Chicago Lawyer 2009 Settlement Survey

By: Olivia Clarke

Herminia “Peppy” Guerrero made it her life’s mission to help other people.

Guerrero, who worked for the Chicago Department of Public Health, organized community drives on her own time to help women get annual mammograms.

She went to different communities to help poor families get their children vaccinated. She coordinated her church’s annual fund-raiser and raised more than $60,000 a year.

In 2007, the 51-year-old woman was crossing with the walk light when a bus driver made a left turn and struck her, said her lawyer, Brian Lewis, of Baizer Kolar & Lewis.

She suffered traumatic brain injury with major speech deficit and physical disabilities. She can walk, but only short distances, and she needs help with all activities, Lewis said. Herminia Guerrero, etc. v. Alltown Bus Service, et al. resulted in a $17.30 million settlement.

“Her life was turned completely upside down in seconds,” Lewis said. “And it’s very gratifying to help somebody in her situation. … This is a woman who gave all of herself to help other people. She couldn’t do any of that anymore and she will never be able to do any of that.

“I never had an easier time on a case finding people to testify about an injured person,” he said. “We had more than 20 people lined up who would testify about this loss, and what Peppy did for them and what she did for their community.”

This is one example of the settlements in the Chicago Lawyer 2009 Settlement Survey.

In 2008, there were 117 settlements of $2 million or more, for a total of $896.31 million. This year there were 123 settlements of $2 million or more, for a total of $630.60 million.

Eleven firms reported total settlements of $12 million or more this year. These were based on settlements in the state of at least $2 million.

— Clifford Law Offices recovered $100.70 million from 16 cases.

— Corboy & Demetrio settled 17 cases for a total of $86.41 million.

— Power Rogers & Smith recovered $75.50 million from 12 cases.

— Burke, Mahoney & Wise recovered $53.45 million from nine cases.

— Salvi, Schostok & Pritchard settled eight cases for a total of $42.90 million.

— Baizer Kolar & Lewis settled Guerrero’s case for $17.30 million.

— Hurley McKenna & Mertz settled three cases for a total settlement of $16.80 million.

— Dudley & Lake recovered $13.65 million from three cases.

— The Healy Law Firm recovered $13.62 from two cases.

— Hilfman Martin & Barr recovered $12.30 million from two cases.

— Coplan & Crane recovered $12 million from one case.

Behind the scenes

Lewis, from Baizer Kolar & Lewis, said he has really gotten to know Guerrero and her family through his work on the case.

He said he would regularly have Friday dinners with her family at the Mexican restaurant they’ve been going to for 10 or 12 years. He said Guerrero’s family was so supportive and loving of each other.

“It was a very personal case for me,” he said. “I am very tied to the family. Truly they are all incredible people. During the case I talked to them probably every day. Now I talk to them every week. … We are all very close. I expect that to continue forever.

“The most rewarding thing is to have a positive impact on somebody’s terrible situation. … I’m truly upset that I didn’t get to know her before this happened. Knowing who she was, I feel like I lost out.”

Mark McNabola, of Cogan & McNabola, said the quickness of how Rusty Wallace’s life changed was mind-boggling.

Wallace, 44, a salesman, was demonstrating a man-lift for his 41-year-old prospective client, Michael Masching, when the platform collapsed while the men were 30 feet in the air, said McNabola, who represented Wallace. They were thrown to the ground, he said.

Wallace suffered multiple injuries including a fractured hip and ribs, causing low-back myofascitis, and a ruptured ankle tendon, McNabola said.

Masching suffered multiple thoracic and lumbar vertebrae fractures and bilateral heel fractures, resulting in severe and permanent back pain and loss of mobility, according to the settlement information.

The consolidated cases, Rusty Wallace, et al. v. Grove Worldwide, Inc., et al., and Michael Masching, et al. v. Alexander Equipment Rental, et al., brought in a $20.67 million settlement — the largest reported settlement in the survey.

During the course of the case McNabola and Wallace became friends.

“The drugs and the pain he had to go through — I knew when was it a good day and when it was a bad day,” McNabola said. “I have come to appreciate the painful and also emotional and financial [troubles] and all the other aspects that come literally crashing down by this type of negligence.”

He said his client talked about feeling guilty that he didn’t require that he and Masching wear harnesses. McNabola said he tried to convince him that he did what he was required to do.

When asked what it feels like to handle a case like this, he said, “You feel good because you know you’re experienced and that you can provide some coping as well. … I was his hope, but you also have to explain to him that there are no guarantees. We are not going to overlook anything and we do the best we can, but it’s an imperfect system.”

Masching was represented by Robert A. Clifford and Richard F. Burke, Jr., of Clifford Law Offices. Burke said he found it ironic that Masching was injured in this manner because he was purchasing the man-lift to use for the renovation of an old church into a home for himself and his wife.

