Category: News Feeds

Could it be? Is there a Biglaw firm out there that’s bold enough to offer its associates a fall bonus after Cravath put the kibosh on doling out cash before the end of the year?

Yes! Finally!

Akin Gump — a firm that came in at No. 34 on the most recent Am Law 100 ranking, with $1,135,014,000 in gross revenue — has bucked the trend and is matching Davis Polk’s generous scale. In an email entitled “Good News and Appreciation,” chair Kim Koopersmith acknowledged her attorneys’ dedication during these difficult times, writing, “You have been making extraordinary contributions in the most challenging of circumstances. In recognition of your dedication and contribution to our firm, we will be paying a special fall bonus to our associates and counsel in good standing.”

In case you’ve forgotten what the DPW scale looks like (and you probably have by now since it’s been so long), here it is:

• Class of 2019: $7,500
• Class of 2018: $10,000
• Class of 2017: $20,000
• Class of 2016: $27,500
• Class of 2015: $32,500
• Class of 2014: $37,000
• Class of 2013+: $40,000

(Flip to the next page to see the full Akin bonus memo.)

Associates are thrilled as can be. “Nice to see Akin Gump ignore the trend of firms refusing to pay this bonus—especially considering how busy everyone has been this year and how well the firm has done,” said one associate. “Feels great, especially for those of us in exceptionally busy practices,” said another.

Akin Gump’s special bonuses will be paid out on November 30, and the firm has committed to offering its “usual year-end [bonuses] at the market scale.”

Congratulations to everyone at the firm. Will your firm step up and offer fall bonuses?

Please help us help you when it comes to bonus news at other firms. As soon as your firm’s bonus memo comes out, please email it to us (subject line: “[Firm Name] Bonus”) or text us (646-820-8477). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.

And if you’d like to sign up for ATL’s Bonus Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the bonus alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each bonus announcement that we publish.

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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.

Last year, the 2019 graduating class of Morehouse College received the surprise of their lives at their commencement ceremony. Their commencement speaker, billionaire Robert F. Smith, announced that he would pay off their student loans totaling $43 million.

At the time, a part of me wondered if there was an ulterior motive for his generosity. Maybe he wanted to set the example for other wealthy alumni. Or he wanted publicity for an upcoming project. Or he just wanted a tax write-off he can feel really good about. Indeed, their student loans will be repaid through the newly formed Morehouse Student Success Program, where contributions are tax-deductible. But ultimately, it was his money, and he can do whatever he wants with it. And he put it to a lot better use than others in his position. So I decided to let it be.

Last week, the U.S. Justice Department announced that Smith was investigated by the IRS’s Criminal Investigation division for potential tax crimes and has entered into a nonprosecution agreement.

According to the Justice Department, Smith formed the Excelsior Trust in Belize, and a shell company, Flash Holdings, in Nevis in 2000. Smith used third parties to conceal his ownership and control of the Excelsior Trust and Flash Holdings. But in reality, Smith controlled both entities and made all substantive decisions. Smith used the Excelsior Trust to conceal his ultimate ownership and control over Flash Holdings. He further used Flash Holdings to hide his interest in private equity investments. Smith admits that he formed these foreign entities in order to use them to avoid reporting over $200 million of income and payment of U.S. taxes.

Over the years, Smith used millions of this unreported income to acquire and make improvements to real estate used for his personal benefit. In 2005, he spent approximately $2.5 million to purchase and renovate a vacation home in Sonoma, California. In 2010, he purchased two ski properties and commercial property in France. In 2011 and 2012, Smith used approximately $13 million to build and make improvements to a residence in Colorado and to fund charitable activities there.

As part of the nonprosecution agreement, Smith will agree to pay $56 million in taxes and penalties and an additional $82 million in special penalties for failing to report his offshore bank accounts.

In addition, Smith agrees to abandon his charitable contribution deductions for 2018 and 2019 which would result in a $182 million tax refund. This contribution likely includes his large gift to the Morehouse graduating class.

Finally, Smith will agree to cooperate with the IRS with any ongoing investigations for the next five years. Smith was reportedly connected with another billionaire, Robert Brockman, who was recently indicted on 39 criminal counts, including tax evasion, money laundering, conspiracy, and wire fraud, to name a few. He is accused of hiding $2 billion in income, which is the largest case of tax fraud in U.S. history.

