Latest Legal News: Bank of America Settlement, Round Two

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B of A Reality Show Round 2: SEC Stands by Its Story, Cuomo Won't Show His Evidence

What does Judge Rakoff think of the Security and Exchange Commission's decision not to prosecute Bank of America (BAC) executives or include punishments against them in its proposed settlement? That depends on which version of events he believes -- the SEC's or New York Attorney General Andrew Cuomo's.If Cuomo's tale of executives overriding legal advice to disclose Merrill Lynch's mounting losses is accurate, the judge will likely reject the proposed settlement. But if the SEC's more benign version is right, he seems disposed to approve the deal. Rather than blindly pick sides, Judge Rakoff has asked the SEC for its underlying evidence, which the SEC and B of A gave him on Wednesday.

The SEC asked Cuomo for his evidence, as well, so that it could be presented to the court. But so far, Cuomo has refused to give the SEC -- and thus the judge -- his supporting evidence, asserting that doing so would jeopardize his ongoing investigation. Further, Cuomo maintains that the five sworn depositions underlying his case represent information the SEC didn't have. Because Cuomo asserts his evidence is different from the SEC's, the judge can't resolve the factual dispute by assessing whether the SEC's conclusions are fairly drawn from its own record. So the judge has decided to ask Cuomo politely to give the relevant evidence to him by noon Friday, and has delayed ruling on the proposed settlement until February 22.

Sharply Ideologically Divided, "Results"-Oriented Top Court? No, Not D.C., New York!

The New York Court of Appeal's new Chief Justice, Jonathan Lippman, has already transformed the court from a staid body prone to unanimous decisions to a more fractious 4-3 court, with the liberal view frequently prevailing -- surprising, given that four of the judges were appointed by former Republican Governor George Pataki. According to the New York Times profile Thursday, the change is no accident. Justice Lippmann declares: "I am a result-oriented person ... and the result I am looking for is not necessarily unanimity."

In an era when "activist judge" is an epithet so casually used it has virtually no meaning -- beyond a vague connotation that the judge is going for a specific result rather than blindly applying the law -- Judge Lippman's honesty is refreshing. According to a retired judge who has known Lippman throughout his 38-year career, this "result focus" is not new. She asserted that Lippman has always been more concerned about getting to the outcome he believed right than he was with technical rules, a description that seems paradigmatically "activist."

Whatever results an appellate judge wants, however, are irrelevant if he can't persuade a majority of his colleagues to agree with him. And there's Justice Lippman's big challenge: the Court of Appeals is recognized as having a conservative 4-3 majority, and Justice Lippman's desired results are liberal. So for each liberal result Chief Justice Lippman produces, he needs to persuade at least one of the conservatives to join him. So far he seems to be a very persuasive guy.

And in the business of law...

First year associates at MoFo will make $160,000 a year after all; Sidley Austin reports revenue and net income were down, but thanks to layoffs and other cost-cutting, profits per partner were up; and senior associates are finding that the jackpot goal of partnership is increasingly out of reach. With the Great Recession shrinking the profits pie, existing partners have little incentive to give new folks a slice.
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