Minimum Competence - Daily Legal News Podcast
Minimum Competence
Weds 9/13 - PwC Not Separating Consulting and Audit Business, SBF Stays in Jail, Paul Weiss Wins, NextGen Bar Exam Details, and the 6th Circuit Defers Liability for CVS, Walgreens, Walmart, etc.

Weds 9/13 - PwC Not Separating Consulting and Audit Business, SBF Stays in Jail, Paul Weiss Wins, NextGen Bar Exam Details, and the 6th Circuit Defers Liability for CVS, Walgreens, Walmart, etc.

PwC tying partner pay to audit quality, SBF stays in jail, Paul Weiss raids Kirkland, NextGen Bar Exam is 3 hours shorter, and the 6th circuit defers decision on pharmacy liability for opioid crisis.

On this day in legal history, September 13, 1971, the Attica Correctional Facility prison revolt came to an end when National Guardsmen took back control of the prison–in so doing 43 people died, all but four from law enforcement’s efforts to regain control.

The Attica Prison Uprising, a grim milestone in the history of prisoners' rights movement, occurred from September 9 to 13, 1971, at the Attica Correctional Facility in New York. Rooted in a growing wave of prison activism and exacerbated by appalling living conditions and racial brutalization occuring at the prison, the revolt began with approximately 1,281 inmates taking control of the prison and holding 42 staff members hostage. Their grievances encompassed a myriad of issues including overcrowding, racial discrimination, lack of proper medical care, and restrictions on their educational and political engagements.

Historian Howard Zinn wrote of Attica, prior to the revolt, in his A People’s History of the United States:

Prisoners spent 14 to 16 hours a day in their cells, their mail was read, their reading material restricted, their visits from families conducted through a mesh screen, their medical care disgraceful, their parole system inequitable, racism everywhere.

Governor Nelson Rockefeller, who communicated with President Richard Nixon during the crisis, adamantly refused to visit the prison or engage in direct dialogues with the inmates. Instead, he authorized a forceful retaking of the prison, which tragically resulted in the deaths of 39 individuals - nearly all by law enforcement gunfire. Post the assault, it was verified that aside from one officer and three inmates, all fatalities were caused by the enforcement's gunfire, contradicting Rockefeller's claim that inmates had committed "cold-blood killings". The incident drew widespread criticism, with many pointing out that the massacre could have been avoided through negotiated settlements.

In the aftermath, the New York Corrections Department initiated changes to meet some of the inmates' demands and alleviate tensions within the prison system. Despite these efforts, many improvements were reversed in the 1980s and 1990s. The event remains a somber testament to the harsh realities of prison life during that period, and today, and stands as a significant marker in the broader history of prisoner activism and the fight for better living conditions and political rights in American prisons.

PwC, under the guidance of US chairman Tim Ryan, is implementing several measures to enhance the credibility of its audits and foster investor confidence. The initiatives include linking leadership compensation to audit quality and sharing the financial repercussions of any scandalous events within the firm equally, including with top-tier leaders from consulting and tax departments. Beginning in 2024, PwC plans to initiate expanded access to specialists to augment fraud monitoring and business viability assessments during audits. The firm is also reducing potential conflicts of interest by discontinuing certain consulting services for audit clients, worth less than $100 million.

Let’s read that carefully, they are divesting their consulting services for clients they also provide audit services for … but only their least profitable consulting clients. Regular listeners will remember I, along with many other professionals, have called for a complete divorce of consulting and audit wings among the Big Four. We aren’t getting that. A quick excerpt from my column on the problem:

An accounting firm often will act as both a consultant on the bulk of transactions entered into by a bank and the auditor of those transactions. If you thought not wanting to lose a sweet auditing gig was motivation to give a thumbs-up on financials, imagine if your firm—your colleagues—were responsible for structuring much of the underlying deals that gave rise to those financials. And perhaps a former colleague is the CEO of that bank.

You begin to see the conflict of interest. 

Anyway, as a part of these reforms, leadership will verify that the firm's internal controls pertaining to audits are operating effectively, aligning with potential new US audit regulations. Ryan emphasized that these transformations, developing over the next three years, aim at adapting to the fast-changing business landscape and are not superficial adjustments. The changes follow the firm's 2021 restructuring and are expected to enhance audit report details, risk management disclosures, and conflict of interest management, to be disclosed in a voluntary audit quality report. Observers anticipate that PwC's strategies may influence other firms in the industry to take similar steps to improve audit quality.

PwC Puts Partner Pay on Line in Bid to Boost Faith in Audits (1)

PwC partners to be paid £906,000 this year

Sam Bankman-Fried, the founder of the now-defunct cryptocurrency exchange FTX, has been denied pretrial release by U.S. District Judge Lewis Kaplan, ahead of his October 3rd trial for fraud charges related to the FTX collapse. Bankman-Fried claimed that his current detention conditions have hindered his ability to adequately prepare his defense, as it restricts his access to the evidence presented by the prosecutors. However, Judge Kaplan noted that he had not detailed the specific pieces of evidence he couldn't access and did not request a trial postponement.

