Legal Briefing: Banks Suing Banks Over Credit Default Swaps
A daily look at legal news and the business of law:
More Fallout from Exploding CDSs: Citigroup Sues Morgan Stanley
The big banks generally don't sue each other, but that's changing thanks to credit default swaps. Citigroup (C) is suing Morgan Stanley (MS) for $245 million, alleging Morgan failed to make good on credit default swaps held by Citi. Morgan claims that Citi engineered the underlying default that made the swaps come due, which was a breach of their CDS agreement. A big bank buying credit default swaps when it was involved in making the underlying debt obligation particularly risky ... hmmm ... where have we heard that before? Both sides have requested a ruling on the matter from District Judge Shira Scheindlin in New York.
Apple Sues Google's Main Cell Phone Partner Over Patents
When Google's (GOOG) Android cell phone operating system hit the market, it was seen as a potentially major rival to Apple's (AAPL) iPhone. Apple is now trying to end the competition with a lawsuit charging that Android phones made by HTC Corp., including the Nexus One, which Google itself sells, infringe on 20 of Apple's patents. Although the suit seeks an injunction that would shut down the sale of Android phones, that result seems unlikely. What's more probable is a countersuit by HTC and/or Google, ultimately followed by a settlement.
Just How Male and White Is Wal-Mart?
On March 1, Wal-Mart (WMT) entered a settlement agreement with the Equal Employment Opportunity Commission in which it agreed to pay a class of women denied warehouse jobs $12 million and give them preference in hiring. This case follows a February 2009 settlement in which Wal-Mart agreed to pay to resolve claims it discriminated against black people in hiring truck drivers. Wal-Mart has faced and settled other discrimination suits in the past, and currently faces the largest gender-discrimination case in history.
Rethinking Skilling's Chances
On Tuesday, I discussed the Supreme Court's reception of arguments that ex-Enron CEO Jeffrey Skilling should get a new trial, and bullishly claimed that if the justices could figure out how to draw the right line, they would grant him a new trial on the basis that his jury's selection process risked too many biased jurors.
Frankly, that goes too far: Before the justices could contemplate the rule they'd fashion, five of them would have to agree that the juror selection process was fatally flawed, and it's hard to count those five votes. Justice Breyer, who was most troubled, is rarely in the majority, and the justices -- indeed, judges generally -- are not predisposed to assisting convicts, nor are they prone to second-guessing other judges. Nonetheless, the juror selection process was problematic, and the government can't be certain the convictions will hold up. What are Skilling's real odds? Better than Lotto by far, but not good enough to bet on unless you're a compulsive gambler who needs a longshot to come in so you can pay your rent.
And in the Business of Law...
• Far fewer summer associates are being hired for those cushy jobs before the third year of law school, meaning far fewer graduates of the class of 2011 will have Big Law jobs.
• Partners at big firms are increasingly vulnerable: A consulting firm is urging law firms to start thinning their ranks in recognition that 2009 was "the worst year for the legal market in at least the last half-century."
• Lawyers looking for jobs might want to target Jackson Lewis, which is hiring people nearly every day, and has gone from 395 attorneys near the end of 2007 to almost 700 now. Jackson is a labor and employment firm, and the Great Recession has kept it busy helping companies lay off workers and defend lawsuits from former employees. Revenue spiked in 2008 and 2009, but profits per partner and revenue per lawyer were close to flat as a result of all the hiring.