“He was a very multi-talented and determined person who literally was doing the vast majority of this renovation work himself, including carpentry, plumbing and electrical work,” Burke said. “He was a very methodological and precise person who had mapped out a plan for completion of this project over an eight-year period, and he was four years into that project.

“It was phenomenally disappointing to be unable to resume work on what truly had become a labor of love for him and his wife.”

Burke said Masching went from being an extremely active person to someone who could not walk on his own for extended periods.

“I think we had an enormous responsibility to insure that Mr. Masching and his wife were fairly and adequately compensated for such tragic injuries,” he said, “especially where Mr. Masching himself had done absolutely nothing to cause those injuries, but instead had relied on others to design a safe product and to safely demonstrate that man-lift to him.”

Kevin Durkin, of Clifford Law Offices, worked with Clifford on two of the larger settlements in the survey — Jerelyn Yoder, et al. v. James N. Ferguson, et al., which reached a settlement of $19.95 million, and Irving Nogoy, et al. v. Hospira, Inc., et al., which reached a settlement of $18 million.

In the Jerelyn case, the plaintiffs’ vehicle was involved in a multi-vehicle accident on I-90 near Rockford, due to white-out conditions. Jerelyn Yoder, 36, suffered multiple facial and skull fractures and permanent deformity; her son, Zach Yoder, age 2, suffered brain injury, causing spastic quadriplegia; her 4-year-old daughter, Teagan Yoder, died; and Scott Yoder, the father/ driver, survived, Durkin said.

The Yoder family went through a divorce following the accident and another lawyer represented the husband. Divorce often occurs after traumas like this, he said.

“Some of these things make families stronger, and some make them not stronger,” Durkin said. “In this case, in a lot of ways it was so sad to go visit Zach and Jerelyn. I would visit Zach, and of course he didn’t speak. But just to see him and see that he needed more motivates you as a lawyer because you understand how important it is that you don’t cut corners and you must do everything right so you maximize whatever they should get.”

He said he can’t bring normality back, but he tried to make their lives a little easier.

“It’s an incredible responsibility to represent families like this,” Durkin said. “They expect you to do well for them. It was a disputed liability case so the outcome helped the family quite a bit. At the end I felt good that my efforts paid off.”

Notes on the charts

All the settlements reported in the charts that follow were published in the Jury Verdict Reporter, the Chicago Daily Law Bulletin, or Chicago Lawyer, between July 1, 2008, and June 30, 2009.

The policy of the Jury Verdict Reporter is to include payoffs from plaintiffs’ own insurance polices in the total: excluded are workers’ compensation payments.

High-low agreements resulting in a post-verdict settlement generally are reported in JVR under “verdicts” as opposed to “settlements” unless attorneys submit a separate settlement form to JVR, which must approve its inclusion. High-lows that appeared under “verdicts” rather than “settlements” in JVR are not listed here.

All amounts listed are in millions of dollars. All settlements are rounded and listed in descending order by dollar amounts. In case of ties, the settlements are in chronological order by when the suit was filed. The firms listed are where the lawyers worked at the time of the settlement.

In most cases, plaintiffs’ counsel provided the names of defense attorneys and other case information. Where parties’ names are confidential, the cases were not included.

Closing Argument: Is there change?

By: Mary Hutchings Reed
Winston & Strawn

When Chicago Lawyer asked me to write about changes in the profession, my first reaction was that everything has changed.

We have committees on women and minorities, but institutional cultures are still dominated by white men. We have technological tools to make the practice easier, but it’s become more time-consuming. Our profession has become a lifestyle, and there are serious questions about whether that lifestyle is good for the profession and those who practice it.

In 1976, we practiced law with books and typewriters, carbon paper and tissue copies, Wite-Out, mag cards, yellow legal pads, and Dictaphones. As described in my novel, “Courting Kathleen Hannigan,” women couldn’t eat a business lunch in certain clubs, couldn’t work part time after maternity leave, and didn’t sit on executive committees.

The firm I joined had two offices (Chicago and D.C.); 125 lawyers (two women partners, one black). The starting salary was $18,500. Expectations for hours were 1,800. The firm manual quoted a founder as dedicated to NOT charging all that the traffic would bear.

Then, we billed only in quarter hours. If we were working on a “rush,” we put it on the fax machine, or, in extreme cases, the youngest associate hand-carried the document to its destination on the last flight out. Without a night staff, secretaries worked overtime. We dressed up. On Saturdays, when we were expected to be there, men were advised by the firm’s chairman, “Even football players practice in their uniforms.”

Then, “they” had assumptions about what we girls could and couldn’t do, which clients would accept us, and whether we should travel on business. Today, technology has made part time possible, and globalization has made diversity not just a goal but a necessity. We have committees to help women market themselves and to become leaders, and task forces to monitor our progress on minority hiring and advancement.

