As noted in this previous post, former Weil, Gotshal & Manges bankruptcy partner and current Greenhill & Co. investment banker Harvey Miller is arguably the most leader of the movement over the past 30 years to elevate the compensation of corporate reorganization lawyers to levels commensurate with that of other corporate and securities lawyers. In so doing, Miller was not accustomed to losing many disputes over his firm’s fees in big reorganization cases, but — as the Wall Street Journal’s ($) Nathan Koppel reports here — Miller absorbed a hit on his fees as an investment banker earlier this month that could be the largest in the history of US corporate reorganizations.
Based on a July 21 ruling of New York Bankruptcy Judge Robert Drain, Miller’s employer — New York investment bank Greenhill & Co. — must return $4.6 million of the more than $11 million the firm was paid as an adviser to Loral Space & Communications Ltd. in the satellite company’s chapter 11 case. Judge Drain concluded that Greenhill had improperly claimed a bonus for advising Loral in its 2003 bankruptcy and that Greenhill’s retention agreement did not authorize such a bonus. Greenhill was allowed to retain the $7 million balance of its compensation.
As noted in the previous post, my sense is that Miller and attorneys at the Akin, Gump law firm are not going to be exchanging holiday greeting cards any time soon.

If you haven’t followed the case of alleged would-be 9/11 bomber Zacarias Moussaoui closely, you probably have never heard of Carla J. Martin.
Well, Martin is the federal aviation attorney who almost undermined the Moussaoui prosecution when she violated a court order that is commonly entered in criminal and civil trials by allowing prosecution witnesses to read transcripts of trial testimony that they were not supposed to see or hear until after they had testified during the trial. According to this Jerry Markon/WaPo article, Martin’s career is shot as a result of her transgression and she apparently is not holding up well:

The woman at the center of the storm is emotionally distraught, crying when she talks about the criminal investigation and feeling like a prisoner in her own apartment, Martin’s mother said last week. “She’s not doing very well. It’s terrible, devastating for her,” said Jean Martin Lay, who believes that her daughter did nothing wrong. “She doesn’t do much of anything but stay at home, as far as I know.”

According to the article, Martin remains subject to an array of federal and state investigations, all determining just how and to what extent she should be punished.
Too bad for Martin that she didn’t engage in prosecutorial misconduct against business interests that she could have parleyed into a cushy job in private practice or a promising political career.

Bruce Carton over at the Securities LItigation Watch has posted his annual State of the (Securities Litigation) Union analysis, which provides an excellent overview of the status of class action securities lawsuit sector. Interestingly, it does not appear that the Milberg Weiss troubles or attempts to constrain such lawsuits are having any meaningful effect on the growth of the sector:

Again, viewed in context, neither the number of cases in 2005 nor the NERA dismissal statistics support the argument that securities class actions have recently ìdried upî in any meaningful wayóthe number of cases is roughly what it has been since 1997 and the dismissal rate is, according to NERA, the same as it has been since 1998. [. . .]
With respect to Milberg Weiss, it seems clearer by the day that even if the firmís practice is diminished or destroyed altogether by the indictment, there will not be a significant impact on securities class actions generally. There are far too many competent plaintiffsí law firms out there that will gladly fill any void that may be created. It also appears that to the extent Milberg Weiss is losing any lawyers, it is because these lawyers are being recruited away by competitors, where they will promptly resume their securities class action practices.

Read the entire post.

Former Texas Southern and current New York Giants star defensive lineman Michael Strahan is discovering that they play for keeps in the divorce courts of New York City:

Michael Strahan’s nasty divorce trial hit a new low yesterday – as his estranged wife suggested the Giants sack king and handsome married TV doctor Ian Smith are more than just friends.
After the couple’s marriage collapsed, “Michael moved into Ian’s one-bedroom apartment,” Jean Strahan told reporters after another bruising day in divorce court.
“And you can say an alternative lifestyle sprouted,” she added, though her lawyer stopped her before she could elaborate. [. . .]
Michael Strahan himself hinted at some controversy when he said in court that he wasn’t sure whether one of his love letters was addressed to “Jean” or “John.”
“I’ve been accused …” Strahan, 34, quipped on the witness stand before cutting himself off in midsentence and flashing his gap-toothed smile.
Strahan’s lawyer rejected any hint that there’s anything more than a friendship between his client and Smith.

That’s not all.

