A group of New York University professors angry over president John Sexton’s stewardship of the school is calling on one of Sexton’s chief defenders, Wachtell, Lipton, Rosen & Katz founding partner Martin Lipton, to resign from his position as chair of NYU’s board of trustees.
NYU Faculty Against the Sexton Plan (FASP), a group that claims to represent more than 400 professors opposed to what they say is Sexton’s push to expand the university at home and abroad on the backs of debt-saddled students and underpaid staffers, demanded that Lipton step down from the post that he’s held for a decade and a half in a lengthy open letter released Tuesday.
Professor Andrew Ross—the president of NYU’s chapter of the American Association of University Professors, which previously called for Sexton’s resignation and has also endorsed FASP’s position that Lipton step down—says it’s not surprising that the M&A legend is getting caught in the anti-Sexton crossfire. “[Lipton] and John Sexton have been ‘partners’ for a long time,” Ross says. “It’s almost as if they were law firm partners, and it’s their tight relationship that has really driven the direction of this university.”
Lipton—whose notable achievements include creating the so-called poison pill shareholder defense against corporate takeovers—has deep NYU ties that he detailed at length in this 20-page academic autobiography posted on the school’s Web site [PDF]. He met his firm’s three other founding partners while attending NYU’s Law School in the 1950s, was first elected as a law school trustee in 1972, and became chair of the law school board in 1988. Both the university’s medical school and law school have facilities bearing the Lipton name.
The call for Lipton’s ouster comes amid a steady drumbeat of faculty criticism aimed at Sexton, a driving force behind NYU’s planned Greenwich Village expansion. The New York City Council overwhelmingly approved that plan—which the university calls NYU 2031—last July over the fierce opposition of local activists and faculty members. (The faculty group is one of nearly two dozen plaintiffs represented pro bono by Gibson, Dunn & Crutcher in a lawsuit challenging the city’s approval of the nearly 2-million-square-foot expansion plan. The suit, filed last September against the city’s transportation department, parks department, planning commission, and several other agencies, argues that the expansion “threatens to overwhelm one of New York City’s crown jewels” and illegally eliminates several parks.)
Sexton has also sought during his tenure to expand the university’s global reach by adding campuses in Abu Dhabi and Shanghai. In the letter released Tuesday, NYU FASP argues that setting up shop in such “police states” has made the university complicit “in the crimes against humanity.” The letter also notes that NYU recently cut its ties to Chinese dissident Chen Guangcheng, who has claimed that that the university made the move due to pressure from the Chinese government. NYU officials deny that allegation.
As for Lipton, the faculty group’s letter cites his unwavering support for Sexton among its chief concerns. The Wachtell heavyweight, who became chairman of the university board in 1998, chaired the search committee that chose Sexton as president in 2001. Sexton rose to his prior position as dean of NYU’s law school just months after Lipton became chair of that school’s board in 1988. Most recently, Lipton has defended Sexton vigorously in the face of a series of no confidence votes taken faculty at various NYU schools, including the The Steinhardt School of Culture, Education, and Human Development, the Gallatin School of Individualized Study, and the College of Arts and Sciences. “That Lipton has been so quick to respond publicly to the votes of no confidence—and with such staunch defenses of president Sexton—has been received as a slap in the face by many faculty,” says NYU professor Ross.
The NYU FASP letter points out that after The New York Times published a front-page June story detailing the vacation home loans that the university had extended to Sexton, other administrators, and star professors, Lipton defended the loan program in a letter to the editor. “We are wholly confident in NYU’s president, John Sexton, whose own innovative leadership has done so much at the law school and the university to maintain the university’s upward trajectory,” Lipton wrote in the letter.
Citing the Times letter, NYU FASP wrote Tuesday, “We write to tell you—and the other members of the board—-that we find such statements deeply troubling. They tell of an intransigence that is as threatening to NYU’s survival as the scandals whose clear impact you deny.” NYU professor Ross says there is increasing anger among faculty about how compensation packages and vacation home loans might be endangering the university’s nonprofit status.” (The FASP letter also points out that Lipton is in his fourth term as the chairman of the board, although that position is limited to two terms under the university bylaws.)
Lipton did not immediately respond to requests for comment.
A call placed to Bickel & Brewer name partner William Brewer III—who is himself an NYU trustee and is assisting the university in its response to an inquiry into the loan program launched by U.S. Senator Charles Grassley—was referred to university spokesman John Beckman. Beckman provided The Am Law Daily with the following statement: “At a time when the trustees and John Sexton have made improving dialogue with the faculty such a priority and have taken concrete and productive new steps to ensure greater faculty participation in decision making, it is perplexing that this group would send such a letter. The trustees hope that all the faculty choose to join in the constructive efforts under way to enhance university governance rather than attacking individual members of the NYU community.”
Lipton is just one of the many lawyers with Am Law 100 ties who serve on NYU’s nearly 70-member board of trustees, according to the university’s website. The list includes Buchanan Ingersoll & Rooney shareholder Ronald Abramson; Cravath, Swaine & Moore associate Heather Cannady and firm chairman Evan Chesler; Davis Polk & Wardwell senior counsel David Oxman; Dorsey & Whitney partner Jonathan Herman; Sullivan & Cromwell associate Mimi Marziani; and Zuckerman Spaeder partner Steven Cohen. In addition, Schulte Roth & Zabel name partner William Zabel is a life trustee and Stroock & Stroock & Lavan real estate department chair Leonard Boxer and Alston & Bird senior counsel Betty Weinberg Ellerin are trustee associates.
According to the most recent Am Law 100 rankings, Wachtell posted gross revenues of $614 million in 2012 and profits per equity partner of $4.975 million—the highest profit figure of any firm in the country.
Am Law Daily reporter Sara Randazzo contributed to this story.