But, the institutional culture of the firm has been disappointingly slow in changing. “Courting Kathleen Hannigan” covers roughly the time from when Hillary Clinton graduated law school to when Michelle Obama joined Sidley Austin in 1988, when I was a partner there. I was surprised by how many young women associates related to my fictional story as contemporary. Young women told me things hadn’t changed that much, that subtle sexism still existed — in the cases they were assigned, the events they weren’t invited to, and their lagging progress towards partnership and leadership. Changes in law firm infrastructure work slowly toward changing culture. They are necessary, but not sufficient.

In contrast, technology has quickly changed the culture of firms, and not, in my opinion, for the better. In the “good old days” — before FedEx, e-mail, voicemail, cell phones, call-forwarding, Facebook, Twitter, business blogs, branding programs, and the shameless self-promotion of pay-to-play CLE — balance wasn’t a buzzword, and firms were not concerned with being “family friendly.” Lawyering was a profession, not a lifestyle.

Ironically, the technology that could promote diversity and bring new balance to our lives has worked against those goals. Instead of technological efficiency giving us time for our friends, families, and creative interests, we’ve given that time to our clients in the form of 24/7 availability. When everything can be done with a keystroke, it’s hard for a client not to demand that “everything” be done. Harder still for a lawyer billing by the hour to suggest that she do only the most important things, or the most cost-effective things. So now we’re more efficient, but we do more and bill more, and balance less. We’ve become adept at the metrics for measuring our productivity, but we frequently mistake our billings for our value and self-worth. We don’t know how to quantify professional values, such as thoughtful analysis, creativity, learnedness, and commitment. Are we, as a profession, “better” lawyers now than then? I don’t know. I do sense that we spend too much time lawyering, at the expense of our personal lives.

Large-firm practice is today technologically more efficient, facially more diverse, institutionally more conscious of women and minorities, formally supportive of pro bono, and structurally more suited to alternative work arrangements. However, largely because of technology, today’s firms are also more time-consuming, more demanding, more money-conscious, less intellectual, and less human.

My female colleagues and I were challenged in 1976 to prove ourselves in an unfriendly law firm environment. Now, successful in that initial endeavor, I am in a position to use technology to design a balanced work life, one that allows me to write novels and to practice law. Professionally speaking, today I’m admittedly less ambitious and less ego-driven. I choose to give myself time for other interests.

I am not convinced that newcomers have the same freedom I do. They seem enmeshed in the 24/7 lawyer lifestyle. I would like to see law firm committees use technological tools to promote the cultural values they espouse.

I sincerely hope that cultural changes will take hold and that newcomers to the bar will be freed to use technology both to practice law as a profession and to live a life worth living.

Counsel’s Table: Simple, fresh food

By: Michael Phillipi
Ungaretti & Harris - Restaraunt Critic

Chicago is a great food city. From pork chop sandwiches at Jimmy’s, the old Maxwell Street stand that people actually moved to west of the Ryan just south of Roosevelt, to the Barbie caviar staircase at Tru — we have something for everyone.

Restaurants open up nearly every day. Some are great; some are gone. How about the old ones? The ones that every time we go we say, “Man, this is great, why don’t I come here more often?” Do we just toss them away? Do we forget about McMahon because of Cutler? I say make them earn their stripes.

I love places that look a little shady from the outside and then open up into Eden. If you do West Randolph then do it all the way to Loomis to one sixtyblue: one of the coolest places in town. A squat brick building framed by a mustard yellow entryway, this Michael Jordan restaurant is a place that you drive up to and your guests say, “Hmmmm, I don’t think so.” Then they go inside.

The bar is sleek, black and chrome with a comfy couch area. Thursday’s are “Burgers, Beers and Beats” nights. Get a serious burger for $4 and listen to the deejay go to work. Try the Bell’s beers — yummy in either the Amber or Oberon variety. Or a cocktail. The Ginger Martini tastes like summer — the right combination of sweet, tart and, well, ginger.

A lot has been written about Chef Michael McDonald and it’s all true. Okay, he is not the guy from the Doobies, but man can he put out a menu. The theme here is simple, fresh food perfectly prepared.

The bread basket has Doritos in it. Real foodies would call them lavash, but this is a column for lawyers, right? Paper-thin triangles sprinkled with chili-like dust and sesame seeds to boot. We got more. Twice.

The wine list has a lot of bottles that I didn’t know. Fortunately the non-stuffy sommelier knew all of them. Since my enjoyment of good wine grossly exceeds my knowledge of it, I put us in his hands, which was a good call.

Hash browns and foie gras came first. Seriously. The hash browns were crispy and oniony and the foie gras exploded with flavor when you bit into it. Next was seared main scallops, tuna tartare and little shrimp dumplings. The tuna won. Perfectly textured with just the right amount of pickled seaweed (battera kombu, if you want to impress your friends, kelp if you only want to impress them a little) and sesame. The scallops were generously portioned, sitting on top of a citrusy salad with pine nuts and olive oil. The citrus took the edge off the saltiness of the scallops, which I am pretty sure was the idea, but I could have done with a little lighter hand with the salt.

