Is STB the next Dewey?

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Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 3:45 am

Anon b/c I'm an incoming SA at STB.

Maybe someone who knows more about corporate/bankruptcy law can enlighten me, but based on this

http://abovethelaw.com/2015/01/mayer-brown-simpson-thacher-make-epic-screwup/

How is STB not completely screwed? Unless this gets reversed by an en banc hearing (seems unlikely), STB could be on the hook for $1.5 billion, which essentially, at least to me, makes it look like its fate is in JP Morgan's hands?

Am I misunderstanding this, or should I approach this summer as if the firm won't be around in a year? Tia

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Desert Fox
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Re: Is STB the next Dewey?

Postby Desert Fox » Tue Feb 17, 2015 4:00 am

malpractice insurance

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Re: Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 4:03 am

Desert Fox wrote:malpractice insurance


OP here, and I'm sure you would know this better than me, but could malpractice insurance really cover a $1.5 billion judgment? What are BigLaw firms normally insured for? Seems like that would go beyond the policy limits

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Re: Is STB the next Dewey?

Postby Desert Fox » Tue Feb 17, 2015 4:04 am

Anonymous User wrote:
Desert Fox wrote:malpractice insurance


OP here, and I'm sure you would know this better than me, but could malpractice insurance really cover a $1.5 billion judgment? What are BigLaw firms normally insured for? Seems like that would go beyond the policy limits


I actually have no idea, but I'm guessing yes since billion dollar deals are common.

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Re: Is STB the next Dewey?

Postby TTTooKewl » Tue Feb 17, 2015 8:59 am

Plus JPMorgan was one of many lenders who contributed to the $1.5 billion total.

911 crisis actor
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Re: Is STB the next Dewey?

Postby 911 crisis actor » Tue Feb 17, 2015 9:15 am

Lol

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Actus Reus
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Re: Is STB the next Dewey?

Postby Actus Reus » Tue Feb 17, 2015 12:17 pm

I'd be more concerned with the insurance and reinsurance companies associated

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Re: Is STB the next Dewey?

Postby DoveBodyWash » Tue Feb 17, 2015 12:26 pm

It's more likely that JP Morgan makes STB write off the time they billed on that matter and expect a lot of discounted work and/or favors in the future than it is that they'll sue to stb to recover from their malpractice insurance (according to one of my profs). Dewey didn't fail cuz they fucked up a matter, it was poor management and unsustainably large compensation guarantees to lateral partners.

But anecdotally I have a friend at JP and works with the MD who oversaw that deal, just said it caused a shit ton of extra work for him/her but it's not like a catastrophe or anything.

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Re: Is STB the next Dewey?

Postby kaiser » Tue Feb 17, 2015 12:54 pm

OP, I wouldn't be concerned about it. Firms don't crash and burn from isolated mistakes like this. They fail due to long-term mismanagement and inability to cope with shifting economic circumstances over the course of years.

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Re: Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 3:38 pm

No one at STB is remotely concerned about this as something harmful long-term to the firm. Hell, the guy responsible still works here. It's viewed (by JPM as well as by STB) as a risk of the business. Sometimes a minor error combined with a business-unfriendly judge results in a huge payout.

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Re: Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 4:05 pm

Anonymous User wrote:No one at STB is remotely concerned about this as something harmful long-term to the firm. Hell, the guy responsible still works here. It's viewed (by JPM as well as by STB) as a risk of the business. Sometimes a minor error combined with a business-unfriendly judge results in a huge payout.


Is there a new nickname for the guy etc. or is everyone simply moving on with their lives?

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Re: Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 5:29 pm

Anonymous User wrote:No one at STB is remotely concerned about this as something harmful long-term to the firm. Hell, the guy responsible still works here. It's viewed (by JPM as well as by STB) as a risk of the business. Sometimes a minor error combined with a business-unfriendly judge results in a huge payout.


OP here, thank you for this, it makes me feel much better

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Re: Is STB the next Dewey?

Postby jbagelboy » Tue Feb 17, 2015 7:46 pm

I think it's safe to say Simpson Thacher is one of the more stable large firms in this market

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Re: Is STB the next Dewey?

