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Laurence Simons Newsletter January 2015

Posted by: Laurence Simons 14/01/15



Lawyer under fire: Prosecutor probed over 'robbery from robber'

A former US attorney has quit his job at New York state firm McElroy, Deutsch, Mulvaney & Carpenter, amid allegations that he stole over $700,000 of client funds from former Danbury executive James Galante.

Yes, that's right: A prosecutor could be prosecuted for robbing a robber.

James Pickerstein, who was acting US attorney for a brief period in 1974, agreed to resign as a probe by state bar investigators into his alleged misappropriation of the money continues. His letter is a fascinating one to say the least. While he said he disputes "some or all" of the allegations against him, he added there is "sufficient evidence to prove by clear and convincing evidence" that there was a failure of compliance with rules governing the safekeeping of client funds.

The case involving Mr Galante involved the issue of price-fixing in the trash industry, with the U.S. Department of Justice agreeing a plea bargain with him that led to Mr Galante being paid $10.7 million in total for the sale of his trash business, a deal that saw him being sent to jail for seven years for his part in a price-hiking conspiracy involving the mob.

One of these instalments amounted to $704,000 and this is the amount that was allegedly siphoned off by Mr Pickerstein. Indeed, the FBI is now said to be on the case as well. Trash? This really is a rubbish situation for all involved.

In view of this, it is perhaps just as well Mr Pickerstein has hired two lawyers of his own to handle the case. William Dow III and Andrew Bowman issued a statement saying: "Jim Pickerstein has helped countless clients and lawyers, many without charge, throughout his career, despite a number of profound personal tragedies.

"Those he has helped have reached out to express their strong support. He is and has been cooperating with authorities. We consider it an honor to represent Jim."

Mr Galante is now out of jail and obviously keen to get his hands on the cash. If the allegations are true, it may end up being a supremely ironic case. Mr Pickerstein will dearly hope the case against him is 'trashed'.

Accountants parking tanks on legal lawn?

Beware all you UK law firms: They are coming for your business; an army of accountants, all suited, booted and armed to the teeth with briefcases and neat ties, pouring over the brow of the hill in battle formation.

Or so it would seem as another accountancy firm - EY - seeks to branch out from its core business into legal services. It has already appointed three partners to its legal section and plans to add 30 more in the next six months.

EY is not the first UK accountancy firm to take advantage of new legislation allowing it to offer a multi-disciplinary approach. Other freshly-licensed companies include PwC, KPMG, Kingston Smith, Price Bailey and Hope Shaw.

But is it quite as dramatic as that? Are accountancy firms really parking their tanks on the lawns of traditional legal firms? Not so, according to  Steve Varley, regional managing partner for EY in the UK and Ireland.

He said: "We aren't competing with the business models of traditional law firms - we are offering something new.

"By working closely with other parts of the organisation, clients will benefit from our global scale and in-depth industry knowledge as well as having a single point of contact for all of their professional service needs.

"Whether advising on large transactions, employment structures or group reorganisation projects, having lawyers, accountants and other professional advisers working side by side will be a real advantage to our clients and ultimately help us to provide a better level of service."

Nonetheless, while the service may differ in some respects from that offered by traditional law firms, there is no doubt that it will still present potential clients with a choice of whether to seek the help and advice they need from a legal firm dealing with areas of finance and tax, or go direct to these new hybrid firms.

EY is now doing in the UK what it has already been able to do elsewhere, with over 1,100 people working in legal departments spread across 60 locations around the globe, in countries as diverse as Mexico, China and Australia. 

Blasphemy defence lawyer comes under attack

If lawyers sometimes think their job is hard and the forces they are up against are too powerful and threatening, they may want to look at the case of Shahbaz Gormani and reconsider.

Mr Gormani is based in the city of Multan in Pakistan, a country where controversy about its blasphemy laws is a hot issue. Those accused often face the 'justice' of the mob before that of the courts. Even those who defend the accused are targets, with the attorney in this case having his house fired on by gunmen, who left a leaflet urging him to drop the case or face the personal consequences.

In this case, the lawyer has the task of defending university lecturer Junaid Hafeez, who teaches at Bahauddin Zakariya University. Mr Hafeez was accused of making some derogatory religious remarks last year.

A known liberal, the lecturer was charged after pressure from student groups and the forces ranged against him are so fierce that anyone seeking to defend him and let the rule of law take its course are a target.

Indeed, Mr Gormani will not have been unaware of what he is taking on. He agreed to take the case of Mr Hafeez after the previous defence lawyer, Rashid Rehman, was shot dead in May.

Speaking to AFP about the latest incident, police official Muhammad Salim said: "Gunmen riding motorbikes fired indiscriminately outside the residence of Gormani and threw a pamphlet... warning him of serious consequences if he continues to pursue the case."

Mr Gormani said the attack showed that the state should pass laws to protect defence lawyers in such cases.

Although the offence of blasphemy carries the death penalty in Pakistan, nobody has ever been formally executed for it. Instead, mob rule often leads to attacks on suspects, many of whom are from Christian and other minority groups.   

Cosby Show needs episode in court, says lawyer

If there is one thing American lawyers know about, it is the statute of limitations. For many, it is a vital tool for getting the accused off the hook. However, while it may be very handy in that regard, particularly from the point of view of someone who knows they are guilty but can get away with it, the situation can also cause problems for those falsely accused. Do they waive their rights under the statute and go to trial in the hope of being exonerated, or will they take the risk of being wrongly convicted?

