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Good morning. The latest Thomson Reuters Institute’s Law Firm Financial Index shows a brighter financial picture based on key metrics. Karen Sloan breaks down the numbers. Plus, Fox wants Dominion Voting’s lawyers to investigate whether they leaked internal messages from Tucker Carlson. On the docket today, Google and Sonos head to trial, Sam Bankman-Fried faces a deadline for key court filings in his criminal case, and closing arguments are expected in E. Jean Carroll’s civil rape trial against Donald Trump. It’s another big week in the courts.
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REUTERS/Thomson Reuters Institute & Financial Insights – Law Firm Financial Index
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Today’s newly released Thomson Reuters Institute’s Law Firm Financial Index, which tracks key financial metrics, rose 14 points in the first quarter of 2023, representing the first increase since the second quarter of 2021, Karen Sloan reports.
Billing rate growth remained healthy for law firms, with rates up nearly 6% over the past year, according to the index. Law firm direct expenses grew more slowly in the first quarter than in the previous year because firms have not raised associate salaries during the previous 12 months. Midsize firms saw demand increase by nearly 2% over the past year and they grew their headcount by almost 5% in response, the index found.
“We knew the pendulum would start to swing back after we set low tide marks the last couple of quarters,” said William Josten, manager for enterprise legal content at the Thomson Reuters Institute, which shares the same parent company as Reuters. The new data shows challenges remain. Profits-per-lawyer declined 0.6% over the past 12 months, and lawyer productivity fell more than 3% during that time.
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- Tesla has turned to law firms Cravath and Farella to defend against lawsuits accusing the electric vehicle maker of unlawfully controlling maintenance and repair services, forcing consumers to pay more and wait longer. Antitrust lawyers David Marriott of Cravath and Farella’s Christopher Wheeler jumped into the cases in recent days. Tesla said in a filing that it planned to soon ask U.S. District Judge Trina Thompson to dismiss the suits.
- Morgan Lewis won dismissal of Prospect Capital’s $12 million malpractice lawsuit in New York state court, after a judge found the business development company hadn’t shown enough of a connection between the firm’s actions and the alleged harm. The court rejected Morgan Lewis’ contention that it could not be held liable at all. (Reuters)
- An attorney for Arizona Republican Kari Lake was hit with a sanction by the Arizona Supreme Court over making “false factual statements” to the court over the failed gubernatorial candidate’s election claims. “Sometimes campaigns and their attendant hyperbole spill over into legal challenges. But once a contest enters the judicial arena, rules of attorney ethics apply,” the justices wrote in their order. The high court imposed a $2,000 penalty. (NBC)
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That’s how much the SEC said it will pay a whistleblower in a record-setting payout. “There is a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations,” Gurbir Grewal, director of the SEC’s enforcement division, said. Awards to whistleblowers can range from 10% to 30% of the money collected when the sanctions exceed $1 million. The agency did not reveal details about the underlying case. The award is more than double the $114 million that it had issued in October 2020.
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“These defendants were prepared to fight.
Not for their country, but against it.“
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—Federal prosecutors in D.C., including assistant U.S. attorneys Jeffrey Nestler, Troy Edwards and Alexandra Hughes, arguing in a sentencing memo that Oath Keepers founder Stewart Rhodes should be sentenced to 25 years in prison for his conviction on seditious conspiracy and other charges over the 2021 attack on the U.S. Capitol by supporters of former President Donald Trump. The DOJ said it was seeking 21 years in prison for another Oath Keepers leader, Kelly Meggs, who also was found guilty of seditious conspiracy. The longest sentence so far in any Jan. 6 case was 14 years in prison. Rhodes, who pleaded not guilty, is due to be sentenced later this month.
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- Anti-abortion groups and doctors seeking to ban the abortion pill mifepristone are expected to submit a court filing to the 5th Circuit in defense of a preliminary order from U.S. District Judge Matthew Kacsmaryk in Amarillo, Texas, suspending the drug’s approval. The brief will respond to the Biden administration’s challenge of Kacsmaryk’s order, which is currently on hold pending the appeal. The DOJ last month told the court that mifepristone’s safety is “amply supported by a record developed over decades of safe and effective use” around the world. The 5th Circuit will hear arguments on May 17. Erin Hawley of Alliance Defending Freedom will argue for plaintiffs including Alliance for Hippocratic Medicine, and will go up against Sarah Harrington of the DOJ.
- Sonos and Google will face off in a San Francisco federal trial over claims that Google copied Sonos’ patented smart-speaker technology in wireless audio devices like Google Home and Chromecast Audio, Blake Brittain reports. Sonos has asked the court for $90 million in damages from Google in the San Francisco case, down from $3 billion after U.S. District Judge William Alsup narrowed the case. Sonos alleges Google infringed two of its patents related to multi-room wireless audio. A Google spokesperson said Sonos “mischaracterized our partnership and technology.” The case is part of a sprawling IP dispute between the former business partners.
- In the D.C. Circuit, Judges Gregory Katsas, Naomi Rao and Florence Pan will hear arguments over whether a District of Columbia suit against Exxon and other energy companies over their alleged roles in contributing to climate change should be heard in Superior Court or in the federal district court. D.C.’s principal deputy solicitor, Ashwin Phatak, will argue for the city that the case belongs in the local court. Appellate veteran Kannon Shanmugam of Paul Weiss will argue for the energy companies that “the complaint reveals that this is a far cry from a typical consumer-protection case that belongs in state court.” Gibson Dunn represents Chevron, Kellogg Hansen has appeared for Shell, and attorneys from Arnold & Porter are defending BP.