Postby Desert Fox » Tue Feb 17, 2015 8:06 pm

jbagelboy wrote:I think it's safe to say Simpson Thacher is one of the more stable large firms in this market


The fact that they led the bonus raise is pretty good evidence.

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Re: Is STB the next Dewey?

Postby Anonymous User » Tue Feb 17, 2015 9:38 pm

Anonymous User wrote:
Anonymous User wrote:No one at STB is remotely concerned about this as something harmful long-term to the firm. Hell, the guy responsible still works here. It's viewed (by JPM as well as by STB) as a risk of the business. Sometimes a minor error combined with a business-unfriendly judge results in a huge payout.


Is there a new nickname for the guy etc. or is everyone simply moving on with their lives?


Honestly, I have never heard anyone at the firm mention it except on the day it was on the front page of Above the Law. I only know who was responsible because I was curious and poked around. The actual error was five or six years ago, and the lawsuit's been going for four years, so they've known about this for a *long* time.

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Re: Is STB the next Dewey?

Postby Anonymous User » Wed Feb 18, 2015 9:48 am

I would be far more worried about the big guarantees given out to partners at STB during The Great Poaching By K&E in 2014, in terms of the long term health of the firm, rather than the immaterial effects of a potential malpractice action against STB (fwiw, many of the top corporate firms share in the same pool for malpractice coverage, so this will hit all of them a little bit in terms of higher premiums.)

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Re: Is STB the next Dewey?

Postby Cogburn87 » Wed Feb 18, 2015 9:51 am

cusenation wrote:Dewey didn't fail cuz they fucked up a matter, it was poor management and unsustainably large compensation guarantees to lateral partners.

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Re: Is STB the next Dewey?

Postby Anonymous User » Wed Feb 18, 2015 12:14 pm

Anonymous User wrote:I would be far more worried about the big guarantees given out to partners at STB during The Great Poaching By K&E in 2014, in terms of the long term health of the firm, rather than the immaterial effects of a potential malpractice action against STB (fwiw, many of the top corporate firms share in the same pool for malpractice coverage, so this will hit all of them a little bit in terms of higher premiums.)


I am pretty sure that there was only one big guarantee given out (though there were multiple poachings by Kirkland). I'm not sure that this is really cause for concern.

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Re: Is STB the next Dewey?

Postby utahraptor » Wed Feb 18, 2015 12:21 pm

Desert Fox wrote:
jbagelboy wrote:I think it's safe to say Simpson Thacher is one of the more stable large firms in this market


The fact that they led the bonus raise is pretty good evidence.


they've also been hiring up a storm

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Re: Is STB the next Dewey?

Postby Anonymous User » Wed Feb 18, 2015 1:07 pm

Anonymous User wrote:
Anonymous User wrote:I would be far more worried about the big guarantees given out to partners at STB during The Great Poaching By K&E in 2014, in terms of the long term health of the firm, rather than the immaterial effects of a potential malpractice action against STB (fwiw, many of the top corporate firms share in the same pool for malpractice coverage, so this will hit all of them a little bit in terms of higher premiums.)


I am pretty sure that there was only one big guarantee given out (though there were multiple poachings by Kirkland). I'm not sure that this is really cause for concern.


You have been lied to. Plenty of guarantees other than the Mind Changer

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Old Gregg
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Re: Is STB the next Dewey?

Postby Old Gregg » Fri Feb 20, 2015 2:22 am

It's funny because this actually happens at every firm, it's just that it doesn't always lead to a judgment against that firm. How many times have you encountered an agreement, but are so sleep deprived that you basically sign off on it while glazing over the words. Not really unique to STB.

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Re: Is STB the next Dewey?

Postby Anonymous User » Fri Feb 20, 2015 9:10 am

zweitbester wrote:It's funny because this actually happens at every firm, it's just that it doesn't always lead to a judgment against that firm. How many times have you encountered an agreement, but are so sleep deprived that you basically sign off on it while glazing over the words. Not really unique to STB.


I do finance work, and I can't imagine making the STB mistake. First off, I'd never let a paralegal prepare a UCC-3, that's a junior associate job. Second off, everyone knows UCC docs are one of the few docs with zero tolerance for errors, so each lawyer is fascistic about checking them CAREFULLY. Finally, we would always have multiple layers of checking on something as irrevocable as a UCC-3 just to be sure no one person is wholly responsible for catching a goof.

