Keep your finger on the legal world's pulse

Lateral hiring by law firms fell 35% in 2023, marking the second straight year of decline, according to a report by the National Association for Law Placement (NALP). The median number of lateral attorneys hired per office dropped from six in 2022 to four in 2023, while the average number of lawyer laterals declined by 42%. This decline in hiring is the lowest since the Great Recession in 2010. NALP's report is based on surveys from 479 U.S. law firm offices. The decline in lateral hiring, along with lower summer associate recruiting, suggests that law firms are projecting lower demand in the coming years and have adjusted their staffing accordingly. Lateral associate hires declined by nearly 43%, while lateral partner hires decreased by 10%. However, demand for lateral partners varied by firm size. Firms with 500 or more lawyers curtailed lateral partner hires by over 19%, while lateral associate hires increased by nearly 21% at firms with 250 or fewer lawyers.

 

Bloomberg Law

ABA Journal

Reuters

The majority of Am Law 200 firms lowered their real estate footprints in 2023, with most paying more per square foot than in 2022. Competition for commercial real estate is heating up, with the legal industry finishing 2023 with its busiest quarter of leasing activity since late 2019. Larger companies were more successful in lowering costs per square foot. According to Savills, legal sector leasing activity in the fourth quarter of 2023 rivaled the all-time peak of 2019's fourth quarter, with law firms signing deals for 2.8m sq ft of real estate that quarter. In survey responses to the American Lawyer, 56% of the 80 Am Law 200 firms said they planned to continue downsizing as a result of remote or hybrid work. Compared to smaller firms, the Am Law 50 proved more capable of controlling rising prices per square foot. The Am Law 50 paid an additional 1.3% per square foot (PSF) in 2023, compared to 3.7% higher PSF costs for the Am Law 51-100 and 7.6% higher PSF for the Second Hundred. Despite the overall trend of downsizing, about 42% of the 80 Am Law 200 firms increased their real estate footprints in 2023.

 

The American Lawyer

California admitted a record high proportion of women and minority lawyers in 2023, but the state's lawyer rolls remain significantly whiter than its adult population, according to a study by the State Bar of California. Women made up 56% of newly-admitted lawyers last year, while minority attorneys accounted for 55%. Despite the increases, California's lawyer population remains nearly two-thirds white, much higher than the state's adult population. The report highlights the racial gap, especially among Latinos. State Bar Executive Director Leah Wilson emphasized the need for sustained progress in increasing diversity. The California report comes amid controversies surrounding diversity efforts by bar associations in other states. Among California's newly-admitted attorneys in 2023, women of color were the largest group, followed by men of color. Latino lawyers accounted for 11% of new lawyers, while Black attorneys were 5% and Asian attorneys were 20%.

 

Reuters

A study by the International Chamber of Commerce says lawyers need a better understanding of the "emotional journey" of the businesses they advise, as well as local values and practices to avoid cross-border disputes. The study of over 1,700 mid- to senior-level managers indicated that the cultural backgrounds of business people and organizations profoundly influence their approaches to acquiring, maintaining and ending relationships. According to research, where conflicts arose, 50% of those questioned attributed contract failure to weak relationships between the parties, with the other half blaming contractual issues or performance. The report suggests that the ability of lawyers to understand relationships also affects a company's choice of external counsel. Some 47% of survey respondents said that they would prioritize individuals or firms showing cultural sensitivity. Roland Ziadé, an international arbitration partner at Linklaters, says there is an increasing move for lawyers to be "emotionally and culturally intelligent" as well as "legally savvy." He says the report reminds in-house and external counsel of the benefits of multilingual teams with cross-cultural experience. Jon Newman, a partner at Kirkland & Ellis, says that "emotional intelligence is a critical skill for lawyers" - but most do not understand that point as they focus on the legal or commercial aspects of their roles.