Only Bill Cosby knows the truth of the very long list of allegations of sexual offences against him, which date back many years. However, he has been left with a dilemma by Gloria Allred, a lawyer representing three of his alleged victims. The claims they have made against the comedian include one incident said to have occurred at the Playboy mansion of all places, back in 1974. All it needs now is for someone to allege Prince Andrew was involved. – Is this a bit too much?

Ms Allred said: "The public deserves to know whether Cosby is a saint or a sexual predator. We challenge Mr Cosby to end this nightmare by accepting either option."

Of course, for the 77-year-old, the current situation is indeed a nightmare. Even if he doesn't end up losing an imminent lawsuit - with his own lawyer claiming various women are jumping on the bandwagon as they eye up his fortune - the comedian has suffered a major loss of reputation. But while the broadcasters and many of the public have turned their back on him, he still has his fans. 

After all, he can always fall back on his great repertoire of jokes, such as his comment that "The only thing that you can get into without a lot of trouble is a lot of trouble.", or "civilization had too many rules for me, so I did my best to rewrite them." How innocent can one get?

Even so, Ms Allred's challenge may tempt Cosby. If innocent, he may decide a trial is worth the risk. Even if he is not, he might decide to gamble on a not guilty verdict to at least maintain the image of innocence. However, with the law on his side, he could simply sit back and treat the matter as a joke. Who knows - he may be justified in doing so.

Lord Chancellor 'doesn't have to be a lawyer' says Lords

It is a few years since the House of Lords has acted as the highest court in the land in the UK. Nonetheless, it has managed to pass judgement on a major issue regarding just who can hold high legal authority - in this case Chris Grayling MP.

Mr Grayling, a Conservative frontbench veteran, was appointed to the post in the last reshuffle, raising hackles among those who thought only a qualified lawyer could do the job. After all, there are a number of weighty legal matters involved in the role.

Is such a qualification necessary? It would be the equivalent of asking if a teacher needs to be formally trained to do that job, or whether a football manager should have been a professional himself (not all have been, Jose Mourinho for instance). So is law different? And does this office need a Jose Mourinho?

The Lords ruled that no, it is not an absolute requirement, but it suggested future governments should give "due consideration" to those who have a "legal or constitutional background".

A statement said: "While some submissions went so far as to say it should be mandatory for the lord chancellor to have a legal background, the majority view was put succinctly by Mr [Dominic] Grieve who noted that "there are advantages of having a lord chancellor who is a lawyer, but it is not essential".

However, the Lords recommended that in the instance of a non-lawyer like Mr Grayling holding the post, the permanent secretary at the Ministry of Justice should be legally qualified, or an advisor who is a lawyer be given the equivalent status to the permanent secretary's role. This would ensure the Lord Chancellor does at least have easy access to a lawyer himself.

It will doubtless come as a relief to the public that there is someone involved in the office who knows what they are talking about. And that his name isn't Jose Mourinho.

All this may suggest to some that the best use for the Lords now - a favourite target for constitutional reformers - is to turn it into a fudge factory, since it has clearly demonstrated impeccable qualifications in the manufacture of the substance in this case. Besides, the fact that few of them may be qualified confectioners is evidently not a problem.

Court upholds business levy on lawyer fees

The levy of service tax that companies with a turnover of more than Rs 10 lakh (circa $16,000) or more must pay when they engage the services of legal firms has been upheld by the Bombay High Court.

Introduced in 2012, it generated concern among legal firms that the additional costs could deter some companies from seeking legal assistance.

The writ petition was filed by The Bombay Bar Association, Advocates Association of Western India and some individual lawyers. It stated: "The levy of service tax imposes a heavy additional burden on litigants and disables them from approaching the courts."

It went on to claim that the tax was unconstitutional, on the grounds that it discriminated between the ability of individuals to seek justice via access to legal services and the equivalent rights of businesses.

Both the service tax authorities and the government contested this law, although it was introduced in 2012 rather than by the BJP majority administration that took office earlier this year. The respondents stated that the purpose of the law was to ensure the common man is not bearing the burden of legal costs in a way that businesses are more likely to be able to afford.

The ruling also took into account the role of lawyers as officers of the court, noting that as they do so they still make money from charging their clients. It stated: "Rather by a rational and intelligible differentiation the parliament has proceeded to levy and impose service tax on legal services rendered to business entities by an individual advocate or law firm."

So it is that larger firms have to pay the 12.36 per cent levy, whereas individuals and small companies do not. Disappointing as this may be to some legal firms, the matter may raise the wider issue of tax in India, with a very small proportion of the country's wealth ever being translated into revenue for the government. In imposing what it regarded as a progressive tax, the old administration may have considered this a key step in the right direction and that view is clearly not opposed by the new government.

As a result, while India's rapid economic growth may produce many ways for business lawyers to increase their earnings, it is evidently doing so at a price that the authorities believe is worth paying. 

UAE firm adds second Dubai office

UAE-based law firm Galadari has set up a fourth office, which it has opened in the Dubai International Financial Centre (DIFC), the Lawyer reported this month.

It is the second in the city, in addition to which the firm has a presence in Abu Dhabi and another base in the Jebel Ali Free Zone.

The company stated that the move was in response to client demands as more firms seek help with transactions and litigation, both at the DIFC and onshore Dubai.

Managing partner Abdulla Galadari will lead the DIFC office alongside corporate partner Ken Dixon and senior associate Mike Wakefield.

The company was formed 31 years ago and has gradually expanded, with chairman Ziad Galadari stating that the presence of the firm in a second Dubai office will help it build its commercial relationships with the companies generating economic growth in the emirate.

A number of legal firms already have a base at the DIFC, ranging from small local outfits to big international players.