My understanding is that the RE guy who sent the email wasn't doing the reviewing, but one of the junior finance associates was and blew it. This still wouldn't happen at our shop because we have controls to protect against UCC fuckups (we heard of a couple of UCC-1s that were improperly prepared several years ago with thankfully no real consequences other than embarrassment). It speaks badly of the level of Balkanization of practice groups at STB, IMO.

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Re: Is STB the next Dewey?

Postby Anonymous User » Fri Feb 20, 2015 10:22 am

Anonymous User wrote:
zweitbester wrote:It's funny because this actually happens at every firm, it's just that it doesn't always lead to a judgment against that firm. How many times have you encountered an agreement, but are so sleep deprived that you basically sign off on it while glazing over the words. Not really unique to STB.


I do finance work, and I can't imagine making the STB mistake. First off, I'd never let a paralegal prepare a UCC-3, that's a junior associate job. Second off, everyone knows UCC docs are one of the few docs with zero tolerance for errors, so each lawyer is fascistic about checking them CAREFULLY. Finally, we would always have multiple layers of checking on something as irrevocable as a UCC-3 just to be sure no one person is wholly responsible for catching a goof.

My understanding is that the RE guy who sent the email wasn't doing the reviewing, but one of the junior finance associates was and blew it. This still wouldn't happen at our shop because we have controls to protect against UCC fuckups (we heard of a couple of UCC-1s that were improperly prepared several years ago with thankfully no real consequences other than embarrassment). It speaks badly of the level of Balkanization of practice groups at STB, IMO.


:roll:

"That's junior associate work". Paralegals are more likely to do it right, anyway. They've actually prepared UCC-3s before.

I'm sure you spend hours of your practice time reading through UCC-3s dozens of times just to make sure everything is exactly correct, and your clients appreciate 20 hours billed on every matter to "UCC perfectionism".

And anyone who calls their law firm a "shop" is obviously trying too hard.

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Re: Is STB the next Dewey?

Postby Anonymous User » Fri Feb 20, 2015 11:14 am

Going to second the earlier statement that no one here at STB thinks this mistake is large problem for the firm. The fact that it happened 6 years ago, and was discovered a few years thereafter, and yet JPM has remained our biggest client over the interceding years shows that they don't view this as a relationship ending mistake. Their guys missed it too, after all.

This is just a PR hit, and not even a very big one (STB rubber stamped the work of another well-regarded law firm when it turns out the other firm screwed up, oh no).

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Re: Is STB the next Dewey?

Postby Old Gregg » Fri Feb 20, 2015 12:59 pm

Anonymous User wrote:
Anonymous User wrote:
zweitbester wrote:It's funny because this actually happens at every firm, it's just that it doesn't always lead to a judgment against that firm. How many times have you encountered an agreement, but are so sleep deprived that you basically sign off on it while glazing over the words. Not really unique to STB.


I do finance work, and I can't imagine making the STB mistake. First off, I'd never let a paralegal prepare a UCC-3, that's a junior associate job. Second off, everyone knows UCC docs are one of the few docs with zero tolerance for errors, so each lawyer is fascistic about checking them CAREFULLY. Finally, we would always have multiple layers of checking on something as irrevocable as a UCC-3 just to be sure no one person is wholly responsible for catching a goof.

My understanding is that the RE guy who sent the email wasn't doing the reviewing, but one of the junior finance associates was and blew it. This still wouldn't happen at our shop because we have controls to protect against UCC fuckups (we heard of a couple of UCC-1s that were improperly prepared several years ago with thankfully no real consequences other than embarrassment). It speaks badly of the level of Balkanization of practice groups at STB, IMO.


:roll:

"That's junior associate work". Paralegals are more likely to do it right, anyway. They've actually prepared UCC-3s before.

I'm sure you spend hours of your practice time reading through UCC-3s dozens of times just to make sure everything is exactly correct, and your clients appreciate 20 hours billed on every matter to "UCC perfectionism".

And anyone who calls their law firm a "shop" is obviously trying too hard.


CR. Above sounds like an idiot. And, if true, probably insufferable to work for.




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