Keep your finger on the legal world's pulse

Law firms are following the lead of major funds and shifting their focus towards private credit, infrastructure, and energy deals. The traditional end-of-year deal flurry has taken on a different look this year, reflecting the changing economy and the type of work law firms will be involved in. High interest rates and inflation have driven funds to explore growth sectors, leading to a pivot by private equity houses. Deals in infrastructure, private credit, and tech are making headlines, with top law firms participating. Private equity consortiums are targeting digital marketplace businesses and other major acquisitions. Law firms are also expecting a rise in private credit work, with PE houses offering multi-billion dollar corporate loans. The expansion of the private credit deal market has led law firms to hire talent in this area. Law firms are positioning themselves to service clients in private capital funds and related divisions. The hiring market, leadership structures, and management decisions in 2024 will reflect this broader vision.

 

Law

The rise of AI could automate many tasks performed by associates, potentially ending the traditional law firm structure, says Ironclad CEO Jason Boehmig. AI has the potential to automate 44% of tasks within the legal industry, according to a Goldman Sachs report. The pyramid structure of law firms, with a small number of partners and a larger group of junior staff, is becoming obsolete. AI tools can automate legal analysis work, freeing partners to focus on providing business strategy and insight. The most successful law firms will embrace AI and shift their value proposition to focus on strategic guidance for clients. AI will also lead to the hiring of individuals with different skill sets, such as technologists and data analysts. The legal industry has the opportunity to lead in the post-AI era by adopting innovative services and technology.

 

Bloomberg Law

Longtime legal technology veteran Rick Hellers discusses the progress and challenges of the legal tech industry. Hellers, who recently took on the role of chief revenue officer at Scan Logic, talks about the evolution of the industry, the need for simplifying law firm finances, and the impact of generative AI. He emphasizes the importance of building a good product, solving problems in a unique way, and being humble. Hellers also highlights the increasing investment and use of technology in the legal tech market. Overall, he sees the legal tech industry as an exciting place to be.

 

Law

Kirkland & Ellis has received $41.5m in retainer payments from bankrupt clients, including Rite Aid Corp., WeWork Inc., and SmileDirectClub Inc. The firm, known for its restructuring practice, has been advising these companies on their bankruptcy cases. Kirkland & Ellis recently named its largest-ever partnership class, with seven new partners coming from its restructuring practice. WeWork, which filed for bankruptcy in November, has hired Kirkland & Ellis to help shed and renegotiate leases. Rite Aid Corp., which went bankrupt last month, has also retained Kirkland & Ellis for its Chapter 11 case. The company is facing a March 1 deadline to complete its turnaround and emerge from bankruptcy. Munger Tolles, Cole Schotz, Wilson Sonsini Goodrich & Rosati, and Kobre & Kim are among the other law firms advising WeWork and Rite Aid.

 

Bloomberg Tax

Recruiting firm MacKay & Agents is suing Holland & Knight for allegedly not paying recruiter fees. MacKay & Agents offered an associate to the law firm, but Holland & Knight did not respond. After learning that Holland & Knight hired the associate anyway, MacKay & Agents filed a lawsuit against the law firm. MacKay & Agents claims that Holland & Knight breached their agreement by not paying the agreed-upon fees. The recruiting firm calculates that Holland & Knight owes them over $73,000 if the allegations are true. Holland & Knight denies receiving MacKay & Agents' emails about the associate and claims to have found the associate through another recruiting firm. MacKay & Agents has tapped Norris McLaughlin to help with the lawsuit. The lawsuit states that it appears Holland & Knight either mistakenly credited someone else or intentionally cut MacKay & Agents out of the process to avoid paying the fee. Holland & Knight and Norris McLaughlin have not yet commented on the matter.

 

Daily Business Review

Two lawsuits are challenging the rules on how buyers' and sellers' agents share fees in the real estate industry. The lawsuits accuse the National Association of Realtors and major brokerages of conspiring to keep commission rates high. A Kansas City jury recently awarded $1.8bn to home sellers in Missouri, a verdict that could potentially triple to $5bn. The lawsuits have brought attention to the issue of real estate agent fees, which have remained around 5% to 6% of the sale price despite rising home values and increased online home searching by buyers. The lawsuits have been seen as a major challenge to the real estate industry and could result in significant changes to how agents are paid.