Dumplings are a universal food group (e.g. pierogi, ravioli, kreplach). The first key is texture and these were perfect. Translucent in the Asian tradition, firm enough to cut with a fork and still hold the inside goodies together — which in this case were shrimp and veggies that worked very well together.

The halibut never disappoints for a main- course choice. A good-sized portion with that crisped up skin that no matter how you try you just can’t do at home. The fish is fork tender without being mushy. This night it was served with citrus sabayon.

The free-range chicken is also a winner, with both dark and white meat and the skin crisped up and served on top. I think the only way to crisp up skin so perfectly is to hold it near the surface of the sun, but my son told me that it was probably deep fried. Killjoy.

Best in show goes to the duck. Duck can be greasy. It can be tough. It can be too rare. Or, it can be crispy on the outside and moist and tender on the inside, cut into bite-sized pieces and served along with bok choy and water chestnuts in a Thai barbecue sauce.

There are sweet and salty people. I am salty. I am cheese tray for dessert guy (which is a fine call here). However, Stephanie Prida is the pastry chef and while I don’t know her either, I want to be her buddy because she does things with desserts that even the saltiest guys can’t ignore. How about a chocolate soufflé tart — caramel, smoked almonds and vanilla ice cream? How about the sticky toffee date cake with toasted coconut ice cream? Or the sorbets? Or whatever else she is serving up.

Traveler’s Tip: I travel a lot and find that I like to eat when I travel. When in Philadelphia, for example, I like to eat at Osteria — a big, open space, casual and full of good smells. At 640 N. Broad, in a somewhat sketchy neighborhood, it qualifies as off the beaten path, but its wood-fired pizzas, fresh-grilled meats and fish, especially the chicken alla griglia, are quickly getting a path beaten to its door.

Pleadings:

one sixtyblue

1400 W. Randolph St., 312-850-0303

Court costs:

Appetizers: $9 - $13; Entrees: $19 - $35

Rating: four gavels

Ethics: Criminal prosecutors

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

Recently, the special duties of criminal prosecutors have been more fully detailed by the new Rules of Professional Conduct adopted by the Illinois Supreme Court and by ABA Formal Opinion 09-454.

Existing Rule 3.8 of the Rules of Professional Conduct, like the newly adopted rule, begins by stating that the duty of a “public prosecutor or other government lawyer” is to seek justice, not merely to convict. The new rule, effective Jan. 1, 2010, does not include other government lawyers, only public prosecutors. The comments to the new rule do not explain why the rule no longer applies to other government lawyers.

Both versions of the rule prohibit a public prosecutor from prosecuting a charge that the prosecutor knows is not supported by probable cause, but while the current version of the rule includes other government lawyers, this section of the new rule is directed only at “prosecutors in criminal cases.”

Newly adopted Illinois Rule 3.8 contains additional provisions that were not part of the existing rule.

For example, section (b) of the new rule requires a criminal prosecutor to “make reasonable efforts to assure that the accused has been advised of the right to, and the procedure for obtaining, counsel and has been given reasonable opportunity to obtain counsel.”

Section (c) prohibits a criminal prosecutor from obtaining a waiver of important pretrial rights, such as the right to a preliminary hearing, from an unrepresented accused. The comments explain that section (c) does not apply to an accused appearing pro se with the approval of the tribunal or forbid the lawful questioning of an uncharged suspect who has knowingly waived the rights to counsel and silence.

Section (e) prohibits a criminal prosecutor from serving a subpoena on a lawyer in a grand jury or other criminal proceeding to present evidence about a past or present client, except when the prosecutor reasonably believes that the information sought is not protected from disclosure by any applicable privilege, the evidence sought is essential to the successful completion of an ongoing investigation or prosecution, and there is no other feasible alternative to obtain the information.

The current rule requires government lawyers in criminal cases to make timely disclosure of the existence of evidence that tends to negate the guilt of the accused or mitigate the degree of the offense.

Section (d) of the new rule contains that same requirement, but adds the additional duty, in connection with sentencing, to disclose to the defense and to the tribunal all unprivileged mitigating information, except when excused by a protective order of the tribunal. The comments to the rule recognize that a prosecutor may seek an appropriate protective order from the tribunal if disclosure of information to the defense could result in substantial harm to an individual or to the public interest.

Recently adopted ABA Formal Opinion 09-454 (July 8, 2009), discussing ABA Model Rule 3.8, which is substantially the same as Illinois Rule 3.8(d), notes that the ethical duty imposed by the rule “is separate from disclosure obligations imposed under the Constitution, statutes, procedural rules, court rules, or court orders.”

