Legal News

Antitrust Suit Plaguing Big Private Equity, Lining BigLaw Pockets

By Ashby Jones

You can take the Law Blogger out of the law group, but you can’t take the law out of the Law Blogger.

Let us explain: Peter Lattman left his post as the writer of this blog some two years ago for the greener pastures of the private-equity world. Nevertheless, his very nice story today confirms to us that he’s still got a big place in his heart for BigLaw and its denizens.

Lattman, at the end of his story on the big class action suit that’s dogged big private equity for two years, mentions the firms handling the work for the PE firms, and serves up a great nugget from the plaintiffs’ lawyer on the case:

Each defendant is represented by a different law firm. All told, there are more than 50 lawyers from prominent firms such as Sullivan & Cromwell and Kirkland & Ellis working on the case. Several defense lawyers involved in the case estimate total billable hours thus far are well into the tens of millions of dollars.

“The big law firms like us because we’ve kept them busy during the downturn,” said K. Craig Wildfang, a lawyer at Robins, Kaplan, Miller & Ciresi in Minneapolis, one of the lead attorneys in the case. “And we’ve still got a ways to go.”

Of course, Wildfang’s quote hints at a little truth: BigLaw loves to trash the plaintiffs’ bar, but of course it’s largely the plaintiffs’ bar that, at the end of the day, is responsible for BigLaw partners’ handsome draws.

And Lattman’s story? It chronicles the case filed two years ago against 11 of the world’s largest PE shops, alleging that the group colluded in a “collaborative, collectivist scheme” to carve up the market for huge acquisitions. The case, fundamentally an antitrust suit, was brought by former shareholders of the acquisition targets.

About the suit, launched in Massachusetts federal court, Lattman writes:

[P]rivately the buyout executives say [the suit] become a huge hassle, forcing the firms to turn over millions of pages of documents and emails. Dozens of the industry’s most prominent executives, including those from Bain Capital and TPG, are giving depositions-some for as long as seven hours. Plaintiffs’ lawyers have taken more than 30 depositions over the past 10 months, including that of Rich Friedman, the head of Goldman Sachs Group Inc.’s private-equity business. Roughly 40 more depositions are set to be taken, including those of Alex Navab, the co-head of North American buyouts at Kohlberg Kravis Roberts & Co. and Blackstone Group boss Stephen Schwarzman, whose deposition was scheduled for last month but was canceled because of a snowstorm.

That’s right fellas — lawsuits ain’t a lotta fun.

Blackstone and KKR, whose shares are traded publicly, have said in securities filings that the lawsuit is without merit. Representatives for the other nine private-equity firms-Bain Capital, Carlyle Group, J.P. Morgan Partners LLC, Providence Equity Partners, Warburg Pincus, Thomas H. Lee Partners, TPG, Permira and Silver Lake Partners-declined to comment.

The lawsuit followed a Justice Department investigation into possible anticompetitive behavior related to the clubs launched in 2006. Lattman reports that investigation continues, according to people familiar with the probe.

Photo: iStockPhoto

Full post as published by Law Blog - WSJ.com on March 09, 2010 (boomark / email).