From DOMA to Dropbox to discrimination, 2012 seemed to be the year of law firms being roped into lawsuits rather than filing them on behalf of clients.
But litigation by and against law firms didn’t distract Pennsylvania’s largest firms from adding new offices, hiring groups of attorneys and making significant changes to management.
On the whole, 2012 was another year of law firms operating with their nose to the grindstone, looking for ways to grow increasingly elusive revenue and ensuring clients remain on the firm roster. But many firms took advantage of unexpected opportunities to open in new markets, particularly through the hiring of lawyers from dissolving Dewey & LeBoeuf.
Law Firms in Lawsuits
One of the most watched lawsuits this year involving local law firms was that filed by Elliott Greenleaf against Stevens & Lee and former Elliott Greenleaf partner William R. Balaban. Elliott Greenleaf alleged in its complaint in February that Balaban downloaded a large number of files from the firm before the Harrisburg managing shareholder, with two associates, abruptly quit to join Stevens & Lee. Elliott Greenleaf alleged Balaban, the associates, two former Elliott Greenleaf clients and Stevens & Lee accessed the data through a Dropbox account after Balaban left Elliott Greenleaf. There were also allegations that Balaban misused escrow funds at Elliott Greenleaf.
As the case became increasingly contentious during discovery, new counsel were hired, searches of Stevens & Lee’s computers were ordered and Stevens & Lee ultimately fired Balaban. The case settled in July for an undisclosed amount.
Cozen O’Connor filed an interpleader action last year asking the court to determine whether the parents or wife of a deceased female partner was entitled to her profit-sharing plan benefits. The case has caused the U.S. Department of Justice, a Republican-led group of representatives and several amici filers to weigh in on the constitutionality of the Defense of Marriage Act. The parents have argued their daughter’s marriage to another woman was not recognized under Pennsylvania or federal law and, therefore, they are entitled to the money. The wife has argued the plan did not define spouse and she is entitled to the money.
While the case, Cozen O’Connor v. Tobits, was awaiting a ruling from U.S. District Judge C. Darnell Jones II of the Eastern District of Pennsylvania that could have touched on the constitutionality of DOMA, the judge placed the case on the suspense docket in October pending rulings in other cases. The U.S. Supreme Court recently granted certiorari in two cases involving the constitutionality of same-sex marriage. The expected decisions in those cases by mid-2013 could very well influence Jones’ opinion in Tobits.
K&L Gates and Buchanan Ingersoll & Rooney were sued in January by a former Pennsylvania House staffer and Computergate defendant who said the firms allegedly failed to cut him an available plea deal in favor of some of the more prominent politicians who the law firms were also representing. That suit was tossed in June by an Allegheny County judge who did not give any reasons as to why he granted the defendants’ preliminary objections.
Stradley Ronon Stevens & Young sued former client Sovereign Bank in May in federal court in Philadelphia. The firm sought a declaratory judgment that the law firm did not commit malpractice in representing Sovereign in a third party’s bankruptcy action. Sovereign then sued Stradley Ronon in the Philadelphia Court of Common Pleas for malpractice. That action has been stayed pending rulings in the federal court. The parties are awaiting a ruling in federal court on Sovereign’s motion to dismiss the complaint.
Also in May, the Pennsylvania Superior Court reinstated a $500 million lawsuit against K&L Gates that was brought by the trustee of bankrupt Le-Nature’s. The trustee alleged the law firm failed to detect fraud in the company when it was hired by the board to conduct an internal investigation in 2003. K&L Gates has appealed the Superior Court’s decision and is awaiting a ruling on its petition for allocatur from the Supreme Court. A number of the state’s largest law firms have filed an amicus brief on the firm’s behalf.
Duane Morris settled a suit in May that was filed against it by area developer Daniel J. Keating III and his wife, Sarah. The Keatings alleged they lost "substantial" sums of money after Duane Morris set up trusts that were ultimately attached to Bernard Madoff-related funds.
In November, the Superior Court revived a malpractice suit against Duane Morris in Coleman v. Duane Morris. The court ruled the limitation on legal malpractice damages to the fees paid to an attorney only applies in criminal cases, not civil. The case, which was initially filed as an unpublished memorandum, has since been deemed precedential by the court.
In early December, former Philadelphia-based Greenberg Traurig shareholder Francine Friedman Griesing sued Greenberg in a proposed class action alleging the firm discriminated against female shareholders by paying them less than men and making it difficult for women to advance to higher tiers within the partnership ranks.