 

Wall Street Journal

Private equity firm Welsh Carson has asked a Houston federal judge to dismiss the U.S. Federal Trade Commission's antitrust lawsuit accusing the agency of pursuing an aggressive litigation agenda. The FTC alleged that Welsh Carson and U.S. Anesthesia Partners conspired to consolidate the anesthesiology market in Texas, violating antitrust laws. Welsh Carson's lawyers argued that the complaint against "mere investors" goes against established corporate law. The litigation is part of the FTC's efforts to target private equity industry-led acquisitions. Welsh Carson and U.S. Anesthesia Partners face a new prospective class action lawsuit from employee benefits plans. The FTC's lawsuit seeks structural relief and other penalties. The case is being heard in the U.S. District Court for the Southern District of Texas.

 

Reuters

An engineer at Santa Clara, California-headquartered software company Nvidia shared his screen during a video conference call with his former employer Valeo, leaving a file up that contained data about robocar technology that he had stolen from the French global automotive supplier. Valeo is now suing Nvidia in California after the engineer was convicted of infringing business secrets in Germany. Nvidia has sought to defuse the situation by stating that it had no interest in Valeo's code or alleged trade secrets and had taken steps to protect Valeo's rights. However, Valeo still filed a complaint against Nvidia. The engineer, Mohammad Moniruzzaman, had stolen files and source code from Valeo before leaving the company. During the conference call, he accidentally displayed Valeo's source code on his computer screen. Moniruzzaman was convicted in a Stuttgart court and ordered to pay a fine. Intellectual property theft is a recurring theme in the race to dominate the autonomous-driving market. Nvidia, a relative newcomer in the self-driving space, is accused of leveraging Valeo's stolen software for an illegitimate advantage. Valeo has spent billions developing advanced driving-assistance systems and aims to protect its investments. The case is ongoing in federal court in San Jose, California.

 

Bloomberg

A top Citigroup executive, Andy Morton, has urged employees to speak up against inappropriate behavior following a lawsuit filed by a managing director alleging sexual harassment. Morton emphasized that no colleague should be discriminated against or harassed, and that decisive action would be taken against unacceptable behavior. The managing director, Ardith Lindsey, accused Citigroup of tolerating a hostile environment and claimed she was subjected to sexual harassment and abuse, including death threats, by a former manager. Citigroup stated that it will defend against Lindsey's claims. Morton highlighted the importance of creating a culture of the highest standards and encouraged employees to raise concerns through official channels without fear of retaliation.

 

U.S. News

Cher Scarlett, a former software engineer at Apple, is facing difficulties in finding employment after speaking up about labor issues at the company. The National Labor Relations Board (NLRB) has issued a complaint against Mozilla, alleging that it refused to hire Scarlett due to her past labor activism. The case has the potential to address the fear of being blacklisted that many tech workers face when considering whistleblowing. The NLRB rarely accuses major tech companies of discrimination, because such cases are challenging to prosecute. However, if successful, the case could embolden workers and send a powerful message to employers. The outcome of the case could have a significant impact on workplace activism in Silicon Valley.

 

Bloomberg

The chief executive of Binance, Changpeng Zhao, plans to step down and plead guilty to violating U.S. anti-money laundering requirements. Binance, the largest global cryptocurrency exchange, will also plead guilty and pay $4.3bn in fines. The deal would end long-running investigations of Binance, which has faced scrutiny from U.S. regulators. Zhao will retain his majority ownership of Binance but won't have an executive role. The outcome is similar to the case against BitMEX executives. The deal doesn't include a settlement with the Securities and Exchange Commission, which sued Binance and Zhao in June. The Department of Justice's investigation focused on Binance's money laundering prevention program and whether it allowed individuals in sanctioned countries to trade with Americans. Binance will also resolve a civil lawsuit filed by the Commodity Futures Trading Commission.

 

Wall Street Journal