Combining firms to create a new enterprise

By Olivia Clarke

A successful merger can often be like a successful marriage.

It takes understanding, compromise, teamwork, and a belief that this new partnership will work for the betterment of everyone involved. Some firms make it look easy, and others have faced challenges along the way.

In the last 10 years a number of Chicago firms have merged with firms from outside the Midwest, and with firms in their own backyards.

Lawyers from Reed Smith, DLA Piper, Drinker Biddle & Reath, and Locke Lord Bissell & Liddell participated in a roundtable discussion about firm growth and law firm mergers. They talked about such topics as, what type of lawyer works best in a large firm, and how firms deal with client conflicts when two firms merge.

Here is a portion of the roundtable discussion, and here is who participated in the discussion:

Jennifer Kenedy (pictured), an equity partner at Locke Lord Bissell & Liddell. She has been on the combined firm’s board of directors since Oct. 2, 2007, when Locke Liddell & Sapp, and Lord, Bissell & Brook merged. She has also co-chaired the combined firm’s integration committee since the same date.

Michael A. LoVallo, Chicago office managing partner at Reed Smith. He has been in that position for over a year, and that was preceded by five years as co-managing partner at Sachnoff & Weaver. Reed Smith and Sachnoff & Weaver’s combination date was March 1, 2007.

David Matteson, managing partner of Drinker Biddle & Reath. He was on the 2006 management committee at Gardner Carton & Douglas, and has been managing partner since Gardner Carton & Douglas and Drinker Biddle & Reath combined Jan. 1, 2007.

William A. Rudnick, managing partner of DLA Piper’s Chicago office. He’s been in that position since January 2008. DLA Piper’s most recent merger was in 2005, and it was a three-way merger among Piper Rudnick, DLA, and Gray Cary.

What are some of the challenges in having a large firm, and the challenges involved in merging in Chicago?

Matteson: The challenge is to get everyone informed and stay informed about what a much larger group is doing. It’s easier when you are smaller, fewer people to understand and get to know their practices, their clients. As the enterprise gets larger the challenge is to find ways to communicate better and get informed.

LoVallo: The challenge is also the opportunity. The upside is all in having people have access and knowledge to the information and the people in the firm. Communication is always an issue in a law firm. I think it takes more direct attention the larger the firm is and the more offices it has to really develop systems and programs and follow them, in terms of communication. But the upside is so much greater as well. Once people see the upsides they’re willing to invest and participate in those practice group meetings or partner meetings, because that’s now how they’re accessing the good information instead of just trying to get it by osmosis in the hallways.

Kenedy: I would say firm culture — trying to have a cohesive, consistent firm culture when you’ve got as many as 12 offices nationwide. I would identify that as a big challenge.

Rudnick: The biggest challenge is the business case upfront. You’ve got to have a vision that makes sense from a business perspective on a stand-alone basis, and then makes sense for the people who are a part of the firm as well. I think the biggest failing that a lot of mergers face is that there isn’t an overwhelming business case to be made at the beginning. And you have two problems that result from that.

One is, if you can’t make the business case to your colleagues, they don’t buy into it and they don’t go along. Second, if you don’t make a business case, the transaction itself, if not doomed, faces serious challenges going forward.

How do you deal with the client conflicts when you are growing and merging?

Rudnick: We’ve dealt with that issue in three different respects. The first issue is, you’ve got to do your homework upfront and figure out what the conflicts are and whether or not you can even go through with the transaction. In all our mergers, we’ve done that and that’s been at times a challenge and we’ve had to, on a couple occasions, say good-bye to some clients.

The second piece of it is, you’ve got to be very, very careful and track the information and develop systems that work, and strike a balance between missing potential conflicts or actual conflicts on one hand and gumming up the works on the other hand. You need a system that can actually identify issues and address them.

I know I said three, but I actually have four.

The third one is, the bigger you are the more important it is to make industry bets. For example, are you going to represent big pharma, or are you going to represent the generics, because you can’t do both.

The last piece has been something that has been known as the international piece — where the conflict rules are entirely different. What we think of as a conflict they don’t think of as conflicts there at all. It’s something we have to educate our overseas colleagues on, because it’s just not something they’ve had the sort of intuitive understanding that we’ve all developed in the practice in the U.S.

Matteson: In our combination we threw a lot of resources at the conflict issue earlier on in the process, and the conflicts are not just client conflicts, but potential business conflicts. As Bill indicated, we may need to find a new home for a certain practice in order to make room for a larger practice. Knowing what those issues are early in the process is very helpful.

Kenedy: We did that as well beforehand. We actually, I think, looked at every single major matter we had between the two firms and tried to identify any conflicts ahead of time and resolve those that we could, and the ones that we couldn’t, decide whether we would be able to go forward, given the conflict.

But it is also equally important after the merger that we take care of conflicts. We used to just have a conflicts system where you plug in your client and figure out if there is a conflict. Now we sort of have levels, almost like a triage, where we have the traditional conflict search; we have daily conflict memorandums that go out, so that if people are opening a file in Houston, we know in Chicago to look and see if one of our clients is on the list. We also have people sending out e-mails for emergency matters, and that is something I think from the sheer size of a firm it’s become necessary to make sure we didn’t miss any business conflicts, and we didn’t miss any ethical conflicts just by our sheer size.

