The hardship of pro bono clients, Steven Simkin edition

By Felix Salmon
May 31, 2011
Peter Lattman follows up today on the only-in-New-York story of Paul Weiss partner Steven Simkin, who wants to claw back money from his ex-wife on the grounds that he was invested with Bernie Madoff when they got divorced:

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Peter Lattman follows up today on the only-in-New-York story of Paul Weiss partner Steven Simkin, who wants to claw back money from his ex-wife on the grounds that he was invested with Bernie Madoff when they got divorced:

Mr. Simkin’s lawyers — his colleagues at Paul Weiss — described their partner in court papers as “gravely damaged” and suffering “extreme hardship” as a result of the Madoff fraud.

The annual profits per partner at Paul Weiss are about $3 million, according to The American Lawyer magazine. Last October, Mr. Simkin sold his Scarsdale home for $5.7 million and bought another in nearby Mamaroneck for $4.1 million, according to state real estate records. Paul Weiss, a law firm renowned for its litigation department, is representing Mr. Simkin free of charge.

There are two outrageous things going on here. First is the claim of “extreme hardship” — a claim that Paul Weiss is actually making with a straight face.

extreme.tiff

Does anybody at Paul Weiss have the slightest notion what “extreme hardship” actually is? Or any hardship at all, for that matter, beyond the hardship involved in drafting SEC shelf registrations at 3 am? Notably, the complaint in this case doesn’t actually give any concrete indication of what Simkin’s extreme hardship entails, probably because any such indication would be ludicrous on its face. (He had to give up his dreams of a third home in the Caribbean!)

More scandalous still, however, is the fact that Paul Weiss’s lawyers are working pro bono for their multi-millionaire colleague and client. The New York City Bar Association’s statement of pro bono principles, which is meant to be available here, seems to have disappeared from the web, but Noah Kazis summarized it when writing about Gibson Dunn in February. Pro bono clients should be confined to:

  • persons of limited means,
  • charitable, religious, civic, cultural, community, governmental and educational organizations committed to serving the needs of persons of limited means and/or in matters which are designed primarily to address the needs of persons of limited means,
  • individuals, groups or organizations seeking to secure or protect civil rights, civil liberties or public rights,
  • individuals, groups or organizations who have been harmed by a natural disaster or public emergency or who are providing assistance to persons harmed by a natural disaster or public emergency, and
  • charitable, religious, civic, cultural, community, governmental and educational organizations in matters in furtherance of their organizational purposes, where the payment of legal fees would significantly deplete the organization’s economic resources.”

It’s pretty obvious that Simkin doesn’t fall into any of these categories.

A few questions, then, for Paul Weiss: What are the grounds on which you decided to take on Simkin as a pro bono client? Do you represent all your partners for free when they get into litigation with their exes? Does the work you’re doing on the Simkin case count towards the total pro bono hours that you’re reporting to the New York City bar? And what, exactly, is the “extreme hardship” that Simkin is suffering?

I’ll be very impressed indeed if Paul Weiss even attempts to answer these questions. But given that they refused to comment to the New York Times, I’m not holding my breath.

6 comments

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“Do you represent all your partners for free when they get into litigation with their exes?”

I don’t know anything specifically about Paul Weiss, but it is actually pretty common for law firms to represent their partners without charge if they can conveniently do so. Law firms are, after all, owned by their partners, so it’s not like they are diverting profits from third party shareholders.

(Likewise, I would guess that architectural firms do home design work for their partners without charge, and that accounting firms do their partners’ tax returns without charge.)

“Does the work you’re doing on the Simkin case count towards the total pro bono hours that you’re reporting to the New York City bar?”

Again, I don’t know anything specifically about Paul Weiss, but I assume not. The Pro Bono Institute’s Law Firm Challenge has a standard definition of pro bono that focuses on representation of the indigent and entities that serve the indigent, and law firms generally use that standard or something similar when reporting their pro bono activity.

Posted by alkali | Report as abusive

alkali’s spot on for tradition: do the work for the partner, but don’t count it toward official reckoning of pro bono work. (Would not at all be surprised if such were a Contractual Obligation of the Firm to its partners.)

That said, arguing that asset values you accepted at time(0) have declined at time(1) is a question of investment, not divorce. This is not a case where expenses or lifestyles had to change; it’s a case where Simkin said, “Yes, honey, I’ll keep the Madoff investment, you get the home in Amagansett (or similar).”

The precedent of being able to renegotiate a divorce settlement because you’re an idiot as an investor is not one we should expect the courts to look on favorably.

Posted by klhoughton | Report as abusive

This might be a novel legal question: is an agreement reached voidable because the parties were defrauded by an outsider after the fact. There is no doubt an agreement was reached; they got divorced and the settlement was done. There was no fraud by either party. There was no misunderstanding by one party about what was agreed. The idea seems to be that one can treat the Madoff fraud as different from say a hurricane. To explain, let’s say you divide the property and one gets the beach house and then after the divorce a hurricane destroys the house. One can say one took on the risk, but is that enough of a difference to matter? What if there had never been hurricane damage there? What if it was a once in a million tsunami? What if a giant squid came out of the ocean and squashed the house with an arm? Is the unforseeability of Madoff’s fraud enough of a difference to allow reopening a closed case in which everyone would acknowledge an agreement was reached? I used “unforeseeable” because the law deals in what is and is not forseeable. I don’t see how one can reward a party for the unforeseeable.

Posted by jomiku | Report as abusive

Can’t/Won’t comment on the specifics, but simply as a point of information, asking the lawyers among FS’s readers….

Wouldn’t ANY profits from a Madoff investment be taken back by the trustee to be divided among the entire body of those who lost money (including the husband, and the wife’s proportion of the pre-divorce investment)? Quite apart from the divorce settlement?

Posted by jbernar | Report as abusive

Since Mr. Weiss is undergoing “extreme hardship”, then it is obvious that he would qualify for the pro bono guidelines.

After all, “limited means” is as undefined as “extreme hardship”. It is quite clear that Mr. Weiss could not make a buy out offer today for, say Berkshire Hathaway or Google, ergo he is clearly of limited means.

Posted by ErnieD | Report as abusive

It will be really shocking if the court does not summarily dismiss this suit. Typically courts treat contracts seriously, and are alive to attempts to utilize obscure logic such as the one in this suit in order to game a financial payday from a ruling. Maybe Simkin’s partners are just trying to make their dilapidated colleague feel better. But contracts don’t get all rubbery when one of the parties loses all his savings at a casino, even if that casino happened to rent a swanky office in the Lipstick building.

Posted by EricVincent | Report as abusive