of the exam, and a thousand other “what ifs” come to mind. Advice from those of us who have had bar snafus of all varieties: when you’re going through hell, just keep going. What other option is there?

Let’s assume this fact pattern: the July Bar is not going to happen. Here in California, we have literally thousands of graduates waiting to take the bar exam. How, testing mavens, do we make that work? I doubt if the California Supreme Court wants to take “it can’t be done” for an acceptable answer. Indiana will conduct a remote bar exam and it will be one day only at the end of July, but the scores will only be good for Indiana.

We all know it’s the easiest thing in the world to criticize (a “benchslap” just as one example, and I’m not saying that it’s the court’s job to offer constructive criticism), but it would be helpful if people would offer guidance in this climate of “who’s on first, what’s on second” rather than just doubting. Please, test mavens, help figure out the best way to have the bar exam in what has been and will continue to be a very difficult year for 2020 graduates. None of this is their fault.

Florida is going ahead with the July bar, complete with masks and thermometers. Kansas, Minnesota, Washington, and Wyoming also are conducting July bar exams. When is it safe to go back to work, to go to court, to take a bar exam? Lives v. licenses? Lives v. cases? Lives v. clients? As just one example, the Los Angeles Superior Court now requires that all judicial officers, be it on the bench or in public areas inside the courthouses, wear face masks. This also applies to court employees. I would think other courts will do likewise, at least those courts that believe that face masks make a difference.

I am amazed by lawyers who don’t get that the legal world is undergoing a seismic shift, that for most matters, things will not be the same, and that we cling to old ways of doing things in the pitiful hope that things will return to the “old normal” once the lockdowns are lifted. Is it inertia or fear? It can’t be FOMO (fear of missing out) because if that were the case, we lawyers would be all for change as, among other things, a way to provide more and better services to clients. I think it’s a combination of inertia and fear, fear of change and yet too afraid to do anything about it. The status quo is now kaput.

One old lady lawyer commented that lawyers need time to deliberate, time to think, to ponder (she was an appellate lawyer so there’s time to ponder), and so on. And that’s true. But that’s not true for every aspect of the law, where quick answers are often needed to immediate and pressing problems that clients present. Not every legal question has the luxury of time to answer (“the vendor needs an answer now,” “we just got subpoenaed, what do we do,” and so on), and the hope is that the answers are more often right than not.

Marc Andreessen says that it’s “time to build.” While he doesn’t specifically mention our profession, it’s true for us as well. I don’t think anyone is saying that we need to toss out everything and everyone to date (although some might disagree about “everyone”), but we do need to build upon what we do have and make it better and more client friendly and client-focused. We have opportunities, but do we have the will?

---

Jill Switzer has been an active member of the State Bar of California for over 40 years. She remembers practicing law in a kinder, gentler time. She’s had a diverse legal career, including stints as a deputy district attorney, a solo practice, and several senior in-house gigs. She now mediates full-time, which gives her the opportunity to see dinosaurs, millennials, and those in-between interact — it’s not always civil. You can reach her by email at oldladylawyer@gmail.com.

The world’s most famous nepotism hire sure does hope we’ll be able to vote on November 3.

“I’m not sure I can commit one way or the other, but right now that’s the plan,” he told Time Magazine on Tuesday when asked if the pandemic might force a postponement of the election.

Luckily, the date of the election doesn’t require Jared Kushner, or for that matter President Trump, to “commit one way or the other.” Article II, Section 1 of the Constitution grants Congress that power:

The Congress may determine the Time of chusing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States.

In 1845 Congress passed a law fixing federal elections between November 2 and November 8 in every even year, later codifying it in
3 U.S. Code § 1:

The electors of President and Vice President shall be appointed, in each State, on the Tuesday next after the first Monday in November, in every fourth year succeeding every election of a President and Vice President.

So postponing the vote would require Nancy Pelosi’s cooperation, an event somewhat less likely than Donald Trump passing a 1L ConLaw exam. Which is to say, not bloody likely.