Matteson: As those conflicts are identified, and there always are conflicts. You can’t put two vibrant firms together without finding them. It’s interesting to me to see how our combination partner handled it.

Did they tell us that by definition their client was going to be the continuing client and ours wasn’t? We learned that it was all about the dialogue in deciding through a consensus what the best result was for the combined firm, and that taught us a lot about how other conflicts or issues would be addressed.

Financial Services: Investors’ use of reverse mortgages

By James J. Eccleston
Shaheen, Novoselsky, Staat, Filipowski & Eccleston

For many individuals, their largest asset is their home, and it is their most precious source of retirement security.

Unfortunately, over the years financial advisers have convinced homeowners that they should tap into their home equity to purchase investments. In 2004, the NASD (National Association of Securities Dealers), now known as FINRA (Financial Industry Regulatory Authority) issued an investor alert, ”Betting the Ranch: Risking Your Home to Buy Securities.”

That alert addressed the use of new mortgages, refinanced mortgages, and lines of credit secured by the home. The NASD expressed its concern that ”investors who must rely on investment returns to make their mortgage payments could end up defaulting on their home loans if their investments decline and they are unable to meet their monthly mortgage payments.”

More recently, homeowners (over age 60) have been the target of those who wish to sell them a ”reverse mortgage.” While reverse mortgages may be appropriate in some circumstances (such as when homeowners cannot meet their monthly mortgage payments or cannot pay bills or meet unexpected expenses), FINRA has alerted investors to stay clear of reverse mortgages to finance a lifestyle that they otherwise cannot afford or to pay for investments. FINRA warns in its recent alert, ”Reverse Mortgages: Avoiding a Reversal of Fortune,” that ”as more Americans near retirement age, some financial institutions are aggressively marketing reverse mortgages as an easy, cost-free way for retirees to finance lifestyles — or to pay for risky investments — that can jeopardize their financial futures.”

Let’s examine FINRA’s guidance.

First, what is a reverse mortgage? Like a home equity loan, a reverse mortgage allows a homeowner to convert home equity to cash. Unlike other home loans, though, homeowners pay no interest or principal payments during the life of the loan. Instead, the interest is added to the loan principal.

Normally, the loan (with interest) is due when the homeowner dies, sells the home or leaves the home for more than 12 months (for example, to enter a nursing home). Reverse mortgages are repaid typically from the sale of the home. The loan is ”non-recourse,” meaning that the lender cannot go after any other assets, even if the proceeds from the sale of the home are less than what is owed on the loan.

Second, what are the disadvantages of a reverse mortgage? FINRA observes that reverse mortgages are ”quite expensive.” The interest rates for reverse mortgages generally are higher than the interest rates for other types of loans. FINRA warns that homeowners may be ‘’surprised” to learn how much ultimately is due as a result of the compounding of interest. Additionally, the fees and costs for reverse mortgages are ”often significantly higher” than for other loans, sometimes 4 percent to even 8 percent of the total loan amount. Other concerns include the fact that homeowners continue to be responsible for property taxes, insurance, and home maintenance costs. If the homeowner cannot meet those obligations, the lender may have the right to foreclose on the home, leaving the homeowner ”in the worst possible situation - no place to live, and no more home equity to draw on.”

Third, what does FINRA recommend considering before agreeing to a reverse mortgage?

Overall, FINRA advises, ”For many borrowers, choosing a reverse mortgage is a last resort way to secure additional monthly income in retirement.” Should a financial professional suggest a reverse mortgage in order to buy an investment, FINRA cautions homeowners that all investments carry risks and costs, and that the higher the promised return, the higher the risk.

Particularly with reverse mortgages, FINRA states, ”It’s best to steer clear of investments that are risky or underdiversified — as well as those that make it expensive, if not impossible, for you to access your money if unexpected expenses arise.” In addition, FINRA issues six tips to consider.

Among other tips, FINRA advises homeowners to weigh all of their options. These include selling the house and down-sizing, taking out a line of credit or home equity loan, consolidating credit card debts, and seeking local government assistance programs to assist in paying taxes or for home maintenance. Likewise, FINRA urges homeowners to recognize the consequences of their decision, such as the fact that while reverse mortgage proceeds are tax-free, they may impact eligibility for state and federal benefits, including Medicaid.

Finally, FINRA advises homeowners to seek advice from a financial adviser who has no interest in either the reverse mortgage of any investment to be purchased with the proceeds of the reverse mortgage. Homeowners must beware of reverse mortgages because they are a last resort solution to retirement security!

Opening Statement: Horton Foote’s human comedy

By Julian Frazin
Michael Best & Friedrich • Entertainment Critic

May it please the court—

”This is as good as it gets!” That is the thought that raced through my mind as I watched Horton Foote’s ”The Trip to Bountiful” at the main stage of the Goodman Theatre, 170 N. Dearborn St. And I am certain the author, himself, who was in the audience that night, had a similar feeling. Perhaps it was because his daughter, Hallie Foote, was giving an outstanding portrayal of Jesse Mae, the nagging, self-centered wife, who harped on the faults of her submissive, compliant husband, Ludie, (in an equally impressive performance by Ms. Foote’s real-life husband, Devon Abner), or constantly criticized her aging, infirm mother-in-law, Carrie Watts.

