law infomation

Amid the merger fervor gripping the struggling airline industry, at least one deal won't happen: the much-talked-about $6.4 billion merger between British Airways and Qantas Airways Ltd. is off, apparently derailed by questions of ownership structure and other complications, according to Bloomberg and a joint statement.

On the bright side, it's not like BA's outside counsel at Sullivan & Cromwell and Slaughter and May are going to be struggling to find deal work. The British carrier, valued at $3.1 billion, is still pursuing a merger with the Spanish carrier Iberia and a possible three-way joint venture with Iberia and American Airlines to split up flights between Europe and North America.

But the BA-Qantas deal is dead, in part because Qantas wanted at least a 50 percent stake in BA but could not give BA more than a 49 percent stake in Qantas. Relinquishing more than that to BA would cost Qantas its "national carrier" status in its homeland.

The airlines had discussed solving these problems with a complex arrangement involving a single carrier dual-listed in the U.K. and Australia with two separate boards but only one board of directors. That solution apparently failed to sway anyone, reopening the door for Iberia, which has been discussing a possible merger with BA since well before Qantas emerged as a suitor.

Allen & Overy is lead M&A counsel for Iberia in that deal and the three-airline joint venture; Steptoe & Johnson is handling antitrust work for the Spanish airline.

As we've written before, American Airlines is relying on in-house counsel with help from Morrison & Foerster's Roger Fones (who previously spent 30 years as an antitrust lawyer for the Justice Department) and Jones Day's Bernard Amory (who's done antitrust work for the EU).

So what happens to the lawyers Qantas retained at Skadden, Arps, Slate, Meagher & Flom, SJ Berwin and the Aussie giant Allens Arthur Robinson? Well, as this New York Times DealBook item reports, Qantas has said it is interested in joining forces with an Asian airline and has had discussions in the past with Singapore Airlines and Malaysian Airlines. So those law firms will probably remain hard at work for Qantas -- especially considering that every airline seems to want to merge with someone. As we reported earlier this month, Lufthansa has signed on to buy Austrian Airlines, and DealBook reminds us a number of airlines are competing to takeover the bankrupt Italian airliner Alitalia.

Francis Aquila is leading the S&C team advising British Airways on its pending merger talks. Stephen Cooke, head of Slaughter's M&A group, is leading the the firm's team advising BA on European matters along with partners David Wittmann and Bernard Louveaux.

A Chinese court has declared bankrupt the company at the center of a scandal over tainted milk -- blamed for killing six children and sickening almost 300,000 more, one of the company's owners said Wednesday.

New Zealand's Fonterra Group said that a court in Shijiazhuang, in China's Hebei province, had issued a bankruptcy order against Sanlu Group Co. in response to a petition from a creditor.

"Sanlu will now be managed by a court-appointed receiver who will assume responsibility for an orderly sale of the company's assets and payment of creditors," Fonterra chief executive Andrew Ferrier said in a statement.

Sanlu was one of 22 Chinese dairy companies whose products were found to contain high levels of the industrial chemical melamine, leading to the deaths of six babies and causing 294,000 others to suffer urinary problems.

Fonterra, a New Zealand farmer-owned cooperative, owns 43 percent of Sanlu.

At least a dozen individual lawsuits have been filed against state-owned Sanlu, but they are in legal limbo because the courts have neither accepted nor refused the cases -- a sign of the scandal's political sensitivity.

The scandal has been met with public anger in China, particularly among parents whose children were sickened from drinking infant formula authorities had certified as safe.

The government has promised free medical treatment to those children, plus unspecified compensation to them and families of the dead.

The Health Ministry said earlier this month that some Chinese dairy companies would likely have to pay for a compensation plan, the details of which have not been released.

"By now, it has been made clear how much Sanlu owes the distributors and creditors, but not the victims' families," Beijing-based lawyer Xu Zhiyong, who represents dozens of families with sickened children, said in a telephone interview.

"In theory, those who were physically harmed should get compensation first," Xu said. "But our concern right now is that ... the creditor bank or banks will collude with the local government to make Sanlu's assets go to compensating themselves first."

Fonterra was responsible for alerting Chinese authorities to the tainted milk scandal in August, and by late September had slashed the value of its investment in the Chinese dairy group by $139 million to an estimated $62 million.

Ferrier said Wednesday that Fonterra had since "elected to write down the full value of our investment in Sanlu."

The receiver would have six months to conclude the sale process, he said.

"This bankruptcy order is not a surprise to us," Ferrier said. "We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis."

Fonterra Chairman Henry van der Heyden said the melamine contamination was "a criminal event," but that Fonterra remained "committed to China."