And not for nothing, but the Twentieth Amendment is pretty clear that the Trump and Pence’s term ends at noon on January 20, 2021, whether Jared Kushner “commits” to holding an election or not. Or, in the inimitable New York Times style, “Kushner, Law Aside, Doesn’t Rule Out Delaying 2020 Election.”

Having belatedly realized that blithely speculation about extra-legal electoral changes was a bad look, Kushner rushed to clean up his remarks.

Well … sort of.

He issued a statement saying that he was unaware of any “discussions” in the White House about postponing the election. Which is not an admission that the Executive Branch plays no role whatsoever in scheduling the vote, but is as close as you get in 2020.

In summary, due to the White House’s wildly successful coronavirus response, our nation’s nightmare is coming to an end and we should all feel safe getting out for a little shopping and face time with our pals. But also the White House may be forced to postpone the election in this dire emergency. They aren’t discussing it right now, of course, but it remains a possibility. Even though it might run afoul of some “laws.”

Jared Kushner Admits There’s ‘Risk’ in Reopening the Country Too Soon [Time]

---

Elizabeth Dye (@5DollarFeminist) lives in Baltimore where she writes about law and politics.

What will Biglaw look like in a post COVID-19 world? That’s the question on everyone’s mind as we, hopefully, move closer to a new normal. In a new interview with Law.com, CEO and chairman of Cooley Joe Conroy breaks down how he sees his firm positioned post pandemic.

The big headline is that Conroy said Cooley has no plans to cut associate salaries or do any layoffs. Conroy said that the firm’s travel and meetings budget — obviously going unused — is providing sufficient cost-savings. But don’t think that Conroy expects no changes in the legal industry. Conroy predicts demand for legal services will be down in a big way because of coronavirus, and that collections will also be down because of the economic conditions:

Our board and I certainly think that we are going to face to reduced demand in 2020. I also think that we’re going to be in an environment where we are going to get lower realization. That’s what happens when economies worsen. That having been said, we haven’t seen it as of yet. We’ve been, with respect to all the metrics that we measure our business, on or over plan. And that has even held up through 11 days this month on cash collections. Trying to figure out what the baseline to plan for is a little TBD. I hope I’m wrong. I don’t think I am. But my guess is that when the book is written on 2020, I will look back and say, “OK, we experienced 10% less demand than we thought we would, 15%, whatever it’s going to be.”

Though these predictions might seem like a downer (though very realistic), Conroy says he is an optimist. His take on the outlook of Cooley certainly reflects that, and he also noted that Cooley is positioned to come out of this in a better position than most:

[A]lthough this is a terrible set of circumstances for all of us and we’ve got to buckle down and do some things differently during this period, we think there will be some law firms that emerge from this circumstance better than others, and we think we’re going to be one of them.

Part of the reason why Conroy believes this is due to the firm’s partnership structure. The firm eschews income partners and Conroy says that means business development is an essential part of the firm’s makeup:

One of the things we’ve always said about our partnership that gives us a higher likelihood of performing well in a down market is we don’t have service partners, we don’t have nonequity partners, and we’ve got business development in the genes of our partners across practices.

Let’s hope plenty of firms are positioned to get through the COVID-19 storm.

---

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

I’m thankful that I’m alive. It’s been quite a journey. I just thought I had a cough. Look, I’m a lawyer. I sit at a desk all day. I think at the time we were sort of focusing on individuals who had maybe traveled internationally, something that I had not done. I had certainly not been to China.

— Lawrence Garbuz, the trusts and estates lawyer who became known as New York City’s “patient zero” for coronavirus community spread, in comments given during an interview with Savannah Guthrie on the Today show. Garbuz is recovering well at home, but was intubated and in a medically induced coma for three weeks’ time. “I have absolutely no recollection of anything that transpired until I woke up from the coma,” he said. “So it’s as if three weeks of my life had completely disappeared, and I was asleep for all of it.” Garbuz still doesn’t know how he got sick.