Perhaps it was seeing Lois Smith reprise her brilliant off-Broadway performance as the tired but persistent and feisty Texas widow, bound and determined to return for one last visit to the beloved town of her youth. At age 77, Smith brings six decades of wonderful acting in films and plays to the stage with all the moves of a true champion. She need only cross hurriedly past an open bedroom door or intensely grasp the arms of her old rocking chair as she peers out the living-room window, and one knows in that instant what she and the story are all about.

It could have been because of the excellent casting under the direction of Harris Yulin where even the smallest role of a Houston traveler was treated with equal importance, and attention to other more significant characters as a local sheriff (James DeMars) and Thelma (Meghan Andrews), the young woman Carrie meets in her travels. But, in the last analysis, I believe that this 92-year-old playwright derived his greatest pleasure that night by sitting in the theater and recognizing that after all these years, his human comedy — this ordinary story about ordinary people with ordinary problems, without a whiff of sex or violence — could continue to engage and touch an audience.

”A piece of fluff!”

”Great!”

”Wasn’t that fun?”

Those were typical of the general comments running through the audience at the Cadillac Palace Theater, 151 W. Randolph St., following Broadway in Chicago’s opening of a two-week limited run of the 2006 five-time Tony Award-winning ”The Drowsy Chaperone.”

To which I can only add ”Now, that’s entertainment!” and my personal hope that this wonderful touring company can return soon for a longer engagement, which the rest of the city can enjoy.

Here, the leading character is described only as ”the man in the chair.” He is played sweetly but enthusiastically by Jonathan Crombie as a theater buff who sits in his living room, surrounded by all kinds of theater memorabilia. As he proceeds to describe and play, for the audience, an LP recording of his favorite ’20s musical — ”The Drowsy Chaperone” — a live orchestra begins in the pit, sparkling performers appear on stage, the living room is transformed into colorful sets, and — it’s on with the show!

The title is a fictional one created by the authors, but this is not a spoof of the musicals of the ’20s, but rather a tribute to them. And, I assure you that it is, at a little over an hour and a half of uninterrupted joy and laughter, as silly and as fine as any of the originals.

If, as Crombie tells us, the audience prayer is ”Oh, God, Let it be good and let it be short,” then your prayers will be answered.

One of the more successful ”traditional” musicals is ”A Man of No Importance,” recently at the Bailiwick Repertory Theatre, 1229 W. Belmont. Written by the team of Lynn Ahrens and Stephen Flaherty who created the award-winning ”Ragtime,” it tells the story of Alfie Byrne (Kevin D. Mayes), a conductor on a Dublin motor coach who recruits and directs the local community theater, consisting mainly of his passengers to whom he quotes passages from Oscar Wilde along the route. He is a 30-plus-year-old Irish bachelor still living at home with his sister.

Alfie turns out — surprise, surprise — to be secretly in love with his motorman, Robbie Fay (Ryan Lanning). The love that dare not speak its name.Alfie’s rag-tag troupe, which rehearses at the local church basement for a performance of ”Salome” are all rather ordinary, middle-aged, plump people, who could have been taken right out of central casting for ”The Music Man.”

This is an excellent show with fine music and lyrics that got short shrift in New York, but hopefully gets back on track. You don’t have to be Irish — but it doesn’t hurt.

I rest my case.

Pleadings:

Jury instructions: 1 gavel — poor; 2 gavels — average; 3 gavels — good; 4 gavels — excellent.

Final Verdict:

”The Trip to Bountiful,” four gavels
”The Drowsy Chaperone,” four gavels
”A Man of No Importance,” three gavels

Counsel’s Table: Mercat — an eclectic array of food choices

By Russell B. Selman
Katten Muchin Rosenman • Restaurant Critic

I’ve always been a sucker for anything Latin. And, by ”Latin,” I don’t mean what President Bush might confuse for what is spoken in ancient church services.

No, I mean the whole romantic, rapid-fire passionate swirl of color and flavor of things that are Spanish.

Every morning I start off my day by getting on my cross-trainer machine and turning on a Spanish soap opera. Admittedly, I cannot understand a word anyone is saying, but everyone just seems so sexy.

I am energized just listening to the hyper-excited dialogue and a full hour of exercise passes without my ever getting bored. In my imagination the actors all seem to be saying that life without passion is impossible. Needless to say, none of the actors ever seem to be playing lawyers.

On an all-too-occasional basis, my wife and I would spice things up for ourselves by assuming Latin identities, she was Maria and I, Bernardo. We lived on a South American sugar-cane plantation where work was long and arduous, we had nothing but each other. Yes, life was impossible and yet passion seemed to flourish amidst our poverty of material goods. Fanciful perhaps, but the Latin soap operas are definitely a source of pharmacological grade pheromones for the imagination.

Mercat taps this same pop-pop-pop energy. Located in the very unlikely Blackstone Hotel (where that wild-and-crazy president, Warren G. Harding was nominated), Mercat (and the hotel) have shaken off the decay of this mundane location.

Mercat’s revivified space is fantastic a very large multi-story reservoir-like room surfaced with kitschy 1960s multi-color mosaic walls intruded upon by a semi-circular kitchen jutting into an electric atmosphere. I was psyched just strutting into the place and I felt a deep tan coming into my complexion.

