The last two years were a crucible for Citigroup Inc., the New York-based financial services behemoth and the biggest client of the litigation department of Paul, Weiss, Rifkind, Wharton & Garrison. Facing well over $150 billion–yes, billion–in exposure from shareholder class actions arising from questionable investments and allegedly misleading analyst recommendations, Citi needed lawyers who could not only excel at what special counsel P.J. Mode calls “the nuts and bolts” of motions practice, courtroom arguments and trial work, but could also provide something extra: “a very mature, very developed strategic sense,” says Mode. Litigating for Citi in the last two years was like playing chess on a half-dozen interconnected boards. A loss on any of them could cripple the company.
Paul Weiss didn’t lose. Firm litigators led by department co-chairman Brad Karp, 45, dispatched the lower-exposure cases with alacrity. A $10 billion securities class action by Dynegy Inc. shareholders who alleged that Citi had abetted corporate fraud was dismissed; Citi then settled the case for $5 million to avert an appeal by plaintiffs lawyers from Lerach Coughlin Stoia Geller Rudman & Robbins. In pretrial motions Paul Weiss eviscerated a trio of class actions–alleging a total of about $60 billion in shareholder losses stemming from recommendations by analyst Jack Grubman–in the courtroom of Judge Gerard Lynch; those cases then settled for a total of about $30 million. The firm obtained the outright dismissal of four other class actions against Citi, and won a stunning ruling from the 7th U.S. Circuit Court of Appeals that dismissed in its entirety a potentially disastrous Madison County, Ill., class action purporting to consist of all brokerage customers of Citi’s Salomon Smith Barney arm. And in a three-week arbitration before an NASD panel, Paul Weiss defeated an investor’s claim that Citi was responsible for the almost $1 billion he lost in WorldCom stock.