---

Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

The only time I see local news broadcasts is in a momentary flash when flipping upward through the channels in a hotel room. But somebody’s apparently watching them, with annual local TV station advertising revenue averaging around $20 billion (the local stations tend to do a bit better in election and Olympics years).

And doing its best to grab as many of those ad dollars as possible, while simultaneously ensuring your local television isn’t really all that local, is Sinclair Broadcast Group, Inc. Sinclair owns 191 television stations throughout the United States. If you’ve heard of Sinclair at all, it was probably in the John Oliver segment decrying the way Sinclair makes its supposedly local anchors parrot the exact same conservative talking points instead of doing real journalism.

Trying to fly under the radar is kind of Sinclair’s thing. A couple years ago, Sinclair was set to merge with Tribune Media Company in a $3.9 billion deal. Had Sinclair successfully acquired Tribune, Sinclair would have been in 73 percent of American households. What other company that three-quarters of us have never heard of has been set to sneak into three-quarters of our homes?

The deal didn’t go through though, in the face of a wave of bipartisan criticism that it would have given Sinclair a television broadcasting oligopoly. After the launch of an investigation by the FCC’s Office of Inspector General, the FCC unanimously declining to approve the merger. Of this, Sinclair president and CEO Chris Ripley said in a 2018 statement:

We unequivocally stand by our position that we did not mislead the FCC with respect to the transaction or act in any way other than with complete candor and transparency.

Well, fast forward to May 2020, when the FCC announced a $48 million civil penalty against Sinclair related to its attempted acquisition of Tribune. This is the largest civil penalty ever imposed in the 86-year history of the agency (the previous record was only half that, a $24 million penalty paid by Univision in 2007). Compared to Sinclair’s CEO, FCC chairman Ajit Pai had quite a different take on the Sinclair-Tribune deal, saying in a press release:

Sinclair’s conduct during its attempt to merge with Tribune was completely unacceptable.

The $48 million fine is part of a consent decree Sinclair entered into to resolve three separate ongoing FCC investigations. According to the FCC, the investigation into the proposed Sinclair-Tribune deal found that Sinclair attempted to deceive regulators by selling off stations in markets where it would have controlled multiple outlets (which it would have had to do to avoid antitrust issues) to two companies that actually had deep ties to the family behind Sinclair itself. The second FCC investigation found that 64 Sinclair stations aired sponsored content as news more than 1,400 times without disclosing that these were paid-for segments. Sinclair also shared these segments with several non-Sinclair stations, which aired them hundreds more times without telling viewers that they were sponsored content. To put that in English, Sinclair was airing paid advertisements as news. The third investigation closed out by the consent decree was into “whether the company has met its obligations to negotiate retransmission consent agreements in good faith,” and if you can translate what the FCC means by that into plain English, you’re a better wordsmith than I.

So, basically Sinclair was trying to circumvent the rules meant to keep it from owning a majority of local television media outlets and was hiding how it was doing it. Sinclair was also airing paid content as real news, and it was doing something inexplicable but shady when it was negotiating whatever retransmission consent agreements are. Now, Sinclair has to abide by what the FCC calls “a strict compliance plan” and pay a $48 million penalty.

Still, go back to the first paragraph and review the annual revenue up for grabs in local television media markets. Even pre-attempted Tribune acquisition, Sinclair was already involved in something close to 40 percent of local TV markets throughout the U.S. I think they’ll be fine. And I’m willing to bet this is far from the last we’ll hear from Sinclair Broadcast Group, Inc.

---

Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

You hear it. You hear it from the nobodies. You hear it from the low-energy whiners. You hear it from the paper-pushing haters.

Stan Druckenmiller said the risk-reward calculation for equities is the worst he’s seen in his career, and that the government stimulus programs won’t be enough to overcome real world economic problems…. “I pray I’m wrong on this, but I just think that the V-out is a fantasy,” the legendary hedge fund manager said, referring to a V-shaped recovery….