Smith’s case is interesting because it gives a glimpse of how the IRS and the Justice Department decide whom to prosecute for tax crimes. The Justice Department does not prosecute many people for tax crimes, but the ones they do have a high likelihood of conviction.

The Justice Department’s announcement stated that Smith’s agreement to cooperate was the deciding factor when deciding not to prosecute. It is believed that he will be a key witness against Robert Brockman and will provide incriminating documents to strengthen their case against him. This is a clear case where the Justice Department is giving concessions in order to go after the bigger and more elusive fish. Without Smith’s cooperation, their case against Brockman will be more difficult.

But another factor the Justice Department must consider is whether a jury is likely to convict Smith. Would a jury believe that Smith acted with fraudulent or criminal intent? Or did he reasonably rely on advisors and lawyers? Would they believe that untaxed money was used to purchase the properties described in the nonprosecution agreement? Or could they have been purchased legally with after-tax money or through a method allowed by law. And finally, in this current climate of protests on racial inequality, if a trial were held now, a jury of Smith’s peers could decide not to convict, even if they believe the prosecution’s narrative.

Charitable work and lenient sentencing can also play a role in deciding whether to prosecute. In one high-profile case, Beanie Babies creator Ty Warner pled guilty to tax evasion and was sentenced to two years of probation and 500 hours of community service. As for Smith, in addition to the Morehouse donation, he has given away at least $300 million for various charitable causes.

Whether Robert F. Smith’s pledge to pay off the Morehouse grads’ student loans and his charitable works was motivated by altruism or his desire to avoid jail is debatable. And it seems like a common defense strategy for people facing tax crime indictments. But in the end, he paid his taxes and then some. And he has agreed to help the prosecution on the largest tax fraud case in U.S. history. As far as I’m concerned, I think I will let this be too.

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Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at sachimalbe@excite.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

You know what a boycott is. But we already have enough negativity in our national discourse, and let’s face it: you probably weren’t going to be spending money on that thing you claim to be boycotting anyway (sorry Donald Trump nuts who don’t even live in New York who tried to boycott the Broadway run of Hamilton that was already sold out a year into the future). I guess by the logic of most boycotts, I’m waging a years-long boycott of the 95-plus percent of products in existence that I already don’t buy.

A “girlcott,” on the other hand, can be a more positive and more proactive way for a generalized group to have their voices heard through their pocketbooks. It seems the term may have first been widely used in 2005 in an effort by high school girls in Pennsylvania to protest Abercrombie & Fitch, as a descriptor simply for girls boycotting something (I’ll allow they definitely had the demographic paired up well with the boycotted product in that instance). But more recently, girlcott has been used to describe kind of the inverse of a boycott: going out and spending money on something purposefully to support and reward its source. Although she didn’t coin the term, author Stacy Malkan gets some credit for popularizing it in her book about the beauty industry. Malkan interviewed cancer researcher and author Dr. Devra Davis about using the word girlcott in her efforts to help people gradually replace the damaging products that seem to edge their way into all of our lives. “Boycotts mean saying no,” Davis explained. “Girlcotts mean yes.”

What a great concept. There are all kinds of worthy things one could apply it to. But, with this heinous election looming in just a couple weeks, I think there are a few obvious choices.

No, I’m not talking about Trump, for once. That’s too obvious, and too broad. But you know who it would be just fantastic to never have to hear from again? What about the guy who said this while stealing Merrick Garland’s Supreme Court seat:

I want you to use my words against me. If there’s a Republican president in 2016 and a vacancy occurs in the last year of the first term, you can say Lindsey Graham said let’s let the next president, whoever it might be, make that nomination.

… who then doubled down in 2018:

If an opening comes in the last year of President Trump’s term, and the primary process has started, we’ll wait till the next election.

… and who finally, in 2020, well after the primary process was over and just weeks from the general election, when it was his party getting to fill the Supreme Court seat, said “the rules have changed” before retweeting Trump’s tweet saying RBG’s Supreme Court seat should be filled “without delay.”