No Fonterra staff should expect repercussions from the bankruptcy proceedings, he said.

Fonterra, which controls more than 95 percent of New Zealand's milk supply, is the country's largest multinational business, its second-biggest foreign currency earner and accounts for more than 24 percent of the nation's exports.

Associated Press Writer Gillian Wong contributed to this report from Beijing.

Copyright 2008 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

government-ordered inquiry into the bungled case of an Indian doctor wrongly linked to attack plots in Britain last year has recommended tougher oversight of Australia's anti-terrorism laws.

In its 310-page report released Tuesday, the inquiry found the Australian Federal Police had no intelligence to justify the arrest of Mohamad Haneef, who became a test case for tough counterterrorism laws introduced after the Sept. 11 attacks.

Haneef, 29, was working in Queensland state as a doctor when he was arrested by federal police as he tried to board a one-way flight to India. The arrest came days after one of his cousins allegedly drove an explosive-laden SUV into Scotland's Glasgow airport in a suspected terrorist attack.

Police said they thought it was suspicious that Haneef had bought a one-way ticket. Haneef told police he was rushing to see his sick newborn daughter in Bangalore and planned to return.

He was held without charge for 12 days under anti-terror laws before being charged with providing support to a terrorist organization. The charges were later dropped, but his visa was still revoked.

Haneef's ordeal triggered a political storm about whether the former conservative government and the federal police were deliberately fueling terrorism fears.

"I could find no evidence that he was associated with or had foreknowledge of the terrorist events," former New South Wales state Supreme Court judge John Clarke wrote in the report released Tuesday.

The terrorism charge was based on Haneef giving his cell phone SIM card to his cousin Sabeel Ahmed, one of the men accused in the attempted bomb attacks. The charge was dropped when it was revealed that Haneef's SIM card had not been found in the Glasgow attack vehicle, as a prosecutor had claimed.

But with elections looming, then-Immigration Minister Kevin Andrews revoked Haneef's visa saying he was not of good character. Critics said Andrews was making Haneef a scapegoat to burnish the government's security credentials.

The court eventually ruled Haneef's visa should be reinstated. After winning the election, new Prime Minister Kevin Rudd's government ordered Clarke's inquiry.

In the report, Clarke said while Andrews was entitled to revoke Clarke's visa, his decision to do so was "mystifying."

Andrews on Tuesday defended his actions, saying Australians expected him to act in the case.

Clarke recommended Australia's anti-terrorism laws be independently reviewed and that a case management system for major police investigations be developed.

Attorney General Robert McClelland said the government would adopt all of the report's recommendations.

"Clearly there were errors made at a number of levels -- including at the highest level," McClelland told reporters in Sydney.

In a conference call from the United Arab Emirates, where he now lives, Haneef told reporters he was pleased with the findings.

"It is a very clear finding that I am totally innocent of the matters alleged against me last year," said Haneef, who is considering pursuing compensation from the government.

The federal police welcomed the findings, but defended its officers in a statement saying their actions were taken in "good faith and in the best interests of public safety given the circumstances at the time."

The inquiry cleared Australia's previous conservative government of any wrongdoing and concluded there was no political motivation behind Haneef's arrest.

Peter Russo, one of Haneef's lawyers, said he was troubled the inquiry didn't assign accountability for the bungled investigation. "I'm a bit cynical about the interaction between the different agencies and the politicians," Russo said.

Stephenson Harwood has bolstered its Asian practice with the hire of insurance specialist Steven Dewhurst to the firm's Singapore office.

Dewhurst joins the firm as a partner from DLA Piper in Hong Kong, where he was a partner for three years. Prior to that he was part of CMS Cameron McKenna's Hong Kong office.

Dewhurst has worked in the Hong Kong insurance market for eight years, focusing on policy coverage, regulatory and compliance work. He also has litigation and dispute resolution experience.

His hire brings Stephenson Harwood's total number of partners in Singapore to eight.

"Steven's appointment marks a real coup for us," commented Singapore managing partner Martin Green.

He added: "He has a strong track record in the insurance market and straddles contentious and non-contentious work. His appointment will further enhance our offering to clients and will attract a lot of business from insurance and reinsurance clients who are flocking to Singapore."

Last year the top 40 U.K. firm boosted its admiralty practice in Singapore with the September hire of specialist Timothy Elsworth.

Elsworth, a former deck officer, joined the firm as a partner from Australian practice Ebsworth & Ebsworth, where he was a partner for nine years.