In the future, he said he wouldn’t be surprised if the Trump administration’s response to the coronavirus outbreak becomes the “poster child for the worst public policy decisions ever made from a cost-benefit analysis.”

It wasn’t that long ago that we were reporting on Perkins Coie’s assurances to associates that salary cuts and layoffs were not in their future. Though the partnership were deferring ~19 percent of their compensation, the firm had no plans for further austerity measures.

But that was last month. A little over a month later (even though it feels like several years ago now), and the firm has changed its tune. Today, in an all-attorney call, the firm announced that pay cuts were coming, beginning in their June paychecks. Non-partner attorneys will see a 15 percent cut, staff making $200,000+ will also have a 15 percent cut, and staff making $125,000-$200,000 will have compensation cut by 10 percent. Below is an internal slide describing the cuts:

Tipsters at the firm describe the cuts as indefinite and that, “Management says they don’t know if it will extend to 2021 or 2022. Won’t answer questions whether temporary or not.”

But, the good news at least, is that the firm is leaving the door open to a “special payment” to make whole top billers. And, as of now, there are no attorney layoffs.

The firm also provided insiders a look at how the austerity measures were impacting the partnership:

We reached out to the firm for comment, but have yet to hear back.

---

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

There will be no in-person classes in Fall 2020 at any California State Universities due to continuing COVID-19 concerns. That means a total of twenty-three universities will only have online instruction unless a viable vaccine is introduced before the start of the Fall semester.

How could twenty-three schools in a state the size of California agree that it is not safe for students to attend classes, but allow those same students to engage in contact sports? It does not seem possible that a reasonable justification can be made for those schools to participate in intercollegiate athletics while preventing students from sitting in a classroom.

Thus, the precedent has been set for a cancellation of college sports for the remainder of the year. In early May, NCAA president Mark Emmert even hinted that he could not envision college sports taking place if students are not allowed on their respective campuses.

“All of the Division I commissioners and every president that I’ve talked to is in clear agreement: If you don’t have students on campus, you don’t have student-athletes on campus,” Emmert said. “That doesn’t mean it has to be up and running in the full normal model, but you’ve got to treat the health and well-being of the athletes at least as much as the regular students. So if a school doesn’t reopen, then they’re not going to be playing sports. It’s really that simple.”

The twenty-three universities in the California State University system include Fresno State, San Jose State, and San Diego State. It is the largest four-year public university system in the United States.

Marc Isenberg, a Vice President and Director of Financial Education at Morgan Stanley’s Global Sports & Entertainment division, believes it is very unlikely that a university will close its doors to in-person classes yet allow athletes to engage in contact sports.

“Schools may try to move forward, but probably would require player to indemnify, which obviously should be a nonstarter,” Isenberg said.

Yet, it is possible that certain schools, such as those in the California State University system, be excluded from participating in college sports in Fall 2020 while other schools that do not feel the same coronavirus concerns plan for full participation of their college athletes. Southeastern Conference commissioner Greg Sankey is on the record as stating that there is room for different conferences to make different decisions, which means the college sports landscape could be composed of a smaller number of schools than what has been seen in prior years.

---

Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at heitner@gmail.com and follow him on Twitter at @DarrenHeitner.

Welcome listeners to this COVID-19 Special Report podcast presented by our friends at Wolters Kluwer and hosted by Evolve the Law Contributing Editor, Ian Connett (@QuantumJurist).

This report features Nicole Pinard, Vice President & General Manager of Legal Education at Wolters Kluwer, who brings exceptional experience leading cross-functional teams to develop innovative learning solutions for law students, professors and the entire legal education industry.

Listen in as Nicole and Ian explore COVID-19’s impact on the rapidly evolving law school model, how professors are adapting to virtual innovation, and what law students must do at this time to finish this semester strong and prepare for the months and years ahead.