UPDATES: 5/16/13, 10:30 a.m. EDT. Lynn Oberlander, general counsel of The New Yorker, has lashed out at the Justice Department for its subpoenas of AP phone records. Meanwhile, a longtime AP reporter in Afghanistan writes about what her job is like on a day-to-day basis. 5/17/13, 11:40 a.m. EDT. Bloomberg has announced that Samuel Palmisano, a former chairman and CEO of IBM, will serve as an independent adviser to the company and make recommendations and enhancements after reviewing its data and privacy standards. Hogan Lovells is advising Bloomberg’s board of directors.
Both The Associated Press and Bloomberg L.P. have retained outside counsel this week after finding themselves caught up in two different controversies, with the AP fighting back against the U.S. Department of Justice’s seizure of reporters’ and editors’ phone records amid a government leaks probe, and Bloomberg under fire for allegedly using its ubiquitous terminals to tap into the personal information of company clients.
An AP spokeswoman confirmed to The Am Law Daily that the New York–based nonprofit news organization has retained David Schulz, a prominent media lawyer and First Amendment advocate who recently landed on the short list of candidates being considered to fill an opening on the New York State Court of Appeals, according to a report by sibling publication the New York Law Journal.
The 60-year-old Schulz is a founding partner and head of the New York office at Washington, D.C.–based Levine, Sullivan, Koch & Schulz, which he joined in 2003 after heading the media litigation practice at Clifford Chance. Before making that move, Schulz was a longtime partner at Rogers & Wells, which merged with the Magic Circle firm in a high-profile tie-up in 1999.
Schulz did not respond to The Am Law Daily‘s request for comment about the Justice Department’s efforts to obtain AP phone records, but he did tell National Public Radio that federal prosecutors are already in possession of a large number of records from the organization’s bureaus in Hartford, New York, and Washington, D.C.
"This sort of activity really amounts to massive government monitoring of the actions of the press, and it really puts a dagger at the heart of AP’s news-gathering activities," Schulz told NPR.
Rules adopted in the wake of the Watergate scandal require federal prosecutors to exhaust all other avenues available to them before seeking information directly from journalists, according to a report by nonprofit news organization ProPublica, which notes that the government can circumvent a provision requiring them to notify media organizations prior to obtaining such information, if they feel that such a disclosure would jeopardize an investigation.
The Poynter Institute, a nonprofit journalism training center, has a primer on just what the Justice Department was looking for when it subpoenaed the AP’s phone records in a move tied to a federal inquiry meant to determine the sources for stories like this May 2012 piece about a CIA–foiled bomb plot involving al-Qaeda in Yemen.
As noted by sibling publication Corporate Counsel, the dispute began last Friday when AP acting general counsel Laura Malone received a letter from Ronald Machen Jr., U.S. attorney for the District of Columbia, stating that the Justice Department had obtained records for more than 20 separate phone lines assigned to AP editors and reporters.
Machen, a former Wilmer Cutler Pickering Hale and Dorr partner who once landed on The American Lawyer‘s Fab Fifty Young Litigators list, and U.S. Attorney for the District of Maryland Rod Rosenstein were appointed last year to handle the federal investigation prompted by the leaking of classified national security information, according to a story by sibling publication The Blog of Legal Times.
Machen, who left Wilmer in early 2010 after the Senate confirmed him as U.S. attorney, has remained in the post amid reports that he was poised to return to private practice on the heels of relocating his family from D.C. to suburban Maryland last year.
Some of Machen’s former colleagues from within the Am Law 100 ranks believe the government has gone too far with the AP subpoenas.
Debevoise & Plimpton’s James Goodale, a former general counsel for The New York Times, compared the Obama administration’s tactics to those of former President Richard Nixon in an interview this week with The New York Observer.
"This is an incredibly broad and damaging intrusion into the AP’s news-gathering activities that flatly violates the First Amendment and the Justice Department’s own guidelines for subpoenas to journalists," said a statement by Gibson, Dunn & Crutcher appellate cochair Theodore Boutrous Jr., a member of the business advisory council for ProPublica. "There’s no excuse for it."