As to the timing of such disclosure, it must be made “as soon as reasonably practicable so that the defense can make meaningful use of it in making such decisions as whether to plead guilty and how to conduct its investigation.” In connection with sentencing proceedings, the opinion notes that prosecutors must disclose known evidence and information that might lead to a more lenient sentence unless the evidence or information is privileged. To be timely, disclosure of this information “must be made sufficiently in advance of the sentencing for the defense effectively to use it and for the tribunal fully to consider it.”

The ABA opinion explains that evidence or information “mitigates the offense,” “if it tends to show that the defendant’s level of culpability is less serious than charged.”

It notes that Rule 3.8(d) requires disclosure only of evidence and information “known to the prosecutor” and that, under the rules, knowledge means “actual knowledge,” which “may be inferred from [the] circumstances.” The opinion notes that the rule does not establish a duty to undertake an investigation in search of exculpatory evidence. The opinion warns, however, that “nothing in the rule suggests a de minimis exception to the prosecutor’s disclosure duty.”

Formal Opinion 09-454 states that a prosecutor and defendant cannot, as a condition of receiving leniency, agree that the defendant will forgo evidence and information that would otherwise be provided. It explains that a defendant’s consent “does not absolve a prosecutor of the duty imposed by Rule 3.8(d), and therefore a prosecutor may not solicit, accept or rely on the defendant’s consent to his violation of the rule.”

Criminal practitioners would be well advised to review both the new Rule 3.8 and ABA Formal Opinion 09-454.

Editor’s Note: department

By: Olivia Clarke - Assistant Editor

Welcome to our October issue. It is one of our most well-read issues of the year due to the annual settlement survey — a listing of all of the reported settlements in the state of $2 million or more. I will cut to the chase and tell you that the survey starts on page 24. (Just in the case that’s the main reason you are reading this magazine. But I selfishly hope you read the magazine for its wonderful articles and columns.)

This issue of the magazine also offers us a chance to look at the personal-injury practice, and the lawyers who choose to dedicate their careers to this practice.

In my opinion, personal-injury lawyers are deeply fascinating people because they work day in and day out with individuals who are facing what could be the hardest and lowest points of their lives. Their clients are either dealing with the death of a loved one or a disability that has forever changed their lives. These lawyers must use every ounce of determination to pursue these cases because families are counting on them. They must pore over documents, take countless depositions and delve into their clients’ personal lives. Now this doesn’t mean they are perfect, or more of a lawyer than anyone else. But they do have a very intense practice — a practice that I find interesting to discuss. And it’s a practice that many lawyers say is not for everyone.

I often get questions about how the magazine comes up with its story ideas. Often these stories start with a conversation. Editor Bob Yates and I will start talking about an aspect of the legal community and why a situation is the way it is. Then we start making calls and talk to lawyers and legal experts about the topic. Before you know it a story is born.

In the case of my story about female plaintiff personal-injury lawyers, the story started with a question. Why aren’t there more female lawyers practicing plaintiff personal-injury law? In a firm, there may be one or two or three female lawyers — why is that? I broached this topic with local female plaintiff personal-injury lawyers, and a couple of male lawyers to get their opinions on this topic. No statistics could be found to say how many female lawyers nationwide practice personal-injury law. But plenty of lawyers weighed in on possible reasons for fewer women in the practice. The story starts on page 18.

Another story, by reporter Sherry Karabin, talks to individuals who went to law school but decided either after briefly practicing or before ever stepping into a law firm that they wanted to use their degrees in a non-legal setting. The story proves my mother’s point that if you have a degree so many more career options exist. I guess that is even more true for those with legal degrees. It’s a fascinating read, especially if you are contemplating switching careers. The story starts on page 74.

We have many wonderful columnists and we just got two new ones. We’d like to introduce readers to partner Michael Philippi, chair of the litigation department at Ungaretti & Harris. He will be our new restaurant critic, and will write our Counsel’s Table column. He wanted us to tell you that he “appreciates a good meal in any city, particularly this one.” His first column, about one sixtyblue, appears on page 94.

And Jennifer Ilkka, a fourth-year associate and commercial litigator at Reed Smith, will be one of our Climbing the Ladder columnists. Her column talks about how, as an associate, you figure out a new legal task without appearing ignorant or incompetent to your superiors. It’s on page 92.

Also, just a reminder that we are looking for nominations for Chicago Lawyer’s 2009 Person of the Year. If you want a local judge or lawyer who has had a tremendous year to gain some recognition, this is a good way to do it. Maybe he’s done a tremendous amount of amazing pro bono work, or she’s won most of her trials and changed laws because of her hard work. We want to recognize and celebrate an outstanding lawyer or judge — someone who is a testament to the wonderful legal minds in this community. Please send your nominations to oclarke@lbpc.com. The person selected will be profiled in our November/December issue.