Our Iberian temperaments were awakened. We were not looking for a pleasantly amiable three-course meal with a predictable beginning — middle — end. No, we wanted an unpredictable and smoldering assortment of things that were not all facing in the same direction. Mercat delivers an eclectic small plate array of food with an immediacy of flavors.

We started in on a selection of cheeses with an unexpected twist of jams as dipping sauce truffled apple, caramel, and chocolate hazelnut to be specific. Sort of desserty to start, and really why not. Or, in the vernacular, you might ask, why, and ”por que,” and then respond, ”porque,” or because.

Yes, this is exactly what I like about both Mercat and passion because you can answer your own question about the unexpected by simply saying ”because” and, that’s enough when you’re in the right frame of mind.

We chewed through a wide selection of savories very good Serrano ham, wonderful thin slices of octopus and some vanilla-scented rabbit-filled dumplings. Not knowing what would come next was a strong conversational stimulant and very welcome. Very good razor clams and nicely rare lamb chops topped things off.

So find someone with whom you can share the same delusions, just because, and enjoy your evening, as I did at Mercat.

Pleadings:
Mercat a la Planxa
Blackstone Hotel
638 S. Michigan Ave.
312-765-0524

Court costs:
Tapas $5–$11; various meats $32–$54

Verdict:
3 Gavels

Practical Matters: What a tangled web

By David M. Heilmann
Clausen Miller

It starts early.

”Billy, did you eat those cookies?”

”No. I did not eat those cookies.”

It works its way into early school years, but gets tweaked.

”Billy, were you looking at Mary’s test answers?”

”No, I was helping her, Mrs. Throckmorton.”

It gets a bit more creative in high school. ”Billy, were you drinking?”

”No dad, no, no no. My buddies were drinking and when I tried to pull the can out of their hands, it basically exploded all over me.”

And it can eventually follow you through law school, where you learn to be very crafty with words and give answers like, ”It depends on what the definition of is is.” Said Billy.

”It” is a lie. For those in public life, it can be a bit more embarrassing.

”Just flying to Washington for another one of those damn meetings, honey. I’ll be in bed early, so you won’t hear from me after nine.

”Okay, Eliot.”

Gets more tricky when the lie is captured in writing, say, e-mails.

Detroit Mayor Kwame Kilpatrick was charged with perjury and other offenses on March 24, 2008. He said he didn’t have an affair with his aide.

But on Oct. 16, 2002, Kilpatrick wrote: ”I’ve been dreaming all day about having you all to myself for 3 days. Relaxing, laughing, talking, sleeping and making love. (Associated Press March 24, 2008.) Nice, Kwame.

Now move this type of conduct into the practice of law. Not the salacious part, but rather those lies. The little lies to protect the client. The little lies about maybe not finding documents. If you can just get away with it …

Forget it.

It’s amazing that with all the news around us about what happens when we are less than honest, every day we still seem to hear of yet another instance where the facts of the case get obscured by the dishonesty of counsel.

In a case involving tech rivals Qualcomm and Broadcom, a California judge recently ordered Qualcomm to pay $8.6 million in sanctions for failing to turn over 46,000 documents central to the opponent’s case. The judge didn’t buy the copier-jam excuse. (Qualcomm Inc. v. Broadcom Corp., 05cv1958-B (BLM), Order granting in part, deny in part Motion For Sanctions. Magistrate Judge Barbara L. Major, USDC So. Dist, Ca., Jan. 7, 2008.)

This began as a simple case of Qualcomm alleging that Broadcom infringed on certain patents.

One of Broadcom’s defenses was that there was a waiver by Qualcomm through its participation in a Joint Video Team (JVT) that created the standard that governs video coding.

In response to Broadcom’s document request for JVT documents, Qualcomm’s counsel answered that it would produce non-privileged relevant and responsive documents describing Qualcomm’s participation in JVT, if any, which can be located after a reasonable search. (Qualcomm’s response to Broadcom RFP, cited in Court Order 1/7/2008.)

But they didn’t. They missed 46,000 sitting in the e-mail archives of Qualcomm’s trial witnesses. Ooops.

In arriving at the decision, the court looked to the attorney’s conduct. The court envisioned four scenarios, ranging from the lawyers having knowledge and intentionally hiding documents to the lawyers suspecting there was additional evidence and choosing to accept Qualcomm’s incredible assertions regarding the adequacy of the document search and witness investigation. (Court order Jan. 7, 2008, p 24.)

Judge Major ruled out the three most egregious scenarios of misconduct for what may have happened. She found that most likely the lawyers chose not to look in the correct locations, accepted their client’s unsubstantiated assurances that its search was sufficient, ignored warning signs that the document production was inadequate, and failed to press Qualcomm’s employees for the truth.

”These choices enabled Qualcomm to withhold hundreds of thousands of pages (even more than just 46K) of relevant discovery and to assert numerous false and misleading arguments to the court and jury. This conduct warrants the imposition of sanctions.” (Court order Jan. 7, 2008, p. 26.)

Under Rule 3.3 of the Illinois Rules of Professional Conduct, a lawyer shall not participate in the creation or preservation of evidence when the lawyer knows or reasonably should know the evidence is false and/or suppress any evidence that the lawyer or client has a legal obligation to reveal or produce. (Illinois Rules of Professional Conduct 3.3 (5); (13).)