Yes, this wordsmith is the one who also called Trump, back in 2016, a “kook” who was “unfit for office” before spending the next four years cozying up to him like a neglected puppy. Now, in 2020, he goes to lick Trump’s boots as his regular golfing buddy. “I don’t like what he says about John McCain,” this supposedly close friend of McCain later said of Trump. “But when we play golf, it’s fun.” Among many other insults both before and after McCain’s death, Trump called McCain a “loser” because he was captured and tortured during the Vietnam War, a war which Trump himself avoided serving in because of a fictional diagnosis of bone spurs. Boy, some friend.

Yes, that’s right, I’m talking about the senior United States Senator from the great state of South Carolina, Lindsey Olin Graham! The many other betrayals of his constituents and whatever remnants of dignity he had left are far too voluminous to catalogue in what is already a too-long column, but suffice it to say that the people of South Carolina can do better, namely with Graham’s challenger in the upcoming election, Jaime Harrison. In a recent debate, Harrison said of Graham’s flip-flopping and subsequent tortured justifications:

The greatest heresy that you could do as a public servant is to betray the trust of the people that you took an oath to serve, and that’s what you’ve done. Just be a man of it and stand up and say, you know what, I’ve changed my mind.

Now there’s a leader, eh?

I’ve already explained what a girlcott is, and this is a “Blue Men’s Group” girlcott only because I am probably going to take my trip with a group of Democratic-leaning guys and I like the double entendre of a bunch of literally blue Tobias Fünke types traipsing around South Carolina. Men, women, and any and all nonbinary folks are totally welcome to join in the fun. So, this is how it works. If you want to join the girlcott, all you have to do is commit to visiting South Carolina sometime in 2021 (whenever it is safe, pandemic-wise) and to spending some money there, if and only if Harrison wins the Senate seat. This will be a reward to the good people of South Carolina for making the right choice on election day, and it will be a little treat for all of us who no longer have to listen to Graham misuse the powers of the government to rant at James Comey in a committee hearing about whatever the hell Obamagate is supposed to be.

Hey, it’s going to be a great time too. South Carolina has a lot going for it as a tourist destination. I should know: as I’m writing this, I’m even wearing my South Carolina Gamecocks sweatshirt from my last trip to the Palmetto State — go Gamecocks!

And if Graham gets re-elected? Well … I hear Vermont is lovely in the fall.

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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.

Biglaw is, by and large, little “c” conservative. And, as far as compensation goes, that usually means following the leader (read: Cravath). Most times that works out well for associates, as Cravath is generally a market leader. But when it comes to COVID-19 fall appreciation bonuses, well, Cravath has taken a wait-and-see approach — despite others like Davis Polk, Milbank, and Sullivan & Cromwell moving forward. But Cravath is still Cravath, and lots of firms have taken their lead on fall bonuses.

So, it really isn’t a surprise that White & Case has made a statement that there will be no fall bonuses for associates (available in full on the next page). But it is still upsetting, as tipsters say:

No fall bonus at W&C. No surprise given the firm is never a leader on comp. If they do eventually give a bonus, I’m sure this will allow them to make it subject to minimum hours (like the usual end of year bonus) and delay paying until February 2021 with the usual bonus.

This is a gut punch for people in practice groups that are drowning in work right now. I, and many of my colleagues, have already hit (and well exceeded) hours requirements for this year. We were just told that banking, restructuring, and M&A are having banner years.  So essentially all of that cash goes to partners. I’ve spoken with many overworked associates whose motivation is utterly gone now.  I’m not holding my breath that the Firm will make good at time for bonuses early next year.  Truly disappointing.

For what it’s worth, White & Case notes they will be taking the fall bonuses into account when it’s time for year-end bonuses. But it doesn’t sound like associates are holding their breath.

Please help us help you when it comes to bonus news at other firms. As soon as your firm’s bonus memo comes out, please email it to us (subject line: “[Firm Name] Bonus”) or text us (646-820-8477). Please include the memo if available. You can take a photo of the memo and send it via text or email if you don’t want to forward the original PDF or Word file.

And if you’d like to sign up for ATL’s Bonus Alerts, please scroll down and enter your email address in the box below this post. If you previously signed up for the bonus alerts, you don’t need to do anything. You’ll receive an email notification within minutes of each bonus announcement that we publish.

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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).

Too many stories have piled up.