Litigation Support Special Section

Our Litigation Support special section features advice from top leaders in the litigation support field covering important topics. Highlights include:

The Medical Expert Witness - Medical Illustrator Relationship
Attorney Side Business May Jeopardize Insurance Coverage
Today’s Choices in Litigation Support - The Options are in Your Favor
“Being There”: The Presence of the Decision-Maker at Mediation
Experts and Logistics: The Keys to Successfully Managing Your Case
Can Your Accounting Expert Clear the Admissibility Hurdles?
Lawsuit Loans an Evolving Industry
Facing Jurors in a Recession

Follow this link to the interactive version of the publication or click on the issue image below:

Financial Services: Prompting an SEC complaint

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

Recently the Securities and Exchange Commission filed a federal lawsuit against Morgan Keegan & Company Inc. alleging widespread sales-practices violations in connection with its underwriting, marketing and sale of auction rate securities (ARS).

The SEC’s complaint contains a treasure trove of alleged facts against Morgan Keegan, which investors, and their lawyers, should find to be fascinating reading. As background, auction rate securities are bonds (issued primarily by municipalities and student loan entities) or preferred stock (issued by closed-end funds) that provide for interest rates or dividend yields that are periodically reset through auctions. Auctions fail when there are not enough bids at the auction to cover the securities for sale. If an auction fails, then the issuer (the municipality, student loan entity or closed-end fund) must pay a pre-determined maximum rate or yield, but, importantly, the ARS is illiquid at that point in time and until the next successful auction.

Let’s highlight the key allegations of the SEC’s complaint. First, Morgan Keegan underwrote 60 ARS issues with a total par value of about $1.1 billion. Additionally, Morgan Keegan resold to its customers another $1.1 billion of auction rate securities that other broker dealers had underwritten. For its efforts between June 2007 and February 2008, Morgan Keegan was paid about $4.3 million in fees and commissions.

Second, the SEC concludes that, between 2002 and Feb. 27, 2008, a majority of the ARS auctions for which Morgan Keegan served as the lead broker dealer would have failed without Morgan Keegan’s participating in the auctions by placing bids for its own account. Morgan Keegan’s participation thus gave the impression, and provided false reassurance, that an ARS was liquid.

In fact, when Morgan Keegan stopped supporting ARS auctions beginning Feb. 27, 2008, the auctions started failing on a widespread basis. By March 20, 2008, Morgan Keegan customers were left holding about $1.2 billion of illiquid securities.

That figure remained at $272 million as of July 15, 2009.

Third, the SEC alleges that Morgan Keegan violated securities laws by selling auction rate securities through misrepresentations and omissions of fact — both to the firm’s customers and to its brokers as well! For example, the SEC charges that Morgan Keegan never disclosed to its customers or to its brokers the level of the firm’s participation that had been required to prevent failed auctions. Furthermore, Morgan Keegan routinely sold ARS issues as an “attractive alternative” to money market funds, “liquid and safe” and “guaranteed.” Not until March 20, 2008 — five weeks after ARS auctions had begun failing on a widespread basis — did Morgan Keegan institute an “enhanced disclosure” policy requiring customers to sign a detailed warning before purchasing. The SEC appears particularly disturbed that no action was taken earlier to properly train brokers and/or warn customers. The Morgan Keegan credit committee notes, dated Aug. 30, 2007, reflect that Morgan Keegan’s general counsel “expressed concern” during the meeting about how auction rate securities were being sold and “asked how we can make sure people know [auction rate securities are] not a money market.”

Fourth, Morgan Keegan knew of “significant and increasing risks associated with ARS” in late 2007 and 2008. For example, on Jan. 18, 2008, Morgan Keegan’s head of retail ARS warned of a “sell off” for Morgan Keegan’s auction rate securities, which “could potentially cause a failed auction.”

Between Jan. 22, 2007, and Feb. 13, 2008, Morgan Keegan witnessed its normal-sized ARS inventory of about $20 million mushroom to $75 million. By Feb. 21, 2008, the inventory ballooned to $180 million. At that point, Morgan Keegan’s credit committee “definitively capped the firm’s ARS inventory at $185 million,” which, according to the SEC’s complaint, meant “effectively withdrawing the firm’s support for future auctions.” The SEC concludes, “Morgan Keegan-managed auctions then began to fail on a widespread basis.”

Fifth, rather than alert its customers or notify its brokers of auction failures and its decision to stop supporting auctions, Morgan Keegan actually accelerated sales of auction rate securities in late 2007 and 2008.

The SEC finds particular fault with the Morgan Keegan’s credit committee’s looking to “broaden the demand” for auction rate securities when it met on Feb. 19, 2008, several days after other firms’ ARS auctions had started failing on a widespread basis.