Pepper Hamilton made big waves in terms of law firm management news when it became what appears to be the first Am Law 100 or 200 firm to hire a nonlawyer to run the firm. Scott Green was hired from WilmerHale in February to serve as Pepper’s first chief executive officer. He reports to Executive Committee Chairwoman Nina Gussack. Later in the year, Pepper announced a new managing partner, Thomas Cole Jr., who will report to Green when he takes over that position in January.
Paul Lancaster Adams returned to Pennsylvania after leaving his post as associate general counsel to Microsoft. The labor and employment lawyer joined Ogletree Deakins in Philadelphia in January, where he now heads up that office.
In April, the University of Pittsburgh School of Law hired former Temple University’s Beasley School of Law professor William M. "Chip" Carter as its new dean.
In May, longtime PNC General Counsel Helen Pudlin retired after 18 years with the company. Deputy General Counsel Robert F. Hoyt took her place.
National labor and employment boutique Littler Mendelson announced in July that Philadelphia-based Thomas Bender would take over the leadership of the firm in January. He will serve as co-president along with San Diego-based shareholder Jeremy Roth.
In October, K&L Gates announced Peter Kalis was re-elected to another five-year term as managing partner of the firm. Reed Smith announced around the same time that Gregory B. Jordan would continue to lead his firm for another three-year term.
New Offices and Hires
K&L Gates opened an office in Milan in February through a merger with nine-lawyer Marini Salso Picciau Studio Legale. In November, K&L Gates received approval to open in Seoul, South Korea, and a few weeks later the firm announced it will merge with 300-lawyer Middletons in Australia come January.
Stevens & Lee was busy hiring from Buchanan Ingersoll & Rooney earlier in the year. Stevens & Lee hired one of the leaders of Buchanan’s health care practice, Tom Tammany. Stevens & Lee also hired Buchanan white-collar defense lawyers William DeStefano and Terri Pawelski. DeStefano now leads Stevens & Lee’s white-collar practice. Francis X. Taney Jr. left Buchanan to join Stevens & Lee as of counsel.
Buchanan later added to its health care practice, however, with the addition of John Washlick, the former head of Cozen O’Connor’s health care practice, and Stanley J. Milavec Jr., the former name partner of Mitts Milavec.
About a month before that in May, Buchanan acquired seven-lawyer litigation boutique Manion McDonough & Lucas in Pittsburgh. In October, Buchanan opened in Charlotte, N.C., with three banking and finance lawyers from the area.
Montgomery McCracken Walker & Rhoads grew its New York office in March through its merger with 13-lawyer real estate firm Kurzman Karelsen & Frank, as well as the acquisition of three-lawyer maritime law boutique DeOrchis & Partners.
In January, Dechert relaunched in Frankfurt, Germany. In April, the firm opened an office in Almaty, Kazakhstan, with a group of Chadbourne & Parke lawyers. The firm then opened a Chicago office in May with a trio of securities litigators from Katten Muchin Rosenman. The firm also opened a Dubai office with the addition of former Dewey lawyers.
When it comes to Dewey, there were plenty of lawyers to go around. Duane Morris picked up 16 former Dewey attorneys across the firm’s New York, Boston and Washington locations. Pepper Hamilton opened a Los Angeles office with the addition of a Dewey lawyer.
Morgan, Lewis & Bockius was by far the biggest beneficiary of Dewey lawyers when it came to Pennsylvania firms in the mix. Morgan hired about 65 lawyers from the disbanding Dewey, giving Morgan new offices in Moscow and Almaty and expanding the firm’s offices in London, New York and Los Angeles.
But Dewey wasn’t the only way firms were able to grow in 2012.
Saul Ewing opened an office in Pittsburgh in May with the addition of four Schnader Harrison Segal & Lewis lawyers.
Kansas City, Mo.-based Shook Hardy & Bacon entered the Philadelphia market with the hire of Dechert products liability lawyer Sean Wajert. Class action boutique Cohen Milstein Sellers & Toll reopened in Philadelphia with three lawyers from Berger & Montague.
Aside from its opening in Los Angeles, Pepper Hamilton was also growing on the East Coast. After months of working with the firm on the Penn State sex-abuse scandal review, Pepper acquired former FBI director Louis Freeh’s law firm, Freeh Sporkin & Sullivan, along with Freeh’s consulting group, Freeh Group International Solutions.
Fox Rothschild launched a Denver office in September with a trio of intellectual property lawyers. In October, Reed Smith officially opened in Singapore. That same month, Morgan Lewis hired a team of white-collar lawyers from White & Case in Washington. The group was led by former Acting Attorney General George J. Terwilliger.