Over 20 percent of Stephenson Harwood's headcount is located in Asia, with the firm planning to continue its expansion in Singapore throughout 2009.

It seems that the abrupt end of Ireland's decade-long economic boom is now squeezing the country's lawyers.

Last week one of the Emerald Isle's largest law firms, A&L Goodbody, announced that it was seeking to cut 45 jobs -- 20 from the firm's stable of solicitors and 25 from the support staff ranks. The rest of A&L Goodbody's 555 remaining employees would face a 10 percent pay cut this year.

"We are taking this action in order to balance the resources of the firm with current and anticipated demand for our services," an A&L Goodbody spokesman told the Irish Times. "We believe that our actions are a prudent, balanced, and measured response to an adverse market and are strategically necessary to be in a stronger position when the recovery occurs."

Since many Irish firms had practice groups that were dependent on a runaway real estate sector, many of those same firms were hit particularly hard when the Celtic Tiger ceased to roar and property values plummeted.

As in the U.S. and U.K., firms are flocking to increased opportunities for government and regulatory work. Arthur Cox, another of Ireland's leading law firms, recently secured a lead role advising on the nationalization of Dublin-based Anglo Irish Bank.

Arthur Cox continues to advise the Irish government on its state-funded bank capitalization program, which is in the process of injecting more than $2 billion into two other leading Irish lenders: Bank of Ireland and Allied Irish Banks.

With the Irish economy having slowed to a crawl, The Australian reports that Irish lawyers are looking Down Under for legal opportunities.

The paper reports that since late last year, Aussie legal recruiters "have been inundated with applications from Irish lawyers, as well as Australian-trained lawyers currently working in Dublin."

Those looking for work come from all practice areas, not just real estate.

The Australian quotes one Irish lawyer who left the Dublin office of top Irish firm Matheson Ormsby Prentice for the Melbourne office of Australian giant Mallesons Stephen Jaques partly because of deteriorating economic conditions.

"Quite a few of my friends [in Dublin] have been made redundant and some of them have taken quite serious pay cuts," says the lawyer, adding that more and more Irish lawyers are looking to Australia as a viable career option. "Traditionally, it would have been London or New York but they're gone, so we're looking at other English-speaking common law jurisdictions."

But U.S. lawyers thinking of doing the same should know that the Land of Oz isn't a panacea, even if some of their Irish brethren have found it a lucky locale.

While Australian firms haven't been as adversely affected as their Anglo-Irish counterparts, some firms have been making cutbacks. The Australian reported in January that Big Six firm Blake Dawson made four property lawyers redundant, citing weakening economic conditions. (Several Canadian firms have also made staff cuts.)

Three other Big Six firms contacted by The Australian -- Allens Arthur Robinson, Clayton Utz, and Minter Ellison -- said they were holding the line on hiring but avoiding large-scale layoffs. Some firms are even pursuing strategic hires of talented Aussie lawyers returning to the Land of Oz after they were the victim of cutbacks abroad.

LawFuel, a legal publication in neighboring New Zealand, reports that increasing numbers of Kiwi lawyers are forgoing their "Big OE" or "overseas experience" in places like London, New York, and Dubai because of diminished job prospects.



The one bright light seems to be from U.S., U.K. and Australian firms seeking to staff new offices that they open in China.

"There is hope," one recruiter told LawFuel. "But lawyers have to be more prepared than ever to sharpen their CVs and work in places that may not have been number one on their prospect list just a few months ago."

The United Kingdom and Australia may change the way they regulate the legal profession, and those changes could affect how lawyers are regulated here, says Theodore Schneyer, a law professor at the University of Arizona.

In a lecture at the Georgetown University Law Center Monday, Schneyer discussed measures in the U.K. and Australia designed to streamline regulation of the legal profession in the two countries.

The problem with the changes being made to the regulatory measures in those two countries is that they may conflict with rules adopted by states in the U.S.

Schneyer says one change in particular may pose a problem for firms that have offices in both the U.K. and the U.S. The U.K. allows non-lawyers, such as accountants, patent advisers and other professionals, to be admitted into the partnership. "That's great for clients because they can have a one-stop-shop law firm," Schneyer says. "The only trouble is that most U.S. firms can't do that."

In the U.S., Schneyer says, individual states adopt versions of the American Bar Association's Rules of Professional Conduct. One rule in particular prohibits firms from allowing non-lawyers into the partnership. D.C. is one of the few exceptions.

For firms that have offices in both the U.K. and the U.S., Schneyer says, that could mean individual lawyers in U.S. could be slapped with disciplinary actions by their respective state regulators.

"We should be thinking hard about the implications that these changes might have," Schneyer says.