 

The Times

Artificial intelligence (AI) is posing increasing risks to financial firms, according to a report by the U.S. Treasury Department, with criminals able to mimic voice or video, impersonate customers, and carry out sophisticated email phishing attacks. The report highlights the need for improved coordination and regulation to address these risks, and also emphasizes the challenges faced by smaller financial firms, which have fewer IT resources and less expertise in developing AI systems. To bridge this gap, the American Bankers Association is designing a pilot program for industry information-sharing on fraud. The U.S. government may also provide access to historical fraud reports to train AI models.

 

Bloomberg

CMS has partnered with the generative artificial intelligence (AI) platform Harvey for a global partnership. The firm will roll out the platform to its lawyers in a phased approach across its member firms, starting with offices in France, Germany, the Netherlands, Portugal, and the U.K. Harvey will assist in creating initial drafts, suggestions, and forecasts from large amounts of data, ultimately leading to final deliverables. CMS operates as a European economic interest grouping and has over 75 offices across 45 countries. John Craske, CMS' UK director of innovation, stated that the partnership with Harvey aligns with the firm's strategy of innovation and providing efficient service to clients. Other firms, including Allen & Overy, Macfarlanes, and Al Tamimi & Co, have also partnered with Harvey. Clifford Chance has announced a partnership with Microsoft to create AI-powered workplace solutions.  

 

Law

Adobe's Senior Director and Associate General Counsel, J. Scott Evans, emphasizes the importance of building artificial intelligence (AI) guardrails to prevent misuse. He highlights the need for a multifunctional approach involving various departments within a company. Evans also discusses how Adobe is helping artists protect their work from being copied and used for commercial purposes through the use of AI. He mentions the risks of improper implementation and overreliance on AI, stressing the need for proper guidance and verification. Additionally, Evans shares Adobe's advocacy for protections and policies that support artists, including the development of a federal anti-impersonation right. He encourages focusing on the positive aspects of AI and collaborating to find solutions to address the challenges.

 

Corporate Counsel

The owner of the ship that collided with the Key Bridge in Baltimore could face significant damage claims after the accident caused chaos in the U.S. transportation network. Legal experts suggest that the ship owner may be able to limit its liability under an obscure 19th-century law, similar to how the owner of the Titanic did after its sinking. The ship owner's liability could be reduced to the value of the vessel after the crash, plus any earnings from the freight on board. This law was originally passed to prevent shipping giants from suffering massive losses. The ship owner's insurance, provided by the Britannia Protection and Indemnity Club, will likely help cover the legal risks. The total insured limit for the ship is approximately $3bn. Maersk, the shipping giant that chartered the voyage, may not be liable as it had no crew on board. Victims of the bridge strike could potentially seek damages in state court under a clause of the U.S. Constitution. The ship itself may be kept under "arrest" by the Maryland Transportation Authority until damages are resolved.

 

ABA Journal

Hunter Biden is seeking the dismissal of a criminal case accusing him of evading $1.4m in taxes. His lawyers argue that the charges were politically motivated due to Republican lawmakers investigating President Joe Biden, his father. The trial is set to begin in June, just months before the November presidential election. Hunter Biden, who has pleaded not guilty, also faces a separate criminal case in Delaware over the alleged purchase of a handgun while using illegal drugs. Special Counsel David Weiss, who brought both cases, has accused Hunter Biden's legal team of spreading conspiracy theories. The tax indictment also sheds light on Hunter Biden's foreign business dealings, which are under investigation by Republicans in the House of Representatives. Hunter Biden's defense team is challenging Weiss's appointment as special counsel and arguing that the case is barred by an earlier plea deal.

 

Reuters

US News and World Report

Texas Attorney General Ken Paxton has reached a settlement to resolve securities fraud charges that were brought against him nearly a decade ago. Mr. Paxton was indicted in 2015 on charges related to stock sales and compensation from a Texas technology firm. Under the deal, the state will drop the charges in 18 months if he pays restitution to investors, completes community service and legal education. Mr. Paxton's lawyer stated that the case has been pending for a long time and it was time to move on. This settlement is being seen as another victory for Mr. Paxton, who has faced corruption allegations since taking office in 2014. The SEC had also sued him for promoting stock without disclosing payments, but the case was dismissed in 2017.

