Fee Tracker: Penn State's Sex Abuse Tab, Herbalife and Twitter
Tallying up what Am Law 200 firms are making for their work on notable matters in the news, The Am Law Daily looks at the Penn State University sex abuse scandal, hedge fund billionaire William Ackman's bet against Herbalife, the coming Wikipedia reboot and Twitter's initial public offering.
Almost two years after assistant Penn State football coach Jerry Sandusky was indicted on multiple criminal counts of abusing minors, the university has agreed to pay a total of $59.7 million to settle 26 suits filed by plaintiffs claiming to be victims of Sandusky's crimes, according to sibling publication The Legal Intelligencer.
The scandal has been costly for Penn State, which last year retained Washington, D.C.’s Feinberg Rozen—a firm founded by so-called master of disaster Kenneth Feinberg, a former Kaye Scholer partner and 2004 National Law Journal Lawyer of the Year—to help settle the suits. (The first abuse claim settled in August.) The school’s Penn State Progress website provides a breakdown of the nearly $50.5 million in fees and expenses it had incurred through July 31 as a result of Sandusky’s crimes. Feinberg Rozen is one of several firms—along with Duane Morris; Jenner & Block; Lanny J. Davis & Associates; Lee, Green & Reiter; Saul Ewing; and White and Williams—that have received a combined $11.5 million for their legal services and defense work on behalf of the university.
Penn State has paid another $842,042 to several firms that conducted external investigative work related to the Sandusky scandal. That group includes Buchanan Ingersoll & Rooney; Lightfoot, Franklin & White; and Saul Ewing. Meanwhile, Reed Smith—which as The Am Law Daily first reported two years ago was hired by the university’s board of trustees amid the mushrooming controversy—is listed along with nine other professional services firms as sharing in more than $7.1 million in fees for “legal services, consulting services and communications” work.
Pepper Hamilton, which acquired last year former FBI Director Louis Freeh’s Freeh Sporkin & Sullivan, has received nearly $8.2 million for putting together an in-depth report documenting the facts and circumstances surrounding Sandusky’s conduct and Penn State’s response to the matter. DLA Piper, whose chairman emeritus George Mitchell was hired last year to serve as an “athletics integrity monitor” for Penn State, released its first annual report in September. The firm has so far received nearly $2 million as payment for its services to the school.
Penn State is also picking up the legal tab for former university president Graham Spanier and other administrators caught up in the Sandusky fallout. Lawyers representing those individuals from a half-dozen firms—including Cohen & Grigsby; Dinsmore & Shohl; Farrell & Reisinger; Fox Rothschild; Hamburg & Golden; Schnader Harrison Segal & Lewis; and Vaira & Riley—have so far been paid a combined $6.8 million.
Herbalife Work Bolsters Boies Schiller's Bottom Line
On Monday, Los Angles–based nutritional and vitamin purveyor Herbalife announced that its profits had jumped 35 percent, to $142 million, in the third quarter of 2013. At the same time, the company also stated in a Form 10-Q filing with the Securities and Exchange Commission that it had paid a total of $23.8 million to its various legal, public relations and other professional advisers during the first nine months of the year as it waged a very public battle with hedge fund manager William Ackman of Pershing Square Capital Management.
Boies, Schiller & Flexner is in line to reap a hefty portion of those fees. As The Am Law Daily has has previously reported, Herbalife hired the firm earlier this year to square off against Ackman, who has likened the company to a pyramid scheme, and his lawyers from Kirkland & Ellis and Sullivan & Cromwell. While he has not backed off his public criticism of the company, Ackman told investors earlier this month that he has scaled back his original $1 billion bet against the company by reducing Pershing Square’s short position in its stock by more than 40 percent amid mounting losses. (Herbalife recently hired Antonio Villaraigosa, a former mayor of Los Angeles who failed California’s bar exam four times, as a senior adviser to its CEO.)
Wikipedia's Woes Could Keep Site's Lawyers Busy
In a lengthy feature published this month, MIT Technology Review reports that Wikipedia—a website founded by Jimmy Wales that the science magazine calls the sixth-most widely used in the world—is in trouble, largely because the army of volunteer editors and researchers on which it relies is overmatched by the volume of material with which they must contend. As a result, the nonprofit Wikimedia Foundation, which pays the online encyclopedia's bills, is planning what amounts to a major reboot aimed at improving the site's authority and reliability.
Among those likely to play key roles in that effort are members of the foundation's in-house legal team. Geoffrey Brigham, a onetime associate at Finley, Kumble, Wagner, Underberg, Manley, Myerson & Casey and former eBay deputy general counsel, replaced Michael Godwin as the Wikimedia Foundation's top in-house lawyer in February 2011. According to the organization's 2012 federal tax filing, Brigham received $182,087 in compensation last year. Squire Sanders, which on its website says it's handled IP work for the San Francisco–based nonprofit, was paid $140,862 during the 2012 fiscal year.
W&C Fights for Fees Tied to Foreign Policy Libel Suit
Lawyers from Williams & Connolly and Levine Sullivan Koch & Schulz are seeking a combined total of more than $200,000 in legal fees and costs for their work fending off a libel suit brought against Foreign Policy magazine and writer Jonathan Schanzer, according to sibling publication The Blog of Legal Times. In the suit, which was filed in September 2012, Palestinian-Canadian businessman Yasser Abbas claimed Schanzer's June 2012 story contained unfounded accusations of corruption against his father, Palestinian Authority President Mahmoud Abbas.
The BLT reported in late September on the suit’s dismissal—click here for U.S. District Judge Emmet Sullivan's 37-page ruling—and now Williams & Connolly is seeking $100,481 in legal fees and costs for its work advising Foreign Policy, which is owned by The Washington Post Company. Schanzer’s lawyers from First Amendment shop Levine Sullivan want $107,174, according to The BLT. New York’s Melito & Adolfsen is representing Yasser Abbas in the litigation.
For Wilson Sonsini, a Modest Take of a Major IPO
While Silicon Valley stalwart Wilson Sonsini Goodrich & Rosati has been busy with a flurry of tech-related IPOs in recent weeks, the biggest one of all is yet to come: the listing planned by social networking company Twitter, which is hoping to raise $1.4 billion in a future float. In an SEC filing last week, Twitter disclosed that it would incur $2 million in legal fees and expenses in connection with the IPO. While Wilson Sonsini is advising Twitter, Davis Polk & Wardwell has taken the lead for underwriters led by Bank of America/Merrill Lynch, Deutsche Bank, Goldman, JPMorgan Chase and Morgan Stanley. The filing also shows that Twitter’s newly appointed general counsel Vijaya Gadde, a Wilson Sonsini alum, earns a base salary of $250,000. Twitter has passed Facebook as the most popular social network among teens, according to a recent report from a U.S. investment bank.