There are several options regulators could take to address the discrepancy between U.K. and U.S. regulations, Schneyer says. One would be to change the rules state by state. But Schneyer says he could see another possibility happening first.

"There's the potential that large law firms might band together to try and have Congress pass a law that would preempt the state rules," Schneyer says.

Or regulators could simply choose to turn a blind eye to the conflict, which Schneyer says might create problems of its own.

"Sure, there are a lot of Mickey Mouse rules on the books that probably shouldn't be there," he says. "But from a public relations standpoint, it's not a very good thing for the legal profession to look like it accepts a bunch of scofflaws."

Pattie Walsh, the former head of employment for the Greater China region at Australia's Minter Ellison, will join DLA Piper in August to head the firm's Asia employment practice.

Joining Walsh from Minter Ellison is associate Alison Smith.

DLA Piper has 250 lawyers who practice employment law. Nine core employment lawyers are in Asia, primarily in Hong Kong, Shanghai, Singapore and Tokyo, said David Bradley, joint global leader of DLA Piper's Employment, Pensions and Benefits group, and a partner in London. Another 10 handle some portion of employment matters, he said.

"The steps we're taking are to further consolidate the core practice," he said.

He said that he anticipated a growth in employment work, given the increase in multinational companies in Asia whose policy changes affect employees in that region. The 2007 enactment of China's Labor Contract Law, which was designed to increase benefits for employees, is creating additional work, he said.

Walsh, who will be based in Hong Kong, has represented companies throughout Asia, particularly in Hong Kong and China, in employment matters such as the protection of confidential information and intellectual property rights and the management of misconduct, legal risks and compliance issues. In her new role at DLA Piper, Walsh will focus on staffing issues associated with mergers and acquisitions, reorganizations and outsourcing in Asia.

Walsh and Smith have worked with telecommunications companies, luxury goods firms and global investment banks.

What do you do when you've got a U.S. company that wants to buy a foreign company, but most of the foreign company's shareholders are American and get a better bargain if they get paid in dollars?

Incorporate the foreign company in America, list it on the Nasdaq, and then sell it.

Dizzy? That's how Latham & Watkins partner Tad Freese felt when he first came on board a deal worth $282 million between Pleasanton, Calif.-based medical device maker Thoratec Corp. and Australia-based HeartWare International Inc., which manufactures miniature heart pumps.

The most challenging part was "just figuring it all out," Freese said. "There have not been a lot of deals where a U.S. company buys an Australian company, both public, for part cash and part stock," said Freese, who is based in Silicon Valley and led the deal with Orange County-based partner Charles Ruck.

"It's pretty unusual to have a foreign company agree to sell itself and then to list on a new stock exchange, in this case the Nasdaq. This is a one-time thing," Freese said.

Thoratec agreed Feb. 13 to buy HeartWare for 50 percent cash and 50 percent Thoratec common stock, which closed at $25.08 on Tuesday. All U.S. shareholders will get paid in U.S. dollars, while Australian shareholders will receive Australian dollars.

"Precise to the deal was the fact that many of the stockholders are American entities and so would prefer to be paid in U.S. dollars. In order to eliminate Australian dollar exchange rate risk for those stockholders, we had HeartWare list on Nasdaq as well," Freese said.

HeartWare incorporated in Delaware and listed on the Nasdaq late last year. Its listing disappears after the merger.

Under the merger agreement, each share of HeartWare common stock (representing 35 Australian CHESS depository interests) will be converted into the right to receive $14.30 in cash and 0.6054 of a share of Thoratec common stock, reflecting a current per share price of approximately $30.19 for each share of HeartWare common stock. Prior to the closing of the transaction, the CDIs will be converted into the underlying shares of common stock of HeartWare. In addition, Thoratec will provide HeartWare a line of credit of up to $28 million to fund ongoing operations until the closing.

The transaction is expected to close in the second half of 2009, pending approval by Thoratec shareholders and other conditions.

While international deals with the specific challenges of this one are rare, mergers and acquisitions in general are increasingly global, Freese said.

"Ten years ago, I spent a lot of my time helping Silicon Valley companies buy Silicon Valley companies," Freese said. "Today, even if it is a Silicon Valley company buying a Silicon Valley company, it involves some global aspect, a lot more than it used to. They may have operations in China, Europe, Australia."

