Minimum Competence - Daily Legal News Podcast
Minimum Competence
Mon 11/27 - BK Big Biz for Kirkland and Ellis, Federal Defenders Team up at SCOTUS, SEC Executive Clawback Rule and Adult Survivors Act Deadlines
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Mon 11/27 - BK Big Biz for Kirkland and Ellis, Federal Defenders Team up at SCOTUS, SEC Executive Clawback Rule and Adult Survivors Act Deadlines

Bankruptcy as big business for Kirkland, federal defenders teaming up at SCOTUS, SEC executive clawback rule means long nights ahead and Adult Survivors Act deadline sees a flurry of lawsuits.
Transcript

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“Clawback,” pencil sketch.

On this day in legal history, November 27, 1815, marked a significant moment in the constitutional journey of Poland. Emperor Alexander I of Russia, in his capacity as King of Poland, signed a constitution for the Kingdom of Poland, a state reconstituted under Russian dominance. This event followed the Congress of Vienna's directive to provide a constitutional framework for Poland, leading to the unofficial naming of the state as Congress Poland or Kongresówka.

The Kingdom of Poland, established as one of the smallest Polish states in history, was significantly smaller than both the preceding Duchy of Warsaw and the earlier Polish–Lithuanian Commonwealth. The constitution was unilaterally granted by the ruler without parliamentary vote, reflecting a top-down approach to governance.

Prince Adam Czartoryski played a pivotal role in drafting this constitution, although its final version bore the edits and influences of Emperor Alexander I and his advisors. Notably liberal for its time, the constitution promised freedoms including speech and religious tolerance, showcasing the influence of both Polish and Russian Enlightenment thought. However, in contrast to the Constitution of the Duchy of Warsaw, it favored the nobility and rolled back certain rights previously extended to Polish Jews and peasants.

The Russian authorities never fully honored the constitution's provisions. Its liberal yet vague articles were frequently manipulated, avoided, or outright violated. The promised parliament, scheduled to convene biennially, only met sporadically, with sessions in 1818, 1820, 1826, and 1830, the latter two held secretly. The infrequent sessions and the government's conservative stance within them sparked liberal dissent among deputies.

This growing dissatisfaction, fueled by the disregard for constitutional promises, eventually led to the November Uprising in 1830. During this tumultuous period, the constitution underwent modifications, but following the uprising's failure, it was replaced by the Organic Statute of the Kingdom of Poland on February 26, 1832. This new statute, far more conservative and granted by Tsar Nicholas I of Russia, never saw actual implementation, marking the end of a brief but pivotal chapter in Poland's constitutional history.


Kirkland & Ellis, a top-grossing law firm in Big Law, recently reported substantial earnings from retainer payments connected to the bankruptcies of Rite Aid Corp. and WeWork Inc., totaling $41.5 million. These payments come in addition to a $2.5 million retainer from another bankrupt client, SmileDirectClub Inc. Kirkland, recognized for its large number of nonequity partners, has recently inducted seven new partners from its restructuring practice, which gained prominence for representing several cryptocurrency companies in Chapter 11 cases.

Kirkland's notable role in high-profile bankruptcies involves complex legal and financial navigations, though the firm did not comment on its specific work for WeWork and Rite Aid. In WeWork's case, Kirkland received over $22 million in retainers and is involved in the company's bankruptcy process to address lease issues, with billing rates for its lawyers ranging from $685 to $2,245 per hour. Other law firms, including Munger, Tolles & Olson; Cole Schotz; and Canada’s Goodmans, are also advising WeWork, with varying retainer fees and hourly rates.

For Rite Aid's bankruptcy, Kirkland disclosed receiving about $19.5 million in retainers, with similar hourly rates as in the WeWork case. Rite Aid has engaged additional legal counsel, including Cole Schotz, Wilson Sonsini Goodrich & Rosati, and Kobre & Kim, each receiving significant retainer payments and billing at various hourly rates. The company, under new legal leadership, faces a deadline to emerge from Chapter 11 by March 1.

WeWork, Rite Aid Bankruptcy Fees $41.5 Million Haul for Kirkland


The Federal Defender Supreme Court Resource & Assistance Panel (DSCRAP) has become instrumental in aiding federal public defenders in preparing for arguments before the US Supreme Court. Andrew Adler, a federal defender, exemplifies this effort, making his third appearance at the Supreme Court, a rare achievement for federal public defenders who usually argue only once before the justices. This trend is notable, as federal defenders across the nation have argued at least one case each term since 2000, according to Adler.

The Supreme Court's limited case docket intensifies the competition for arguing cases, with elite law firms often pressuring defenders to hand over their cases to more experienced advocates. To counter this, DSCRAP supports first-time advocates by partnering them with experienced federal defenders. This initiative is a response to criticisms from Supreme Court justices regarding the quality of representation provided by criminal defense attorneys.