In the Qualcomm case, the court practically applied a negligence standard to the attorneys’ efforts toward complying with discovery. The implication was of a duty owed to look in the correct locations for documents, a breach by failing to do so by accepting unsubstantiated assurances of the client, the ignoring of warnings, and damages - the legal fees expended by the other side.So in practice, attorneys should be very specific to clients about the need to make a diligent search for records. All records.

If not, you could find yourself out there dodging bullets.

Like little Billy’s wife.

Editor’s Note

I spent a couple of weeks last month on call for jury duty in federal court. I sat through two voir dires, got bounced from both, but let’s not get into that. My major ”takeaway” from the experience is that lawyers should be watching more television — specifically, ”Law and Order” and ”CSI.” Everyone on the two panels watched those shows.

I’ve read about the ”CSI effect” in courtrooms — that jurors expect to see evidence pile up and point to an obvious conviction as it does on television — but the lawyers and judges in what I still consider to be ”our” cases seemed a little surprised at the popularity of the shows. The lawyers seemed to fear that jurors would expect them to speak in witty sound bites and dazzle us with the presentation of their cases. Or, as an assistant U.S. attorney asked us, ”You do realize that most of that stuff on ‘CSI’ is made-up?”

Well, I think most people actually get that. I mean, most people who accept their citizen’s duty to serve on a jury — even with the eye-rolling and grumbling that are a mandatory accompaniment to jury service — get the distinction between a Miami Police Department that can solve murders off an eensy-beensy paint scratch and two motes of living-room dust (and all in one day, or at least without a change of clothes) and real life. Jurors, after all, have marriages and divorces, happy children and troubled children, jobs and stretches of unemployment, soccer practices and parents with Alzheimer’s. So, they kind of get it.

But there’s an oddly positive note, constitutionally speaking, that I think lawyers and judges should know about (if you already do, my apologies). I was a little surprised, as I chatted with some fellow panel members in our armed robbery case, to find that, while everyone casually assumed the guy in the ill-fitting clothes did it, they also casually understood that that’s not the end of the story.

Thanks, maybe, to Ed and Lennie and Cyrus and Jack McCoy, people understand that the prosecution has to prove its case, and if they don’t, even if the jurors figure the guy did it, they’ll still let him walk. Because that’s our system. So, I guess that McCoy’s occasional losses, while a sad, sad occurrence for fictional New York, may be a good thing, and a little weekly civics lesson.

And now, back to this month’s issue.

We have two stories on intellectual property, coming at it from different angles.

Our cover story, by Maria Kantzavelos, looks at the growing practice of biotechnology patent law. The biotech industry — and the practice that supports it — began to take off after a 1980 U.S. Supreme Court case, and now the field is growing steadily, as microbiologists and other Ph.D.s in the sciences see the practice of law as a way to work with exciting discoveries in science and help to bring them to the marketplace.

Olivia Clarke, who is now assistant editor, writes about the challenges IP boutique firms face as they try to stay in the game while the large firms move to expand their IP practice areas. The boutiques say they offer clients a greater depth of understanding of the science and technology, but they’re also aware that they need to adapt as large firms offer the full range of client services in addition to strictly patent work that a corporation may need.

Olivia has also written a profile about a determined young lawyer, Heather Nelson-Beverly, who started out with Don Hubert, then left and simply created her own entertainment law firm, which nearly everyone said couldn’t be done in Chicago. Sometimes it doesn’t pay to listen, and Nelson-Beverly has built a very successful practice representing people in all aspects of the music industry.

I also want to point to a couple of columns this month.

Arin Reeves has an insightful take on the reaction to Barack Obama’s speech on race in ”Diversity in Practice”; and Shawn Wood takes a look at lawyers and electronics — not e-discovery, but the discovery that e-, as in e-mail, can cause lawyers lots of embarrassment, to say nothing of employment-related problems.

— Robert Yates

Deals // Verdicts // Settlements

Big Deals

Mayer Brown represented TransCanada Corp. in its $2.8 billion acquisition of all outstanding membership interests of KeySpan-Ravenswood LLC that directly own or control an electric power plant in Queens, N.Y., from National Grid plc. The plant provides more than 20 percent of New York City’s electricity.

Corporate and securities partner Marc F. Sperber led the Mayer Brown team, which included D. Michael Murray and Nina L. Flax, also from corporate and securities; Robert E. Gordon and Jade E. Newburn, from real estate; Stuart M. Rozen and Sean T. Scott, from restructuring, bankruptcy and insolvency; James R. Barry and Robert A. Kelman, from tax; Ralph P. Dudziak, Daniel P. Whitmore, and Andrzej R. Niekrasz, from banking and finance; and Debra B. Hoffman and Edward A. Pionke, from employee benefits.

Kirkland & Ellis advised ConAgra on the sale of its commodity trading and distribution business, which merchandises and distributes grains and fertilizer, and trades agricultural and energy commodities, to hedge fund Ospraie for $2.1 billion. Ospraie’s private equity unit will pay ConAgra $1.6 billion in cash and $525 million of debt securities for the business.

