Tuesday, September 30, 2014
Questions arise over strategy carried out by Argentine lawyers
Carmine Bocuzzi of the firm Cleary Gottlieb leaves the Court yesterday after the hearing.
‘Often, when Cleary loses, it wins,’ says The Economist
As the years have passed in the country’s long-term legal battle with the holdouts, the negative results in the numerous hearings with Argentina’s lawyers at Cleary Gottlieb Steen & Hamilton have continued to clock up. Nevertheless, the firm has never been questioned nor the obtained large profits in the legal process, The Economist warned in an article.
“Often, when Cleary loses it wins. If Argentina or Russia had been victorious in their recent cases, legal work for them would probably have fallen off. Instead, their defeats pave the way for years of enforcement battles, and thus lots of juicy fees for its lawyers,” the British magazine said in a report.
Cleary’s lawyer Carmine Boccuzzi attended yesterday’s hearing with New York Judge Thomas Griesa representing Argentina and argued a contempt order was premature. Journalists covering the hearing described his arguments as “weak” and said he was “nervous,” completely the opposite to NML lawyer Robert Cohen’s performance.
“Bocuzzi’s allegations were really weak. He seemed nervous and his face was all red. Compared to Cohen, he didn’t entice Griesa. He should have been more fierce,” Silvina Sterin Pencel, a journalist from Grupo Clarín, said yesterday.
Since 1983, the law firm has advised 28 sovereign debtors in 54 restructurings. Some of its recent clients include Greece, Iraq and South Korea. Cleary’s lawyers have gained both fame and fortune as a result: a survey of 17,000 lawyers by Vault, a jobs site, ranked it the US’s seventh most prestigious firm. Its profit per partner of US$2.9 million last year ranks it 12th, according to American Lawyer magazine.
The Economist said the firm “had a year to forget” and mentions several cases which were lost by the firm’s lawyers. In July arbitrators at The Hague ruled that Russia had illegally expropriated Yukos, a big oil company and ordered the government, represented by Cleary, to pay shareholders US$50 billion.
Cleary also represented Google in a failed effort to prevent the “right to be forgotten” being established in Europe, forcing the company to block some search results. Press reports have identified Cleary as one of the firms said to have given advice to BNP Paribas, a French bank, on transactions with Iran, Sudan and Cuba, over which BNP later had to pay a US$9-billion settlement.
In any other industry, such a string of losses would send customers scurrying. Nevertheless, that’s not the case for law firms, the Economist said.
“In Argentina opposition lawmakers have proposed a bill to make the government switch firms. However, the relationship between a law firm’s income and its success in court is murky. Clients know that in a high-stakes suit, they and their opponents will both hire skilled and costly counsel, and one side will lose. Unlike in college debating contests, real-world results depend mainly on the merits rather than the ingenuity of the arguments,” the magazine said.
The Economist also warns the barriers to entry in sovereign-debt litigation are formidable since “most diversified law firms are wary of advising governments and that would prevent them from working for the hedge funds which often sue sovereign issuers for payment.” About half of Cleary’s 1,200 lawyers work outside the US, spread among 11 countries.