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Shelter From the Storm In the last few years Sidley Austin has faced two major federal investigations. One down. One to go. Federal prosecutors will not file criminal charges against Sidley Austin over its work with tax shelters that helped investors save billions of dollars. The U.S. Attorney’s Office in Manhattan, led by Michael Garcia of the Southern District of New York (a possible candidate for the open deputy attorney general slot at Main Justice), said in a statement that it had decided not to charge Sidley, because the firm’s tax-shelter work was mostly done by a single person, former tax partner Raymond Ruble. The decision to not prosecute Sidley Austin comes about two months after a nonprosecution agreement was reached with Dallas-based Jenkens & Gilchrist, which had a similar tax practice promoting shelters. Jenkens was gutted by the scandal, losing most of its lawyers before it closed. Sidley Austin is the fifth-largest law firm in the country in terms of revenue, which was almost $1.25 billion last year, according to the 2007 The American Lawyer 100 survey. In return for not being prosecuted, Sidley agreed to pay a $39.4 million penalty to the Internal Revenue Service, admit wrongdoing, and cooperate with the ongoing criminal and civil investigations into Ruble. The firm said in a statement that Ruble had “deceived his partners about the nature and extent of his involvement in the tax shelter transactions.” The other major federal investigation is a suit brought by the Equal Employment Opportunity Commission. Filed in the U.S. District Court in Chicago in 2005, it charges that Sidley Austin discriminated based on age when in 1999 it demoted or forced the retirement of 32 partners prior to its May 2001 merger with New York’s Brown & Wood. The case remains tied up in discovery without a trial date. Garcia said Ruble’s work began when he was a partner at Brown & Wood. The firm had marketed the shelter in conjunction with Jenkens & Gilchrist, the accounting firm Ernst & Young, and Deutsche Bank. In a statement, Garcia noted that Ruble’s shelter work had continued after the merger but that he had done much of it without the firm’s knowledge. Sidley Austin fired Ruble in the fall of 2003 after discovering that he had been taking kickbacks totaling in the tens of millions of dollars and funneling them into a personal account. He was indicted in August 2005.
Merger Mania With another multibillion-dollar deal under its belt, Hogan & Hartson solidified its position on the M&A league tables for legal counsel, a rare position for a D.C. firm. Hogan represented Cytec Corp. in the $6.2 billion acquisition by Hologic Inc. announced last week. Both companies are Massachusetts-based producers of women’s health care diagnostic equipment. Three D.C.-based partners, Joseph Gilligan, Joseph Connolly, and Amit Saluja, led the firm’s more than 30-lawyer team. Cytec is a long-time firm client, Gilligan says. Hogan started advising the company almost 20 years ago when it first got its venture financing on Food and Drug Administration matters and the firm’s role has expanded over the years. It became the company’s primary outside corporate counsel in 2003, he adds. Under the terms of the deal Cytec will become a wholly owned subsidiary of the merged company, which will retain the Hologic name. The deal is subject to regulatory approvals in the United States and the team is analyzing in which other countries it might need to get antitrust sign-off, Gilligan says, but notes this shouldn’t be much of an issue because the companies don’t have much overlap in their product lines. One of Hologic’s main sources of revenue is digital mammography equipment, while Cytec is a leading maker of cervical cancer screening tests. As is the case for many other sectors, the M&A market for the life sciences industry has been extremely active, Gilligan says. In April, the firm represented Cytec in its approximately $450 million acquisition of Adeza Biomedical Corp., which makes equipment designed to identify women at risk of having premature babies, and last fall advised Cytec on its unsuccessful bid for Australia-based biotech company Vision Systems Inc. Brown Rudnick represented Hologic on the deal, led by partners Philip Flink and Matthew Gilman out of the firm’s Boston office.
Marathon Deal The race to finish a deal is always packed with pressure, but the recent buyout of Crescent Real Estate Equities Co. by Morgan Stanley Real Estate was especially so, according to Bob Robbins, a partner at Pillsbury Winthrop Shaw Pittman who led Crescent’s legal team. “We were very fortunate that the partner who was really running all the documents, Bill Horton, is a marathon runner and, you know, I think it really makes a difference because Bill stayed upright during the entire thing. I certainly wasn’t able to do that,” says Robbins, of the two all-nighters Pillsbury’s team pulled in order to close the deal last week. Pillsbury, which had been primary corporate securities counsel to Crescent since its initial public offering in 1993, used a 19-lawyer team to pull off the deal. Crescent announced its intent to sell off its real estate holdings in March, but Morgan Stanley offered to buy out the entire company. “This is a large group of lawyers even for a deal of this size, and I think Goodwin Procter pulled together an equally large group of lawyers because it was a very complicated transaction,” says Robbins of Crescent’s diverse portfolio, which includes assets like the Canyon Ranch Health & Wellness Centers and business-class hotels among others. Pillsbury’s team included D.C. tax partners Brian Blum and Eileen Brownell, D.C. executive compensation and benefits partners Kurt Lawson and Howard Clemons, corporate and securities partners Kimberly Mann and John Mcdonald and counsel Robin Jones, D.C. litigation and securities regulatory partners Alvin Dunn, David Cynamon, and Rich Rosenfeld. New York tax partners William Burke and Jim Chudy also advised on the deal. D.C. associates Bob Logan, Kimberly Drake, Kimberly Miller, Jason Balitzer, and Michael Purdy also worked on the deal. Gilbert Menna of Goodwin Procter’s Boston office led Morgan Stanley’s legal team.
Telecom Takeover In what is reported to be the largest leveraged buyout in telecom history, TPG Inc. and GS Capital Partners, Goldman Sachs’ private equity arm, made a successful $27.5 billion bid for Little Rock, Ark.-based Alltel Corp. last week. The buyers beat out other buyout groups that included leading private equity shops such as the Blackstone Group, the Carlyle Group, and Kohlberg Kravis Roberts & Co. Cleary Gottlieb Steen & Hamilton represented the Fort Worth, Texas-based private equity shop formerly known as Texas Pacific Group on the deal, while Weil Gotshal Manges represented Goldman Sachs. Lawyers from the D.C. office of Akin Gump Strauss Hauer & Feld served as the buyers’ regulatory counsel. D.C.-based partners Kathleen Abernathy and Tom Davidson lead Akin’s team, which also included D.C. partner Phillip Marchesiello, counsel Natalie Roisman, and associates Adam Jones and Karen Milne. M&A heavyweight Wachtell Lipton Rosen & Katz advised Alltel, which is the nation’s fifth largest wireless company, on the buyout.
Keeping Score is Legal Times ‘ weekly column devoted to the legal business scene. Got a tip? Contact Business Editor Anna Palmer at [email protected].

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