Partner Michael Timmers led the Kirkland team for ConAgra, which included corporate partners Jody Gale, Christopher Butler, and Jeff Richards, and associate Steve Toth; environmental partner Walt Lohmann; employee benefits partner Alexandra Mihalas and associate Dominic DeMatties; real estate partner John Caruso; tax partner Jeff Sheffield and associate Mike Carew; labor and employment partner Tim Stephenson; derivatives partner Maureen Donley and associates Rachel Kaplan and William Bestani; and energy partner Elaine Walsh.

Reed Smith partners Daniel J. Slattery, and Cynthia Jared; and analyst Lynn Nichols were part of a team advising the two lenders on a $188 million transaction involving a subsidiary of Prime Group Realty Trust and its financing of the renovation of the IBM Building.

The financing package was used to retire the existing debt on the property and to provide additional financing for tenant improvements, leasing commissions, and capital expenditures for the renovation.

Winston & Strawn represented Discover Financial Services in its pending $165 million acquisition of Diners Club International, which operates in 185 countries and has a spend volume of more than $30 billion.

Corporate partner Terrence Brady lead the Winston & Strawn team, which included attorneys from five of Winston & Strawn’s 11 offices. Other partners on the deal included: Zoe Ashcroft, Christine Edwards, Paul Pilecki (corporate); Roger Lucas (tax); Barbara Hart, Cardelle Spangler (labor and employment); Michael Sibarium (litigation); Virginia Richard (intellectual property); and Andrew Wang (employee benefits and executive compensation).

Verdicts

A Livingston County jury awarded $14.6 million to a woman who lost part of her leg while working as a flagger on a highway construction site in September 2002.

Bobbi Jo Craver, then 31, was holding a sign to control traffic on Interstate 55 near Pontiac, when a concrete cutter with a nine-foot wheel climbed out of its trench and went out of control; the machine ran over Craver and severed her right leg below the knee. The operator had pressed the emergency-stop button to shut down the cutter, but a construction company employee had rigged a component in the engine so that the emergency-stop button was rendered useless.

Craver was represented by Robert J. Napleton of Napleton & Motherway. The defendant was represented by Charles D. Knell and Terrance M. Nofsinger of Knell & Kelly of Peoria.

John Kirkton, editor of the Jury Verdict Reporter, said this is the highest verdict ever recorded in Livington County.

Seyfarth Shaw recovered $11.3 million for their client, Michael P. Bryan, in litigation arising out of the sale of American Administrative Group, Inc., by Bryan to The Parker Group, Inc.

In this post-acquisition dispute, Parker Group filed a declaratory judgment seeking to avoid paying a substantial portion of the additional purchase price owed to Bryan under the terms of a stock purchase agreement. Parker Group sought to justify this reduction on a post-closing adjustment to the ”normalized EBITDA” (earnings before interest, taxes, depreciation and amortization) of one of the entities that had been acquired, and alleged this was warranted by a difference in the company’s actual versus audited financial results.

Bryan filed counterclaims charging that Parker Group’s attempt to ”adjust” away a significant portion of the purchase price was factually insupportable, and sought payment of the full amount of the additional purchase price, plus default interest.

The U.S. District Court for the Northern District of Texas entered summary judgment in favor of Bryan, rejecting Parker Group’s attempt to decrease the Additional Purchase Price, and the U.S. Court of Appeals for the Fifth Circuit unanimously affirmed.

Shawn Wood and Allan Reich led the Seyfarth Shaw team, which included associates David Countiss and Molly Joyce, and senior paralegal Clarize Ditching.

Settlements

A former deckhand who lost part of his right leg in an accident on the Chicago River has received a $4.5 million settlement.

James Talbot, 24 at the time of the accident, was trying to attach an empty barge already in tow to another empty barge at 1 a.m. in September 2004.

When he stepped from one to the other, he slipped on some gravel and his leg was crushed between the two barges. Talbot argued that the defendant was negligent due to the absence of adequate lighting, failing to paint the deck edges in contrasting colors, the presence of loose gravel, improper training, and a lack of adequate supervision.

Talbot was represented by John J. Perconti and Rick J. Wittmer of Levin & Perconti and David K. Kremin of David K. Kremin & Associates. The defendant was represented by John A. O’Donnell of Belgrade and O’Donnell and Robert A. Carson of Gould & Ratner.

Jury Verdict Reporter’s Kirkton said this is the highest award stemming from a lawsuit filed under the Jones Act.

— Robert Yates

All in the Family: Taking aim at gun violence in schools

By Joseph N. DuCanto
Schiller, DuCanto and Fleck

When five students were shot to death recently at Northern Illinois University, the cry renewed for increased gun control as a way to end violence in schools and universities.

The well-meaning people who hold that opinion have their sights set on the wrong solution. Yes, ”guns kill” seems like a logical conclusion when viewing not only the tragedy at NIU, but also similar events at Columbine, Virginia Tech, and Winnetka. But that opinion is based on the wrong premise. Guns aren’t going away, even as many await nervously the U.S. Supreme Court’s decision in a case that directly challenges the District of Columbia’s total ban on individual ownership of firearms within the home.

A decision striking down the D.C. ban would have a serious impact on similar bans that prevail in Chicago and many of its suburbs, including Oak Park, Evanston, Wilmette, and Morton Grove.