Worse still, the SEC alleges that Morgan Keegan downplayed the liquidity risks, for example, in December 2007 (”Check out Santa’s ARS Specials”), and in January (”yields from ARS are so attractive” due to “seasonality”). Perhaps most alarming is the series of e-mails uncovered by the SEC in which Morgan Keegan discouraged its brokers from selling their customers’ ARS holdings.

In its lawsuit the SEC requests, among other things, an order or rescission for all auction rate securities that Morgan Keegan sold prior to March 20, 2008.

That relief certainly is justified.

An International Perspective: Not guilty, just foreign

By Kwabena Appenteng
Greene and Letts

Soon after I arrived in Chicago and obtained my Illinois driver’s license, a bright light, loud siren and stocky looking gentleman curtly informed me that I had broken the law.

Although my alleged infringement consisted of nothing more than misinterpreting a road sign, in my mind my dreams of passing character and fitness and being sworn in as a member of the Illinois bar rested in the gloved hands of the officer at my window. Unsure of what to do, I retorted in the most plausible manner I could think of: “Officer, I am new to Chicago, and this country, and didn’t realize that what I was doing was illegal. …”

Slowly, as though trying to decipher the logic behind my defense, the officer wrote a warning and wished me the best.

Although I have not pleaded “not-guilty-by-reason-of-being-a-foreigner” since that faithful traffic stop, recent developments suggest that such a plea may soon become a viable defense to other infringements of the law, influential enough to be considered by juries and persuasive enough to mitigate sentences handed down by courts.

Advocates of this defense point to the case of Nary Chao, a 28-year-old Cambodian woman prosecuted last year in Las Vegas. Ms. Chao was charged with felony sexual assault of a minor under age 14 after her son informed child protective services that his mother kissed his genitals while he was sleeping.

As loathsome as this act may sound to many of us, to Cambodians and citizens of other Asian countries the act is merely a culturally acceptable expression of parental love. Recognizing this, prosecutors subsequently allowed Ms. Chao to plead to a misdemeanor and did not require her to register as a sex offender. To people unfamiliar with Cambodian culture, Ms. Chao’s actions would likely be described as nauseating, and illegal, deserving of a more severe punishment than that which she received.

To members of the Cambodian community, and some members of the Asian community within the United States, however, Ms. Chao’s actions would likely be deemed unworthy of meriting even the punishment that she received, as they amounted to nothing more than an accepted cultural act. Herein lies the problem.

As a nation of immigrants, the United States houses hundreds of cultural communities, each with their own set of beliefs and practices. Yet despite this rich cultural diversity, the rigid laws that control, and that judges and juries must apply, often conflict with these cultural practices. And they prevent the “perpetrators” from using their cultural background as a defense.

Interestingly, this issue was inadvertently touched upon by newly appointed Supreme Court Justice Sonya Sotomayor in her now- infamous 2001 speech at the University of California, Berkeley, School of Law.

In her speech, Justice Sotomayor recognized the importance of diversity on the bench and the effect of background and personal experiences in judicial decision-making. Whether or not Justice Sotomayor would agree with considering a defendant’s cultural background as a factor in their defense is a question only she could answer.

However, her recognition of the need for cultural diversity of thought amongst judges makes for more than just a controversial speech when looked at through the eyes of a defendant like Nary Chao. Whereas a judge raised in small-town Illinois may not see past the details of Ms. Chao’s crime, a judge or jury familiar with Cambodian or Asian culture may understand her behavior and choose to impose a reduced sentence or no sentence at all upon her.

Judges are not able to independently re- define criminal activity or make legal that which is illegal. As we were taught through our painfully-long negligence law lectures in law school, whether an individual meant to break the law or harm someone is not a factor contemplated by the law. What matters is whether or not you broke the law. To many people the discussion, and this column, should end here for that very reason: immigrants who break the law should be punished to the same extent as everyone else. End of story.

But as rigid as the law may be, punishing to the full extent of the law individuals who had no intention of breaking the law, and had deep-rooted cultural reasons for engaging in their behavior, surely sounds unjust to even the most callous, culturally insensitive litigator or judge amongst us.

Invariably, as the immigrant population within the United States continues to grow so will the number of immigrants tried in the federal and state courthouses across the country. Whereas some of these cases may be simple civil suits, others may be more serious infringements of the law — behavior typically “permitted” within their country of origin — such as spousal rape or arranged marriages of underage girls.

Although many argue that these immigrant offenders should be treated no differently from any other offender, others contend that they should be permitted to provide the judge or jury with evidence of their cultural background, laws, or practices as part of their defense. Whether courts and lawyers around the country will allow this, however, is a question on which the jury is still out.

Q & A: Carrie M. Risatti

By Olivia Clarke

Carrie M. Risatti

Age: 36

Education: She earned her undergraduate degree from the University of Wisconsin in 1995, and her law degree from Washington and Lee University School of Law in 1999.