While on the subject of Houston-based cases that are not reflecting well on the U.S. criminal justice system, the jury in the retrial of Andrea Yates — the suburban Houston mother and housewife who drowned her five young children in a bathtub in 2001 — was seated yesterday and opening arguments are scheduled to begin on Monday.
The Yates case is not Texas at its finest. Despite overwhelming medical evidence that Yates was severely mentally ill, suffering from post-partum depression and had been taken off the only medication that had ever helped her when she killed her children, the State of Texas still wants to put Yates in prison instead of a mental health facility for the rest of her life. Not surprisingly, prosecutors have never been able to offer any motive — much less a reasonable explanation — for why an otherwise attentive and loving mother would suddenly go nuclear on her young children and kill them.
But it gets worse. The state is retrying this case despite the fact that Yates’ first trial ended in a conviction that was subsequently overturned because the lead prosecution expert witness made the dubious link between Yates and an episode of the television show Law and Order in which a mother drowns her child. Now, it’s bad enough that State District Judge Belinda Hill ever allowed the jury to hear an expert make such a questionable reference to in the first place, but what’s worse is that the episode that the expert referred to was never even broadcast!
Moreover, it’s not as if this trial of Yates even involves the issue of incarceration versus freedom — even if successful, Yates’ insanity defense would result in her assignment to a secured psychiatric hospital, probably for the remainder of her life. And, from the looks of it, the prosecution and Judge Hill do not appear to be acting any more responsibly in the second Yates trial than they did in the first one. Last week, Judge Hill granted an inhumane prosecution request that Yates be incarcerated in prison during the retrial rather than in a mental health facility.
In short, despite the fact that there is no meaningful dispute regarding the nature and depth of Yates’ mental illness, the State insists upon punishing this feeble and tormented woman by imprisoning her for the rest of her life. Such a lack of prosecutorial discretion leaves a serious black mark on the Harris County District Attorney’s Office and the State of Texas criminal justice system, and it is not one that is easily erased.

In one of first concrete signs of the erosion of limits on governmental misconduct toward U.S. citizens, this NY Times article reports on yesterday’s controversial 5-4 U.S. Supreme Court decision in the Michigan “knock-and-announce” case, which raises troubling new issues about whether the “exclusionary rule” will survive the Roberts Court for constitutional violations by police, including Fourth Amendment violations of searching citizens’ homes and seizing their property. A copy of the decision is here, and the SCOTUS blog has a good analysis of the Supreme Court’s opinion here.
Make no mistake about it, the Supreme Court’s decision is a full-blown attack on the traditional remedies for ensuring civil liberties in America. The decision clearly indicates that that Justice Scalia is intending a significant revision or casting aside of the exclusionary rule as a remedy for illegal governmental police conduct, perhaps best reflected by the opinion’s naive trust placed in police officers to ensure Constitutional protections. Particularly troubling to me is Justice Scalia’s dismissive attitude toward the “knock-and-announce” rule, not the least of which are the understandable terror and fear involved in having one’s door beaten down in the middle of the night by armed and masked men, the disturbing predicament that a homeowner confronts in deciding whether the intruders are criminals or police and the fact that the high emotion of such a situation can lead police to make horrifying misinterpretations of harmless gestures, which often result in tragic consequences. Justice Scalia gallingly ignores those valid reasons for the knock-and-announce rule by contending that the reasoning behind the rule is simply “the right not to be intruded upon in one’s nightclothes.”
Yeah, right. Orin Kerr places the positive face on the decision here, while Cato’s Mark Moller and Grits for Breakfast’s Scott Henson echo my more ominous view of the decision.

For anyone interested in Houston lore, a subscription to the Wall Street Journal is a must today as WSJ reporter Jonathan Karp weighs in with this front page article on the latest lawsuit of Melvin Dummar, the former Utah milkman who unsuccessfully claimed during a highly-publicized trial in 1978 that a handwritten “Morman Will” from reclusive billionaire and former Houstonian Howard Hughes entitled Dummar to over $150 million from the Hughes estate (Hughes died while flying to Houston in 1976 for medical treatment). Dummar claimed that the handwritten will was a reward for saving Hughes’ life after Dummar found him lying alone one night on a desolate Nevada desert roadside about 150 miles north of Las Vegas. Dummar’s story about the Mormon Will is the basis of the clever 1980 movie, Melvin and Howard.
Amidst that rich backdrop, Karp reports that Dummar is again after a chunk of the Hughes estate, albeit indirectly through two beneficiaries of the Hughes estate, Houstonians William Lummis and Frank Gay. Dummar’s new lawsuit alleges that Lummis, a Hughes cousin and the main family heir, and Gay, a former Hughes executive, conspired to withhold information from the court in the 1978 trial in order to discredit the validity of the Morman Will. The 77-year old Lummis currently serves as a trustee for the nonprofit Howard Hughes Medical Institute and the 85-year old Gay was also a member of medical institute’s board of trustees until recently.
Dummar’s latest lawsuit is based largely on the testimony of a former Hughes pilot, who allegedly corroborates Dummar’s allegation that Hughes had left Las Vegas to visit a brothel — appropriately named the “Cottontail Ranch” — near the spot where Dummar allegedly found Hughes in the Nevada desert. According to the pilot, the purpose of Hughes’ visit to the brothel was to renew a regular tryst with “Sunny, a redhead who had a diamond in an upper incisor. ‘You couldn’t see it unless she smiled broadly,’ [the pilot] recalls. ‘She was the class of the field.'”
Read the entire article. New movie to follow.

After Florida and Massachusetts disbarred well-known criminal defense lawyer F. Lee Bailey, a three judge panel of the federal district court in Massachusetts was presented with the issue of whether the court should discipline Bailey on a reciprocal basis. The panel did so, and Bailey appealed to the First Circuit Court of Appeals, which issued this interesting opinion that sets out the facts of the case that got Bailey in trouble, but then concludes that those facts are irrelevant because of the principle of reciprocal discipline.
Key tip of the opinion — when reaching deals with prosecutors on behalf of clients, get them in writing.