Earlier in August, Bankman-Fried was incarcerated due to suspected witness tampering, including the alleged sharing of personal writings of his ex-partner and colleague, Caroline Ellison, with a journalist. Ellison, formerly at the helm of Bankman-Fried's Alameda Research hedge fund, has admitted to fraud charges and is slated to testify against him. Despite these developments, Bankman-Fried, who is accused of misappropriating billions from FTX to cover Alameda's losses and other personal expenditures, maintains his innocence, acknowledging only shortcomings in risk management at FTX. His appeal against the detention order will be heard on September 19th.

Sam Bankman-Fried loses bid for pretrial jail release | Reuters

The law firm Paul, Weiss, Rifkind, Wharton & Garrison is considerably expanding its private equity practice by hiring numerous partners from rival firms Kirkland & Ellis and Linklaters, particularly enhancing its presence in London, New York, and Los Angeles. Last month, they secured the services of renowned debt finance lawyer Neel Sachdev and other partners from London and New York. Adding to this list, Roger Johnson, Andreas Philipson, Timothy Lowe, Cian O’Connor from Kirkland, and William Aitken-Davies from Linklaters are set to join Sachdev in spearheading various global practices at Paul Weiss' London office.

Meanwhile, in the US, Ben Steadman, Matthew Leist, and Caroline Epstein from Kirkland are linking up with Eric Wedel to bolster the corporate department in New York and inaugurate a new branch in Los Angeles. Paul Weiss's chairman, Brad Karp, emphasized that the incorporation of these premier teams would notably amplify the firm's global capacities in the private equity and M&A sectors, promising substantial benefits for both current and prospective clients. This massive recruitment drive, characterized as a raid, has sent ripples through the London legal circles, prompting speculation about the future of Kirkland's operations in the UK. It's noted that the departure of Sachdev from Kirkland occurred amidst internal power tensions.

Paul Weiss Continues Raid on Kirkland & Ellis in London and US

The National Conference of Bar Examiners (NCBE) has revealed that the upcoming NextGen Bar Exam, set to commence in July 2026, will be approximately three hours shorter than the existing Uniform Bar Exam (UBE). The new format, which will span one-and-a-half days with a total of nine hours of testing time, aims to measure knowledge and skills more accurately, employing a mix of various question types that will enhance efficiency, according to Andreas Oranje, the NCBE's managing director of assessment programs. Despite the reduction in time, the bar exam preparation period will remain extensive, highlighted Amit Schlesinger, executive director at Kaplan. The revamped exam aims to be more skills-oriented, reducing the emphasis on law memorization, a change partly spurred by critiques that the current exam doesn't adequately mirror the real-world practice of law. From July 2027 onwards, only the NextGen test will be available, with jurisdictions being given a choice between the new and existing exams until that time. Initial announcements regarding state adoptions of the new exam are anticipated this fall.

New bar exam shaves three hours off testing time | Reuters

A group of prominent authors, including Pulitzer Prize-winner Michael Chabon, have filed a lawsuit against Meta Platforms, alleging that their works were improperly used to train Meta's artificial intelligence software called Llama. The writers, which also include David Henry Hwang, Matthew Klam, Rachel Louise Snyder, and Ayelet Waldman, claim that datasets containing pirated versions of their writings were used to train the AI in responding to human text prompts. They filed a similar lawsuit against OpenAI, the maker of ChatGPT, highlighting that books and plays represent premium examples of long-form writing, making them valuable for AI language training. This lawsuit joins a series of copyright cases against AI companies, including a July lawsuit involving comedian Sarah Silverman. While Meta disclosed the datasets used for the initial version of Llama, the details for the recently released Llama 2 have not been revealed. Llama 2, available for commercial use, is viewed as a pivotal release in the competitive generative AI software market. Meta has not commented on the lawsuit as of now.

Pulitzer winner Chabon, other authors sue Meta over AI program | Reuters

The 6th U.S. Circuit Court of Appeals, located in Cincinnati, has deferred a decision on the $650 million judgment against pharmacy operators CVS, Walmart, and Walgreens, asking the Ohio Supreme Court to provide their input initially. This judgment was made in relation to the pharmacies' role in exacerbating the opioid crisis in certain Ohio regions. The court seeks clarification on the state law pertaining to the public-nuisance claim which forms the basis of this case. Initially, oral arguments were scheduled for October 20 but have been canceled due to the absence of a guiding precedent from the state's highest court. This case, initiated by Ohio's Lake and Trumbull counties, marks the first trial the three companies faced out of the numerous lawsuits filed against them concerning the U.S. opioid crisis. The initial trial concluded that the firms contributed to the public nuisance created by an oversupply and subsequent black market distribution of addictive pain pills. While the companies agreed to a substantial settlement in other cases, they persist in appealing this Ohio ruling, emphasizing the amended Ohio Product Liability Act which, they argue, restricts such public nuisance claims related to product-liability arising from the sale or distribution of products like opioids.

Pharmacies' appeal of $650 mln opioid judgment heads to Ohio top court | 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