The head of the National Conference of Bar Examiners passed along a not-so veiled threat that state bar examiners are going to make character and fitness trouble for applicants seen criticizing the exam. Law schools started scolding diploma privilege advocates about character and fitness retaliation. At least one applicant has now come forward to reveal that his record — which passed character and fitness scrutiny before he criticized the bar exam — is now open again in what reads as pure retaliation. Now we’re hearing that North Carolina is telling people who already cleared the ethical inquiry that they have to appear before the full board — in the summer of 2021 — before getting their licenses.

Alright state governments… come get your bureaucrats.

Whether it’s the legislature, or the judiciary, or the state AG’s office, it’s now time to begin a serious inquiry into exactly how the state bar examiners are doing their jobs. The sanctity of the licensing process depends on knowing that the bar examiners aren’t a goon squad trying to shakedown anyone who looks at them cockeyed. Figuratively cockeyed that is, because I assume looking at them literally cockeyed already flagged the proctoring algorithm.

After we covered Karen Sloan’s interview with Brian Heckmann over belief that he’s the subject of retaliation for having become a prominent diploma privilege advocate on local media, someone wrote in saying that the investigation seemed superficially to be valid, which misses the point. There are a million and one minor infractions that an enterprising character and fitness committee could say warrants a deeper dive. But they see these issues and properly dismiss them all the time and seem to have only started caring about adding these onerous hoops when they see the opportunity to harass a critic. Indeed, even if this process were to uncover a handful of legitimate issues, the fact that the examiners chose to dig into applicants after already clearing them speaks to a post hoc retaliation effort that’s troubling on its face.

There needs to be an official inquiry. With everything that’s happened over the last several months, it’s time for governments to get a handle on this. Subpoena some documents. Figure out if reopening character and fitness reviews have spiked this year and why. Get someone to testify under oath about why paying a parking ticket late in 2011 is an issue this year when it wasn’t for a similarly situated candidate last year.

Bar examiners are going to complain that this is uncalled for and an intrusion into them just doing their jobs. And, hey, maybe everything is warranted and above board and only looks like a retaliatory threat because they explicitly threatened people! But seriously, this is what happens with government agencies! They get reviewed from time to time and especially after allegations of even the appearance of impropriety. Even the most scrupulously run organization should have oversight.

And if they think it’s unfair to have to take time out of their day to gather documents and go to a hearing when they don’t think they’ve done anything wrong, then now they know how all these applicants that they already cleared feel right now.

Earlier: NCBE Prez Issues Threat To Tie Up Licenses Of Bar Exam Critics
After Criticizing Bar Examiners, Bar Applicant’s Character & Fitness Review Mysteriously Ramped Up
Law School Implies Diploma Privilege Advocates Could Get Dinged On Character & Fitness

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Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

The story is an all too familiar one in the area of assisted reproduction. You got a home DNA kit as a gift or buy one yourself, curious about your ancestry. What a fun thing to do! Not. So. Fast.

Once you receive the results of the genetic test, you’re in shock to learn that your parents might not have been who you always thought they were.

A Horrific And All Too Familiar Story

Traci Portugal is among the many to experience this unwelcome surprise. Hers occurred in the fall of 2019, after taking a 23andMe genetic test. A mom in her mid-40s living in the state of Washington, Portugal was curious about her genetic medical history, given that both her father and paternal grandparents had passed. Her results, however, showed genetic relatives she didn’t recognize and genetic conditions she had no knowledge of. And, ultimately, the results led her to discover that her mother’s fertility doctor out of San Diego, California — not the man that she had called “Dad” her whole life — was her genetic father.

Her mother revealed to her how she and her father had sought fertility treatment before her conception, and were told that the use of donor sperm, sourced from a pre-med student, would “help” her father’s sperm along. But the doctor told her parents never to tell anyone about the treatment, which is like, the most suspicious thing you can say to a patient and an absolute red flag. But this was  the 1970s, when the world was simpler.

As Portugal sought out more information, she reached out to the doctor, still practicing at the time, directly. He was cruel in response: he refused to provide her familial medical information; he asked what she had accomplished in life while sharing no substantive information in return, and then he abruptly cut off all communication.

On the legal front, Portugal talked to various lawyers about exposing the doctor for his unethical actions. Unfortunately, the few cases that have moved forward against “doctor-donors” have regularly dismissed the children conceived from the donation on the basis that they lack standing and are not considered an injured party. Tell that to Portugal, who like many doctor-donor offspring, deals with constant anxiety and depression from the trauma of her discovery.