Also helping on the deal were Latham & Watkins partner Michael Treska and associates David Buchanan, Timothy Andrews and Jason Bosworth in Orange County; associates Joshua Dubofsky, Kathleen Wells and Edward Locke in Silicon Valley; and associates Wenchi Liu and Laura Boysen Aragon in San Francisco. Advice also was provided by benefits and compensation partner Joseph Yaffe and associate Alice Chung, as well as intellectual property partners Peter Chen and J.D. Marple, in Silicon Valley; and by tax partner Kirt Switzer and associate Grace Chen, as well as antitrust partner Hanno Kaiser, in San Francisco.

Shearman & Sterling New York partners Clare O'Brien and Robert Katz led the deal for HeartWare International.

From the U.S. to the U.K., from Canada to the tiny island nation of Jamaica, law firm layoffs seem to be a global phenomenon. Australia's relatively remote location hasn't spared its law firms from the economic squeeze, reports Australasian Legal Business.

Salary freezes, layoffs and deferrals have picked up in recent months, ALB reports, and the scourge has spread to some of Australia's most prominent firms.

Among the larger Aussie firms enacting cuts:

-- Minter Ellison said that "softening" demand for legal services was behind its decision to let go of 35 staff members -- 11 lawyers and 24 support staff.

-- Blake Dawson terminated 89 employees -- 23 lawyers and 66 support staff -- after its March review of business.

-- DLA Phillips Fox, an affiliate of DLA Piper, cut 12 lawyers from its offices in Australia and New Zealand.

-- One of Australia's largest firms, Allens Arthur Robinson, announced a firmwide salary freeze in light of a "shrinking Australian legal market."

-- Corrs Chambers Westgarth has delayed the start date for its 2009 recruits from February to April and paid graduates roughly $1,740 each in compensation. (All dollar totals have been converted to U.S. dollars.)

Click here for a nifty ALB layoff chart detailing all the cutbacks by firms down under.

ALB reports that in addition to layoffs, many firms in Australia are enacting other cost-cutting measures, including subletting office space to reduce rent obligations and crafting flexible work arrangements with employees.

And what of the lawyers already let go? Many Aussie lawyers are pursuing solo practices or in-house jobs, ALB reports -- a phenomenon we've seen here in the U.S. Still, landing a new job or finding work is easier said than done. "[Some] companies are not looking to employ, but get people in with contracts to assist," Ken Jagger of Aussie recruiting firm Balance Legal told ALB.

See if your law firm is on The Layoff List.

The start of hurricane season is a bitter reminder for residents of a number of South Florida condominium towers that they are still battling insurance giant QBE in federal court in what seems like a never-ending effort to get the Australian company to pay for damages wrought by Wilma in 2005.

Sydney-based QBE is one of the largest insurance carriers in the world and the top private insurance carrier in Florida for condo associations, insuring nearly $20 billion in property.

"We are 3½ years out from the storm, and a lot of communities are still dealing with the problems of both trying to rebuild and collect," said Daniel S. Rosenbaum, a partner with Katzman Garfinkel Rosenbaum in West Palm Beach, Fla.

Hurricane Wilma was the most intense storm ever recorded in the Atlantic basin, causing more than $20 billion in damage in the United States. The October 2005 hurricane swept east from the Gulf of Mexico, over the Everglades and across South Florida and was particularly rough on older condo complexes.

While some condo associations have begrudgingly settled with QBE, Rosenbaum has not been afraid to take insurance giant QBE to trial for clients with damage in the millions of dollars.

QBE has tapped some heavy hitters to fight its legal battles in South Florida, including Raoul Cantero, a former Florida Supreme Court justice now with White & Case in Miami, and Rodolfo Sorondo, a former 3rd District Court of Appeal judge now with Holland & Knight in Miami.

"They are muscling up," Rosenbaum said. "From a legal point of view they are being smart. The idea they have is to get better and better legal talent and try to outgun the plaintiff's attorneys."

He said he typically goes up against four or five firms representing QBE. "It's a David vs. Goliath situation."

Cantero did not return phone calls for comment, and Sorondo referred questions to William Berk, lead trial counsel for QBE in the South Florida cases. He is with Berk, Merchant & Sims in Coral Gables, Fla., and said QBE does not comment on pending litigation.

QBE's Florida legal team laid out its arguments in a 2007 interview with the Daily Business Review, saying many of condo association claims were fraudulent, "inflated, exaggerated and unfounded."

Attorneys for the associations say QBE hopes to force their clients into unfair settlements to avoid court costs.

"They are willing to heavily lawyer up and spend millions and millions of dollars to fight," Rosenbaum said. "That is a business decision they make. They always say the chickens come home to roost in the federal system."

Once a verdict on storm damage against QBE is upheld, Rosenbaum can file a new bad faith lawsuit against the company that potentially exposes it to treble damages.