 

The Baltimore Sun

Reuters

U.S. News

A new U.S. Supreme Court brief by Bestwall, a Georgia-Pacific spinoff, opposes plaintiffs' arguments about the validity of the Texas two-step in asbestos litigation. Bestwall's lawyers have focused on technical arguments rather than a full-throttled defense of the device. The courts have reached different conclusions on the viability of the Texas two-step, making it a candidate for Supreme Court review. Two groups of asbestos plaintiffs have asked the Supreme Court to intervene, arguing that healthy companies are abusing the bankruptcy process to deny plaintiffs their day in court. Bestwall's brief downplays any split among the circuits and portrays the case as unnecessary. The company argues that the bankruptcy court had subject-matter jurisdiction and that the claims against Georgia-Pacific are related to the bankruptcy of Bestwall. The Supreme Court will consider the case and decide whether to review it.

 

Reuters

FTX is currently engaged in a legal battle with digital asset holders in Delaware bankruptcy court over the valuation of certain tokens. The dispute revolves around the estimation methodology to be used for valuing four assets—MAPS, OXY, SRM, and BOBA. The court has already approved FTX's proposed methodology for valuing over 1,000 digital assets. However, the difficulty in valuing crypto assets is that they have no inherent value and their value is derived from trades based on sentiments. The parties presented their closing arguments, with one side claiming the tokens are worth more than $500m and the other arguing for a valuation of around $292m. The court has yet to issue a decision on the matter.

 

Law

Chewy and IBM have agreed to resolve a patent infringement lawsuit from IBM over the online pet-food seller's advertising technology. In 2021, Chewy sued IBM, seeking a judgment that its website and mobile app's targeted advertising did not infringe IBM's patents. IBM countersued for infringing patents related to website functionality and internet ad targeting.

 

Reuters

A U.S. appeals court has ruled in favor of Stern Produce Company, stating that the company did not violate federal labor law by warning a pro-union truck driver not to cover up a surveillance camera in his truck. The court called the National Labor Relations Board's ruling against the company "nonsense." The court stated that the company's policy requiring drivers to keep the cameras on "at all times" did not infringe on the driver's rights. The court also reversed the board's finding that Stern violated a different pro-union employee's rights. The United Food and Commercial Workers union has been attempting to organize drivers and warehouse workers at Stern since 2015. The case is Stern Produce Company Inc v. NLRB, U.S. Court of Appeals for the D.C. Circuit, No. 23-1100.

 

Reuters

Freshfields Bruckhaus Deringer is joining other firms in implementing a four-day in-office work week. Starting May 1, partners, associates, legal assistants, and fee earners at Freshfields' U.S. offices will be required to work at least four days in the office each week. The firm's new policy comes as many law firms are gravitating towards more days of office work. Freshfields' decision follows other top firms, including Simpson Thacher & Bartlett, Skadden, Arps, Slate, Meagher & Flom, Davis, Polk & Wardwell, Weil, Gotshal & Manges, Ropes & Gray, and Vinson & Elkins. The firm recently moved into new office spaces in New York and Silicon Valley. This shift towards more in-office work is expected to continue, with more firms likely to adopt similar policies in the future.

 

Law

Herbert Smith Freehills has appointed four senior leaders to its global ESG leadership team. The team will oversee the firm's growing ESG practice across the U.K., U.S., and EMEA. Led by partner Silke Goldberg, the practice advises clients on sustainability matters including energy transition, green finance, responsible investment, and sustainability reporting. The new appointments include Jannis Bille as Head of ESG in the UK, Ben Rubinstein as Head of ESG in the US, and Heike Schmitz and Iria Calviño as joint Heads of ESG. The four new appointees will join the firm's existing ESG global leadership team.

 

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