Dan Garner – Breaking up, as law firm Pierce Bainbridge Beck Price & Hecht LLP are doing, may not be so hard to do after all. On November 6, 2019, Rudy Giuliani announced that he hired Pierce Bainbridge for representation with the Ukraine fiasco. Just a few months earlier, LawFuel was the first legal publication to raise concerns about Pierce Bainbridge finances. The firm has undergone a precipitous fall from grace and is steeped in massive debt.
What Law360 has referred to as the “dramatic disintegration” of the firm has spawned a number of new ones. The latest firm to enter the arena is Bainbridge Law APC; it follows Hecht Partners, Warren Terzian and more. Just how current and future claims against Pierce Bainbridge may impact these firms is yet to be seen.
James D. Bainbridge, (left) the Pierce Bainbridge co-founder filed to have his new firm appear in a lawsuit in Los Angeles; Bainbridge was already involved in the case while at Pierce Bainbridge. A motion is pending from the other side which states the court must stop Pierce Bainbridge and its client’s “effort to. . .commit fraud upon this Court.”
Along similar lines, a CNN article published two days after Giuliani retained Pierce Bainbridge is titled: “State Department official describes Giuliani’s ‘campaign of lies’ in Ukraine.”
CNN is also tangentially tied to Pierce Bainbridge as it’s well-known anchor, Don Lemon, was represented by Pierce Bainbridge, specifically Caroline Polisi (now with Armstrong & Teasedale) and Christopher N. LaVigne (now with Withers Bergman) in connection with an alleged dispute that took place in New York.
Bainbridge is not the only ex-PB name partner to recently start his own firm. David Hecht incorporated Hecht Partners on March 20, 2020, the same day Bainbridge Law APC filed articles of incorporation. According to Law360, both claim to still be affiliated with PB, although they are no longer name-partners.
Law Firm Breakups
In breaking the news about the new Bainbridge Law APC, Law360 included interesting insight:
Robert W. Hillman, a professor at UC Davis School of Law who is an expert on ethics issues arising from law firm breakups, said it’s very unusual for lawyers to remain affiliated with troubled firms like Pierce Bainbridge after they’ve departed.
“In the classic failed firm situation, the norm is for departing lawyers to work very hard for a clean and sharp break,” Hillman said. “In general, the legal profession is not really set up to deal with the idea of lawyers being members of more than one firm at a time.”
Other new firms which are home to former PB partners, named as defendants or proposed defendants in lawsuits by whistle blowing ex-partner Don Lewis, who has formed his own firm, include: Warren Terzian LLP as well as Bradford Edwards and Varlack LLP (according to Bradford’s LinkedIn); in addition, Jonathan Sorkowitz and Michael Pomerantz appear to have started their own firms. The other two departed name partners are Carolynn K. Beck, now with Goldstein & McClintock, and Maxim Price, also at Hecht Partners.
As for these new firms, questions will presumably continue about the nature of their relationships with Pierce Bainbridge. For example, Warren Terzian has joined Pierce Bainbridge as counsel in a matter pending in New York State Court.
Also, as reported by Law360, Hecht Partners described itself in a court filing as the “successor to Pierce Bainbridge Beck Price & Hecht LLP” for that matter. Law360 also noted “Pierce Bainbridge firm has not yet been dissolved.”
PB’s Rapid Splintering
The rapid splintering of PB has led to some interesting legal representation activity, as the Los Angeles-based firm appears short-handed on the East Coast.
In the New York case that Warren Terzian joined, John M. Pierce filed to be admitted “pro hac vice” – which permits an out-of-state lawyer to practice in a local jurisdiction for a particular case only – a necessary application because Pierce’s bar status in New York is “Resigned.” A scathing opposition was filed, and the next day Pierce Bainbridge withdrew the Pierce request and claimed: “To be clear, Plaintiffs withdraw the [PHV] Motion not because of the Defendants’ opposition, but because the Motion is moot.” Warren Terzian appeared thereafter.
Yet another pro hac application was recently filed on behalf of Pierce in the Court of Chancery in Delaware. The one-page submission by Tye C. Bell of Manning Gross & Massenburg LLP represents: “The applicant [John M. Pierce] is admitted, practicing, and in good standing in the State of New York.” This appears to conflict with Pierce’s bar status being listed as “Resigned” on the NYCourts.gov website.
Law Firm Financial Issues
The financial issues facing Pierce Bainbridge are substantial; Pierce Bainbridge now has a reported $70 million debt, $65 million of which is owed to Virage Capital Management. Interestingly, Lewis suggested in a recent sworn court filing that he has reason to believe that Virage Capital may be paying PB’s legal bills in connection with his lawsuits; the benefactor of any such payments would be Cohen Seglias, the law firm the stepped in after Marc Mukasey of Mukasey Frenchmen & Sklaroff withdrew citing ethical concerns with continued representation.
In addition, just one month before Bainbridge APC and Hecht Partners made their respective March 20 filings, Pierce Bainbridge founder John Pierce reportedly entered into a $2.5 million “merchant cash advance” agreement with Karish Kapital.
To add to the debt pile, last week, a transcription service provider – Transperfect Legal Solutions – filed a summons saying Pierce Bainbridge has reneged on an approximately $150,000 payment obligation.
The unfolding events surrounding the disintegration of Pierce Bainbridge and the spawning of multitude of splinter firms will continue to excite the interest of Pierce Bainbridge creditors and prospective creditors looking to be made whole.
The break-up a law firm is usually not pretty, and it is presumably exacerbated when that firm, the same law firm hired by Rudy Giuliani, has a $70 million reported debt and is involved in several legal actions alleging financial misdeeds among other claims.
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