Driven

The one thing the doctor did share with Portugal was that all of his “children were driven individuals.” That characterization certainly applies to Portugal. After experiencing trauma due to the circumstances of her conception, and learning of so many others in similar situations, Portugal became driven to expose what this doctor and other doctors like him have done, and to advocate for legislative change and support for those harmed by their actions.

Cataloging The Law

Portugal founded the website DonorDeceived.org, where she carefully catalogues and tracks the legal cases dealing with fraud and donor conception. While initially focused on cases in the U.S., she has recently connected to international organizations and sources and is expanding her coverage. She has categorized these cases into: Doctor Donor Fraud, Donor ID Fraud, Donor Medical/Info Fraud, Donor Permission Fraud, and Large Sibling Groups. Who knew there were so many types of fraud occurring with donor conception?!

For any attorney interested in this area, the website is a wealth of information. And, if you weren’t previously interested, take a look and you will be. These cases grapple with the very heart of what it means to be a human, what information we are entitled to know about ourselves, and how judges must apply outdated laws to cutting-edge technological advancements, modes of conception, and family configurations not yet imagined at the time of their creation.

In addition to her focus on the legal side of donor fraud, Portugal has been passionate about bolstering mental health resources for victims of donor fraud. Portugal described her recent project with the Counseling Collective to help connect skilled mental health professionals — trained in the complexities of MPE/NPE (misattributed parentage/nonparent expected) — and connect them with victims in need of professional mental health support.

As if that wasn’t enough, Portugal has also been working with other stakeholders, including the organization Right To Know, on legislation, both in her home state of Washington and other states, to support the rights of donor-conceived people. Right To Know is an advocacy group for people who discover one or more of their genetic parents is not their legal parent. In addition to promoting access to trained mental health professionals, the group advocates for changes in the law to reflect a person’s right to know their genetic identity.

You would think that we could all agree that doctors should not use unauthorized sperm, eggs, or embryos with their patients, and that a law against such actions should be a no-brainer. Fascinatingly, Portugal describes how these laws have faced opposition. Some have argued that there is no need, and that no doctor is going to engage in this type of behavior now. Let’s hope! But Portugal argues that we have probably only seen the tip of the iceberg of these cases, and that the expanding use of DNA kits is going to continue to reveal a substantial number of victims. And those victims deserve a path to justice. Don’t they?

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Ellen Trachman is the Managing Attorney of Trachman Law Center, LLC, a Denver-based law firm specializing in assisted reproductive technology law, and co-host of the podcast I Want To Put A Baby In You. You can reach her at babies@abovethelaw.com.

Like many of his colleagues—notably his good friend Jay Clayton, most recently seen doing away with those pesky and unnecessary rules about conflicts of interest, whatever those are anyway, vis-à-vis auditing firms—Attorney General Bill Barr has gotten quite busy in the last few weeks. To be sure, he’s doing all that he can to ensure the next few months are not his last at the helm of the Justice Department, but just in case, he’s making sure as many Americans as possible die of COVID-19 during this fall spike, exacting vengeance on his and his boss’ enemies (while ignoring the much more serious crimes of their friends), racing to file a hastily-slapped together lawsuit against another, and making sure the president—who looks to be pretty hard up these days—doesn’t have another legal bill to pay.

* The Department of Justice has filed an antitrust lawsuit against Google. Don’t get it, people still use Ask Jeeves, AOL Keywords, and Prodigy, right…? (I’m really dating myself here!) [Wall Street Journal]

* Lawyers at Jones Day have purportedly donated far more money to Joe Biden than President Trump, even though the firm is working on President Trump’s re-election campaign. [Reuters]

* The Los Angeles District Attorney and her husband are being sued over an incident earlier this year in which the husband of LA’s district attorney allegedly pointed a gun at protesters. [Fox News]

* President Trump has requested that Attorney General Barr investigate Hunter Biden for alleged improprieties. [Bloomberg Law]

* New Hampshire is suing Massachusetts in the Supreme Court of the United States for taxing New Hampshire residents even though they are working remotely. This is going to be a “wicked” interesting case. [Fox News]

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Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

Ed. Note: Welcome to our daily feature Trivia Question of the Day!

According to Vault’s 2021 rankings, which litigation boutique topped the list?

Hint: This firm was founded in Houston, but now has four offices nationwide.

See the answer on the next page.