Twenty-five years ago only a handful of states permitted citizens to carry guns; now 38 states have adopted some level of a citizen’s ”right to carry” law. This bodes poorly for any decision or legislation restricting personal use and ownership of guns.

Reportedly, 15 states are considering legislation that would authorize conditional carrying of guns in schools and on college campuses. Increasing security by filling security needs will do far more to protect students than will making gun ownership illegal.

One of the converts to this opinion is David McGrath, a professor of English at the University of South Alabama. In a commentary in the Chicago Tribune, after the NIU shootings, McGrath suggests that some school personnel be armed and capable of responding to future school attacks. McGrath admits moving from an anti-gun posture to one of realistic recognition of an unfilled security need. He wrote:

”My perspective has changed because the country is changing cataclysmically. The rash of cold-blooded serial killings on campuses is now less an anomaly than a wave of terror. It demands new initiatives to safeguard the lives of people seeking a college education.” (”Vulnerable Schools Need Protection,” Feb. 19, 2008, Chicago Tribune.)

David Kopel, writing for the National Review, thoroughly explored the basic issue and should be read for an extended review. One aspect resonates:

”One reason why adult sociopaths so often choose to attack schools — schools to which they have no particular connection — is that schools are easy targets. It is not surprising that police stations, hunting club meetings, stateside army bases, NRA offices, and similar locations known to contain armed adults are rarely attacked,” Kopel wrote. (Oct. 10, 2006, NRO Online.)

Experience shows that properly trained and screened people who are authorized to carry weapons rarely are charged with misuse or abuse of this privilege.

Arming school personnel, if known and publicized, would reduce the attraction of the ”weasel-in-the-henhouse” approach taken by most perpetrators. If quick response is clearly threatened, many possible attackers would be dissuaded when confronted with certain knowledge of an early, death-dealing, response.

Chicago schools are blessed by the presence of armed security at most city schools. These men and women include trained security officers and moonlighting off-duty cops. This presence to date has helped Chicago avoid any incident of this kind.

Yes, students are being shot, but outside, not inside, Chicago schools. The most recent event as of this writing occurred March 26 outside Simeon Career Academy. This is no less a tragedy than losses at universities, and society must seek solutions. For now, reality dictates that within the school itself, armed security forces are a major answer.

Chicago is fortunate; most other Illinois schools have little more than a ruler in the hands of a teacher with which to defend the flock.

Arguments against arming school personnel are predictable: ”Guns and kids don’t mix;” ”teachers might shoot by mistake;” ”it’s too risky;” and ”teachers don’t want to be armed.”

With an estimated six million teachers nationwide, one can expect that many teachers have experience with firearms, either as a rural youngster, as a hunter, or in the military. It is also reasonable to assume that many teachers would accept the responsibility and necessary training to become a designated armed officer in their schools.

Even a small number — say one out of 100 — of willing teachers produces a large number of designees nationally.

Alternative suggestions appear desperately puny in both contemplation and execution. Telling kids to flee, scream, or swarm the attacker will not work well with children younger than teenagers. But, then, how does one train kids to fear and attack while concurrently emphasizing negotiating skills, diplomacy, civility, and fairness?

Our school kids and our teachers deserve a universal plan with some immediate promise of effective results and protection. No solution offered — including this one — is perfect, but imperfection is not a cause for inertia.

Pro Bono: Foundation Memorandum

By Margaret C. Benson
Chicago Volunteer Legal Services

To: Network Executives

From: Reality Show Development

Re: May Sweeps & Law Day Programming

We are introducing a new reality program that we anticipate will score a minimum of a 30 share in the Chicago markets.

”America’s Next Top Pro Bono Project — Chicago” combines the elements of ”America’s Next Top Model,” ”Top Chef,” and ”Project Runway” into one trendy cutthroat program featuring lawyers, judges, and clients. Dripping with pathos, irony, and unbridled egos, the only word that can accurately describe its effect on the American audience is, ”Fierce!”

Concept

Legal aid programs vie to get their pro bono projects selected by top law firms. Pro bono is in these days — lawyers talk about wanting to do it and law firms claim to support it 100 percent. This program will challenge both groups in a fun, spirited way. Each episode will feature a quirky collection of legal service programs trying to convince legal industry leaders to adopt their pro bono programs. Watch the fireworks when pro bono coordinators and legal service directors try to sway the judges to adopt their pro bono projects, and are shot down by competitors and our very own judges.

Judges

The makeup of the judging panel is key. Of course a high-fashion model as leader is de rigueur. Cindy Crawford is our first choice because of her local roots. If she is not available, we will try to get Naomi Campbell. Both her temper and well-known familiarity with the legal system should make her eager to participate and fun to watch. As with every show, our model’s job will be to wear a dizzying succession of extremely tight dresses, and frequent hairstyle changes. The other judges will include one actual judge. We believe this component will truly set our show apart — a real judge judging. This person should be of the Nina Garcia cranky sort — someone who doesn’t really buy into this whole ”pro bono” thing and cares more about courtroom protocol and demeanor than actual justice.

We’ve been led to understand that there is no shortage of this type of judge in Chicago. Of course, we will have to also factor in telegenic qualities, which may limit our choices. Our judge will wear a black robe and hold a gavel at all times. During particularly heated moments, such as when a contestant says something foolish or one of the other show judges argues with the actual judge, he or she could threaten to hit that person with the gavel. That would be a hoot and should really get our numbers up.

