Dan Garner – Lawfuel.com was the first legal publication to raise concerns about the finances at Pierce, Bainbridge, Beck, Price & Hecht LLP, the law firm Rudy Giuliani hired in November for his issues with Ukraine.
We first raised issues in August, and then in September we noted: “Pierce Bainbridge’s securing several loans since their March over $9.1 million default to Pravati firm – had certain of our readers opine – that the firm may be engaged in the at-times maligned practice of “loan stacking.” Recent court filings from the firm’s next litigation funder Virage Capital Management has essentially confirmed this.
Giuliani announced that he hired Pierce Bainbridge by tweet on November 6, 2019. According to recently filed court papers, Virage Capital signed an agreement with Pierce Bainbridge just over a week later, on November 14, 2019 to provide funding.
Around six months later, Law360 reported that Pierce Bainbridge had undergone a “dramatic disintegration,” and also reported that the firm owes $65 million to Virage Capital.
The Virage court papers also allege that Pierce Bainbridge double, and then triple, pledged the same collateral to other lenders which the firm used to obtain tens of millions of dollars from Virage. At least four lending entities have come forward to assert legal claims against Pierce Bainbridge for monies allegedly owed under lending agreements.
An interesting wrinkle is contained in a letter recently filed by an attorney for Virage Capital in New York. The letter was submitted in an effort to thwart another lender’s, Slate Advance LLC’s, efforts to temporarily freeze the bank accounts of Pierce Bainbridge, and related entities Pierce Burns and John Mark Pierce Enterprises.
The same letter provides details concerning the collateral that firm pledged to Virage; and states it includes: “all legal matters (whether filed or unfiled) in the Borrower or any Guarantor currently or later acquires a legal interest, regardless of the basis of which the fees are payable in connection therewith (including on a contingency, fixed, hourly and/or other fee basis.”
The all-encompassing nature of this collateral leads to questions about cases that may have left Pierce Bainbridge with partners who went to law firms such as Withers Bergman, BraunHagey & Borden, Hecht Partners, Warren Terzian, Bradford Edwards & Varlack, among potentially others.
Indeed, Law360 reported on Virage Capital sending communications to certain Pierce Bainbridge departed partners about Virage’s alleged rights to cases that were previously at the firm.
According to Law360, the departed Pierce Bainbridge lawyers “reactions ranged from incredulousness to outright fury when they realized the lender was asserting it holds a lien on their cases — despite the fact that they’ve left Pierce Bainbridge and neither they nor their clients ever agreed to those liens”
It is a developing situation, involving tens of millions of dollars, a law firm that represented clients with checkered history, including Lenny Dykstra who years before hiring Pierce Bainbridge plead guilty to money laundering, Michael Avenatti who was arrested on charges including money laundering in January of this year, and a Russian Oligarch, Sergey Grishin, who has apparently boasted about his own purported money laundering exploits.
It appears that wherever Rudy Giuliani goes controversy follows. The law firm of Pierce Bainbridge Beck Price & Hecht appears not to have been an exception.
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