- FTX founder Sam Bankman-Fried’s lawyers at Cohen & Gresser have until today to file motions in Manhattan federal court formally responding to the criminal fraud charges brought against him by federal prosecutors. Bankman-Fried has pleaded not guilty to eight counts of fraud and conspiracy for allegedly stealing billions in FTX customer funds to plug losses at his hedge fund, Alameda Research. He also has pleaded not guilty to charges of conspiring to violate campaign finance laws and bribe Chinese authorities. Bankman-Fried is confined to his parents’ Palo Alto home as a condition of his $250 million bail package.
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- On Tuesday, U.S. District Judge Amit Mehta in D.C. federal court will hear the SEC’s lawsuit demanding that Covington disclose details about nearly 300 of the firm’s clients whose information was accessed or stolen by hackers in a previously undisclosed cyberattack. Covington called the subpoena “an assault on the sanctity and confidentiality of the attorney-client relationship” that could open the firm’s clients up to SEC scrutiny without initial evidence of misconduct. A group of 83 large U.S. law firms has thrown its weight behind Covington’s effort to resist the SEC’s demand.
- Also on Tuesday, Suffolk County Superior Court Justice Kenneth Salinger in Massachusetts will hear oral arguments in a $636 million malpractice lawsuit against Proskauer. Former Proskauer client Robert Adelman in 2020 sued the firm over its work on a contract that was supposed to protect his interest in a multibillion-dollar hedge fund he had co-founded. Proskauer and its lawyers at Williams & Connolly have moved for summary judgment, arguing among other things that the contract as a whole protected Adelman’s economic interest in the hedge fund. Lawyers from Susman Godfrey represent Adelman.
- On Wednesday, lawyers for Donald Trump are expected to file their opening brief in the 11th Circuit challenging a Florida federal judge’s orders sanctioning counsel for the former U.S. president for their work on his suit claiming the 2016 presidential election was rigged. U.S. District Judge Donald Middlebrooks last year threw out Trump’s lawsuit, saying he was “seeking to flaunt a two-hundred-page political manifesto outlining his grievances against those that have opposed him.” The judge in January ordered Trump and his attorneys to pay more than $937,000 in sanctions. Trump’s lawyers had opposed any sanctions.
- On Thursday, 2nd Circuit Chief Judge Debra Ann Livingston, sitting with Circuit Judges Reena Raggi and Maria Araújo Kahn, will hear Elon Musk’s challenge to a Manhattan federal judge’s refusal to end his 2018 agreement with the SEC requiring a Tesla attorney to vet some of his posts on Twitter. Musk, represented by Quinn Emanuel, will ask the appeals court to overturn an April 2022 decision by U.S. District Judge Lewis Liman that allowed the consent decree with the SEC to stand. The decree resolved a lawsuit accusing Musk of defrauding investors by tweeting in 2018 that he had “funding secured” to take his electric car company private, though a buyout was not close. The SEC’s Jeffrey Berger will argue for the agency.
- On Friday, Argentine businessman Alejandro Burzaco, former head of a sports marketing company, is scheduled to be sentenced in Brooklyn federal court for paying millions of dollars in bribes to secure marketing rights to soccer tournaments, including the Copa America, Copa Libertadores and World Cup. Burzaco pleaded guilty in 2015 and cooperated with prosecutors. He was a cooperating witness at trial this year in the prosecution of two former 21st Century Fox executives, one of whom was convicted while the other was acquitted. U.S. District Judge Pamela Chen will preside at the hearing.
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- Closing arguments are set to begin today in E. Jean Carroll’s civil rape trial against Donald Trump in Manhattan federal court. Carroll has testified that Trump raped her in a department store dressing room in Manhattan in the mid-1990s, and then tarred her reputation and career by lying about it online. Trump has denied the allegation. (Reuters)
- The execution of Oklahoma death row inmate Richard Glossip, whose case has drawn support from the state’s Republican attorney general, was halted by the U.S. Supreme Court. An investigation shed new light on evidence relating to the 1997 murder Glossip was convicted of commissioning. The justices acted after a divided Oklahoma state panel last month voted against recommending clemency for Glossip, who was scheduled to be executed on May 18 for his role in the murder of motel owner Barry Van Treese. (Reuters)
- Distributors for a commercial bakery can pursue claims in court rather than arbitration that they were misclassified as independent contractors, a unanimous 1st Circuit panel said. The appeals court said the distributors for bakery Flowers Foods were “transportation workers engaged in interstate commerce,” qualifying them for an exemption from having to arbitrate wage claims. (Reuters)
- Sweden’s Assa Abloy, the world’s No. 1 lock maker, and U.S.-based Spectrum Brands, said they reached a settlement with the DOJ regarding Assa’s $4.3 billion proposed deal to buy Spectrum’s hardware and home improvement division. The deal came mid-trial in D.C. federal court. (Reuters)
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- Winston & Strawn picked up a trio of D.C.-based litigators from Reed Smith: Lawrence Block, Elizabeth Leavy and Lawrence Sher. The three partners focus on litigation matters arising out of government contracts. (Reuters)
- Alston & Bird added private equity partners Jonathan Manor and Simon Root in the firm’s Palo Alto office. They were previously at Kirkland. (Alston)
- Akerman added Aliza Malouf as a D.C.-based partner focused on consumer financial services data and technology. Malouf previously was at Hunton Andrews Kurth. (Akerman)
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Congress has taken steps to combat the online market for counterfeit and stolen goods in passing the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act, write Mike Turner and Lee Barrington Stark of Neal, Gerber & Eisenberg. The law, which goes into effect in June, imposes new disclosure obligations on high-volume sellers of consumer goods through online marketplaces. There’s lots to unpack in the new law.
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