Justice Sonia Sotomayor, for instance, criticized attorneys unwilling to pass their cases to seasoned Supreme Court advocates, labeling it as "malpractice." This sentiment reflects the dominance of a small, elite group of big firm lawyers in the Supreme Court bar. However, federal defenders often possess deep subject matter expertise and extensive experience in federal appellate courts.

Andrew Adler's preparation for his current case, Jackson v. United States, demonstrates the collaborative efforts to ensure successful arguments. DSCRAP assisted in brainstorming strategies and planned moot courts for Adler, while he also worked with Supreme Court veteran Jeff Fisher for brief preparation. Michael Caruso, the federal public defender for the Southern District of Florida, emphasizes the value of partnering with experienced high court veterans for insights and argument preparation.

This collaborative approach aims to balance the often David and Goliath-like scenario federal defenders face when opposing top government lawyers, like the U.S. Solicitor General's Office attorneys. The partnerships and support systems developed within the federal defender community illustrate their commitment to providing quality representation in the nation's highest court, countering the perceived home court advantage of repeat players.

Federal Defenders Combine Forces to Argue at US Supreme Court


The new Securities and Exchange Commission (SEC) rules for clawing back executive pay are causing significant challenges and discussions in corporate America. These rules, mandated by the Dodd-Frank Act of 2010 but only issued in 2022, require companies to adopt policies to recoup bonuses from executives in cases of accounting errors. Failing to implement these policies by the December 1 deadline risks expulsion from stock exchanges like Nasdaq and the New York Stock Exchange.

The complexity of these rules is considerable, as demonstrated by a legal team at Latham & Watkins LLP, who spent over five hours on a call just to create a flowchart for clients. The SEC's directive primarily targets bonuses linked to earnings metrics that are later found to be miscalculated. This not only includes major financial restatements, known as "Big R" corrections, but also smaller, often unnoticed adjustments labeled "Little R" revisions.

These "Little R" revisions, typically slipped into regular financial filings, are more common than the more conspicuous "Big R" restatements. However, the SEC's new rules do not cover out-of-period adjustments, which are minor fixes to immaterial errors in past financial statements. Despite this, companies must now indicate on their annual financial statements if any past correction, including out-of-period adjustments, was made.

This means companies must now discern between "Little R" revisions and out-of-period adjustments more carefully, a task that has gained new significance under these rules. As Keith Halverstam of Latham & Watkins LLP notes, this represents a new reality where both executive and accounting teams need to be acutely aware of these distinctions.

Beyond accounting complexities, the SEC rules also raise questions about their applicability to overseas companies listed on US exchanges, especially in countries where clawing back pay is prohibited. Additionally, the rules apply to the pre-tax amount of wrongly awarded compensation, posing challenges for long-term incentive programs tied to company stock performance.

As companies navigate these new regulations, the focus will also shift to how these policies are implemented in practice, leading to further questions and potential issues, as noted by Veronica Wissel of Davis Polk & Wardwell LLP. This situation indicates a significant shift in executive compensation and corporate governance, requiring meticulous compliance and strategic planning.

SEC Executive Clawback Rules Bring Late Nights as Deadline Nears


In recent days, New York has seen a surge in lawsuits filed against notable individuals under the Adult Survivors Act (ASA). This act, passed in May 2022, was a critical amendment to state law, allowing alleged victims of sexual offenses, where the statute of limitations had lapsed, to file civil suits within a one-year period. This "lookback window" began on November 24, 2022, and was set to close on November 24, 2023, creating a sense of urgency for filings.

The ASA was designed to address the delayed effects of trauma often experienced by survivors of sexual assault, recognizing that many are unable to come forward immediately after the incident. This legislation mirrors the earlier Child Victims Act of 2019, providing a similar opportunity for adults.

As the deadline approached, there was a notable increase in high-profile lawsuits. Figures like Sean "Diddy" Combs, New York Mayor Eric Adams, and former President Donald Trump were among those sued under the ASA. For example, Trump was ordered to pay $5 million in damages to writer E. Jean Carroll for defamation and battery related to an incident alleged to have occurred in 1996.

This wave of lawsuits highlights a crucial aspect of the ASA: its capacity to empower survivors of historic sexual abuse to seek justice, regardless of the elapsed time. While the law initially saw relatively few filings, the rush near the deadline indicates a significant response from survivors seizing this opportunity.

Overall, the ASA has facilitated over 2,500 legal actions, underscoring the widespread impact of sexual assault and the need for legal avenues to address long-standing grievances. The law's expiry has prompted a final push for justice, bringing numerous cases into the public eye and spotlighting the pervasive issue of sexual misconduct across various sectors.

Adult Survivors Act deadline prompts rush of sexual assault lawsuits

Governor Hochul Signs Adult Survivors Act

Actor Jamie Foxx accused of sexual abuse in New York lawsuit | Reuters

New York Mayor Eric Adams accused of sexual assault in 1993 | Reuters

Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at www.minimumcomp.com.
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