The final two judges will be a bar leader, a managing partner at one of Chicago’s big law firms, or a corporate general counsel. In addition to their basic good looks — this is television after all — we need articulate people with strong egos who can appear affable while ruthlessly mortifying a well-meaning, earnest person in front of an audience of millions. Again, we’ve been assured that casting these roles will be the easiest part of the job.

Contestants

While judges have to look good, contestants have to be good. We plan to select earnest ideologues who can convey, with intensity, the conviction of their causes. We will select based on visible manifestations of personality and belief in their cause. More succinctly, quirky is good. We have decided against trotting out any actual clients. Although some of us believed that clients would score huge numbers, the prevailing view was that clients are too unpredictable and might not be convincing enough for television.

Challenges

There will be two per show. At the beginning of each week’s show, the group of contestants will be provided with the facts of a typical pro bono case. The types will differ each week. Each contestant will have five minutes to package the product in a way that the average attorney would want to handle it for free. The winner of that challenge will have immunity for the second contest of the show. For the weekly main match, the contestants will be provided with an overall theme, such as ”death penalty,” ”asylum,” or ”domestic violence,” and given an eclectic array of cases generally in line with that theme. They will each have 15 minutes to develop, package, and market a pro bono project and convince the judges that it meets the needs of volunteer attorneys, employers, the legal profession, the courts, and, of course, the clients. The winning contestant’s program gets his or her project placed with a firm or corporate law department for 13 weeks. The contestant who scores the lowest interest from the judges gets kicked off the show.

Conclusion

We anticipate that ”America’s Next Top Pro Bono Project - Chicago” will be an immediate huge hit. We are introducing it in May to take advantage of sweeps and, of course, Law Day. What better way to cash in on the legal profession’s current obsession with pro bono than to make it a television contest? Once we get the green light, we are ready to go.

Ethics: Pro bono practice for inactive or retired lawyers

By Thomas P. McGarry and Thomas P. Sukowicz
Hinshaw & Culbertson

On March 26, 2008, the Illinois Supreme Court entered an order amending certain Supreme Court rules pertaining to the practice of law in Illinois (M.R. 3140).

The amendments are effective as of July 1, 2008. One of the amendments modified Supreme Court Rule 756, which requires attorneys to register each year with the Attorney Registration and Disciplinary Commission and to pay the appropriate registration fee in order to be eligible to engage in the practice of law in Illinois.

Rule 756 allows attorneys to register as inactive or retired. An attorney who is currently registered as inactive or retired is not entitled to practice law or to hold himself or herself out as authorized to practice law.

The amendment creates an exception to the rule that allows attorneys on inactive or retirement status (as well as attorneys who are registered as house counsel under Rule 716) to provide pro bono legal services if there is no charge and no expectation of a fee by the attorney.

The pro bono services must be rendered to persons of limited means or to certain organizations (which are defined in paragraph (f) of the rule) and must be rendered under the auspices of a sponsoring entity. The sponsoring organization must be a not-for-profit legal services organization, governmental entity, law school clinical program, or bar association providing pro bono legal services. It is required to provide malpractice insurance coverage for any retired or inactive lawyers or house counsel participating in its pro bono program.

The sponsoring organization must submit to the administrator of the ARDC an application identifying the nature of the organization and describing the pro bono program it sponsors and in which retired or inactive lawyers or house counsel may participate. In the application, a responsible attorney is required to verify that the program will provide appropriate training and support and malpractice insurance for volunteers and that the sponsoring entity will notify the administrator as soon as any attorney authorized to provide services under this rule has ended his or her participation in the program.

A sponsoring entity is required to submit an annual statement verifying the continuation of any programs and describing any changes in programs in which retired or inactive lawyers or house counsel may participate. An attorney registered as inactive or retired or admitted as house counsel who seeks to provide pro bono services is required to submit a statement to the administrator indicating a desire to provide pro bono services, along with a verification from a sponsoring organization that the attorney will be participating in a pro bono program under its auspices.

The attorney’s statement is to include an agreement that the attorney will participate in any training required by the sponsoring organization. The attorney must also agree in the statement and that he or she will notify the administrator within 30 days of ending his or her participation in the pro bono program. Upon receiving the attorney’s statement and the sponsoring organization’s verification, the administrator will cause the master roll to reflect that the attorney is authorized to provide pro bono services.

The authorization to provide pro bono services continues until the end of the calendar year in which the statement and verification are submitted, unless the lawyer or the sponsoring organization notifies the administrator that the program or the lawyer’s participation in the program has ended.

An attorney may renew the authorization to provide pro bono services on an annual basis by submitting a statement that he or she continues to participate in a qualifying program, along with verification from the sponsoring organization that the attorney continues to participate a program under the entity’s auspices and that the attorney has taken part in any training required by the program.

Attorneys registered under retirement status who seek to provide pro bono services under the rule must register on an annual basis, but are not required to pay a registration fee. Inactive or retired attorneys are exempt from the mandatory CLE requirements of Rule 791.

Participation in the pro bono program under this rule does not affect this exemption. Such attorneys continue to be exempt, except that such attorneys shall participate in training to the extent required by the sponsoring entity.

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