AP president Gary Pruitt wrote a letter to U.S. Attorney General Eric Holder Jr. asking that an independent investigation be launched into who was responsible for the subpoenas in question. The BLT reported Tuesday that Holder—a former Covington & Burling partner profiled by The American Lawyer in 2008 in connection with his role as cochair of Barack Obama’s first presidential campaign—was not involved in the decision to obtain the phone records.
Holder said at a press conference Tuesday that he had recused himself from involvement in the leaks probe after the Federal Bureau of Investigation interviewed him earlier in the investigation and that it was deputy attorney general James Cole—a former Bryan Cave partner—who signed off on the AP subpoenas. Holder said he was confident Main Justice had acted appropriately in requesting the phone records, and the BLT notes that members of Congress will get a chance to question him about the matter when he testifies at a House Judiciary Committee oversight hearing scheduled for Wednesday.
While the AP copes with the government’s attempt to monitor its reporting activities, New York–based Bloomberg L.P. is facing scrutiny for allegedly letting its reporters engage in activities that some critics have likened to News Corporation’s phone-hacking scandal.
Bloomberg, founded in 1981 by current New York City Mayor Michael Bloomberg (a man known to zealously guard his own privacy), has admitted that its reporters were able to access personal contact, biographical, and client usage information about customers for its all-powerful—and highly profitable—double-screened computer terminals.
The New York Post broke the news last week that Goldman Sachs executives had contacted Bloomberg to object to the practice after one of its reporters made an offhanded comment to a Goldman executive about one of the company’s employees not having logged onto his terminal in some time.
It soon emerged that Bloomberg reporters had also possibly gained access to accounts belonging to Federal Reserve chairman Benjamin Bernanke and former U.S. Treasury Department secretary Timothy Geithner. Bloomberg responded by calling the snooping error "inexcusable" and discontinuing the function on its terminals that allowed its reporters access to such information.
The Bank of England was among those lashing out at Bloomberg over its data-monitoring practices, while former SEC chair Harvey Pitt—a former top partner at Fried, Frank, Harris, Shriver & Jacobson—has labeled as not credible the company’s denials that it knew proprietary client information was made publicly available. (Pitt’s predecessor as SEC chair, Arthur Levitt, is a director at Bloomberg.)
Bloomberg has promoted Steve Ross to serve as its client data compliance chief to cope with the fallout from the data breach controversy, according to sibling publication Corporate Counsel, and The New York Times reports that the company has also retained outside lawyers to help it navigate a crisis that threatens to undermine the company’s reputation.
A Bloomberg spokesman did not respond to a request for comment about which firm the company has hired in the wake of the terminal fiasco. One strong possibility: Willkie Farr & Gallagher, which, in its capacity as Bloomberg’s long-standing outside counsel, has represented the company in connection with its $990 million purchase of the Bureau of National Affairs in 2011, its 2009 acquisition of BusinessWeek from The McGraw-Hill Companies, its $4.4 billion purchase of a 20 percent stake held by Merrill Lynch in 2008, and litigation fights with the Federal Reserve.
Bloomberg brought on 20 former Willkie lawyers in 2011 to bolster its in-house legal department, including ex-firm partner and current Bloomberg chief legal officer Richard DeScherer, a longtime confidant of the company’s namesake founder. DeScherer also did not respond to a request for comment about whether his former firm has been retained. A Willkie spokeswoman declined to comment.
In April, Bloomberg’s lawyers led by Willkie of counsel Mario Cuomo and Gibson Dunn litigation partner Eugene Scalia—the son of U.S. Supreme Court Justice Antonin Scalia—issued statements in support of the company following its suit against the Commodity Futures Trading Commission over new derivatives rules.
Senate filings show that Bloomberg paid Washington, D.C.’s Williams & Jensen roughly $560,000 last year to lobby Congress on market data issues, including derivatives and regulatory reforms related to the Dodd-Frank Act. Williams & Jensen has received $150,000 for its government affairs work on behalf of Bloomberg through the first quarter of this year, according to Senate records.
Bloomberg also paid $80,000 last year to all-Republican lobby shop Clark Lytle Geduldig & Cranford to handle issues related to investor access to information and other Dodd-Frank regulatory reforms. D.C.–based Clark Lytle has received $20,000 from Bloomberg through the first quarter of 2013.