Professional: A principal at Much Shelist, she is a member of its real estate practice group, where she represents clients in all aspects of real estate development and finance.

1. What is the most unusual thing that has happened to you as a lawyer?

I clerked in the Virginia courts after law school, and one of my cases was a murder-for-hire case. It was really interesting, and probably the most dramatic thing I’ve been involved with. … During my clerkship my office made a right angle with the lock-up where the defendants who were being brought in for hearings or trials waited. Every morning they would bring them in at 6 o’clock. By the time you came in at 8 or 8:30 they’d been there for several hours.

And as you can imagine, probably not unlike many law students, I didn’t have a lot of contact with inmates before that. As you can also imagine, given that the door to the judge’s chambers was right by lock-up, there were a lot of locks. I would sit there every morning going through a string of deadbolts and codes. I got to spend a good 10 minutes every morning with the inmates, who were not shy. …

The defendant for the murder-for-hire case was by himself … and he was quiet and very, very intelligent in a deeply disturbing way. And, he would ask me questions. After the first day of trial, he greeted me in the morning and had gone online the night before. He knew a lot of information about me. At the time, when I was hearing it, it kind of rattled me because I thought he knew everything about me. He was a nice person, which was the weird thing. You would sit in court all day and see all this evidence being presented, and it presented obviously a very different picture of him.

2. If you could have lunch with anyone, living or dead, who would it be and why?

Coco Chanel.

I think she is often overlooked as someone who has done a great deal for women, especially women professionals. She owned her own company; she never gave it up. As a transactional lawyer, I deal a lot with businesses and I realize how hard it is to start a company and keep a company successful over years and years. … The fact that she did this at a time when women were not allowed to vote, women were not allowed to have bank accounts. … She really did something quite remarkable and it was so far outside of the standard idea of what a woman’s life should be at that time. …

She is known for being uncompromising and unrelenting and very unconventional, which are categories I think, as lawyers, we probably strive to possess in ourselves and our own practices. But she is quoted often as saying fashion is everywhere. Fashion is in the streets, because it’s how you choose to present yourself to the world, which as a lawyer is a big part of my job. Whether or not my clients often get the deal that they want depends on how I present that deal to the other side. It’s a concept that I think about very often in my life and I think it’s probably a concept that transcends the ideas of fashion. …

3. What advice do you have for new or future lawyers?

Always remember that civility is your greatest strength. I went to a law school that is founded on the principles of an honor system and a speaking tradition. When I started my practice in Virginia, these are principles that are almost force-fed to new attorneys by the Virginia bar. … Then I came to Chicago — to a much more sophisticated bar and there are so many more lawyers and we work at such a fast pace — and that isn’t the central focus of the bar. And that’s not a judgment or an indictment against Illinois. It’s the practical reality and the difference in the nature of the practice. As I’ve grown in practice I’ve realized how absolutely fundamental it is. I think it’s very easy to get caught up in what you’re doing … and it’s easy to forget that this community isn’t that big, and all you have to sell is ultimately your character and your integrity. …

4. What do you like the most and the least about being a lawyer?

My favorite part of practicing law is advising my clients. I think, especially in this economy, my practice demands that I be a counselor of law. My job is to holistically advise my clients, and always be cognizant of what their objectives are in any transaction. And that’s great and it’s really, really fun to have a relationship with clients and watch them grow their businesses and do projects and get deals done.

My least favorite part of practice is dealing with difficult opposing counsel. It’s hard to do deals when everyone isn’t on the same page that we are going to do something together, and this is the beginning of a relationship for our clients; and that ideally there are no winners or losers.

I find most attorneys, they want their clients and the transaction to succeed just as much as I do. But occasionally you get someone who is not on board with that plan.

5. If you didn’t become a lawyer, what career would you have chosen?

I, a year ago, helped my sister open a bridal salon in Manhattan. And I’m in the process of designing a line of accessories for her store, and will eventually design a line of gowns. … I am taking classes at night and on weekends over at The Art Institute, and am taking their art and fashion design classes, and it’s an amazing program. … If I wasn’t a lawyer I would be in this program full time and pursuing that.

6. What is your favorite childhood vacation?

My parents sent my sister and me to foreign language sleep-away camps in the summer. And I know it sounds like band camp, but it was great. We loved it. It was probably the most influential experience in my childhood in terms of influencing my world view. …

7. What is your favorite Chicago restaurant?

I love Cafe Spiaggia because they have this wild boar gnocchi that is out of this world.

Social Scene: 40 Under 40 10th Anniversary Celebration at Aqua

We celebrated the 10th Anniversary of our 40 Illinois Attorneys Under Forty magazine at a recent reception at Aqua. All 40 Under 40 alumni were invited to attend. It was a great networking event that featured some of city’s finest lawyers. Enjoy the photos by Colleen O’Brien.

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