16 October 2016
At the end of George W. Bush’s presidential administration, it was clear: National security law practices, formed in the wake of Sept. 11 at the major regulatory firms in town, were here to stay.
Now with the end of the Obama administration nearing, some lawyers who worked in the administration are climbing to success in a growing bevy of private-practice areas.
Below, we look at four practices—from tech sophisticates, to financial regulation experts, to fraud specialists, to third-party settlement appointees—that have gained steam during Barack Obama’s presidency.
Ask any general counsel. Cybersecurity is keeping them up at night. Responses to data breaches and litigation aren’t law firms’ only service for clients anymore. Policies materialized that caused compliance and legislative work to grow during the Obama administration with guidelines such as the Cybersecurity Information Sharing Act, the National Institute of Standards and Technology’s cybersecurity framework and the U.S. Congress’ focus on hacks, leaks and the internet.
“This administration has been both tech savvy and in touch with the technology community in all its facets,” said Rajesh De, a partner at Mayer Brown and the National Security Agency’s general counsel from 2012 to 2015. “Every person coming out now [from the government] touts themselves as a cyber person.”
That doesn’t mean all are, though. Several exiting Obama administration lawyers noted their expertise in cybersecurity when they joined law firms, yet many still find most of their work in more traditional internal investigations and white-collar defense.
“I think cyber practices are growing and are really on the cusp of being significant practices at firms,” De said. “But it’s hard, until you get into a firm, to entirely appreciate what clients need.”
Former Federal Bureau of Investigation director Robert Mueller III was able to fit into the established national security practice at Wilmer Cutler Pickering Hale and Dorr when he left the government in 2013 after 12 years. So has Stephen Preston, the former U.S. Department of Defense and Central Intelligence Agency general counsel who chairs Wilmer’s hybrid defense, national security and government-contracts practice. Preston served in the Obama administration from 2009 to 2013.
“It’s not like any of these firms are discovering something new,” Jamie Gorelick, chair of Wilmer’s regulatory and government-affairs department, said about cybersecurity practices. “It’s more about refreshing your understanding of what is concerning [clients] and how best to address it. That is a slightly different focus.”
The Wall Street Journal four years ago dubbed the modern U.S. Justice Department ”FCPA Inc.” The practice of inspiring companies’ internal fraud investigations prompted multimillion-dollar clients for corporate defense lawyers in Washington throughout the Obama years. The Foreign Corrupt Practices Act had gathered dust in prosecutors’ toolkits since 1977, until lawyers in DOJ’s Criminal Division in the latter years of the George W. Bush administration revived it and Obama’s lawyers carried it on.
Siemens A.G., an early target of a modern FCPA probe, agreed to pay a record $1.6 billion for both Justice and Securities and Exchange Commission bribery violations one month before Barack Obama took office.
Since then, FCPA has become the white-collar knight for both Main Justice and private law firms’ balance books.
“Almost every year, everybody seems to think, ‘This is it. This is going to plateau’; that there will be a dip or downward trajectory of enforcement,” said Charles Duross, a Morrison & Foerster partner who led FCPA enforcement efforts in the fraud section of Justice’s Criminal Division from 2010 to 2014. “But what surprised people is the staying power of DOJ’s and SEC’s efforts.”
Many of the Main Justice leaders who got the ball rolling on FCPA stayed for some of Obama’s first term. Now, they’re in private practice, consulting on the types of internal investigations of companies they used to demand.
Fraud section top alumni include Duross; Paul Pelletier, now at Pepper Hamilton; Steven Tyrrell, managing partner of Weil, Gotshal & Manges; Denis McInerney of Davis Polk & Wardwell; Jeffrey Knox of Simpson Thacher & Bartlett; and Mark Mendelsohn of Paul, Weiss, Rifkind, Wharton & Garrison.
Several former and current SEC lawyers focus on FCPA law, too.
While the number of FCPA enforcement actions taken by the Justice Department peaked in 2010, two years ago the approach hit a high-water mark in dollars, with $1.5 billion in SEC and DOJ fines. White-collar lawyers expect FCPA enforcement to remain strong despite the drop in Main Justice cases last year.
Breuer and Raman, who both served as assistant AGs for the Criminal Division under former Obama Attorney General Eric Holder Jr., have joined Covington & Burling. Holder joined the firm, too, last year.
And the pipeline of FCPA lawyers remains strong. Caldwell announced last November that the fraud section’s FCPA unit would grow by 50 percent, with the addition of 10 new prosecutors.
The practice has also been a windfall for lawyers without the recent DOJ resume line. Joseph Warin, a Gibson, Dunn & Crutcher partner for 22 years, is regarded as having one of the largest FCPA practices in town.
Corporate monitorships have become some of the major sought-after job for law firms.
They last years, so it’s a significant business contract. They’re natural fits for people with former Justice Department experience, since they extend an agency’s authority over a company on compliance matters and settlements. And the private-practice lawyers who serve as monitors can revisit their heydays as prosecutors, instead of working as corporate cogs.
“The monitorship area has become a growth area,” said Thomas Perrelli, the associate attorney general from 2009 to 2012. “Five years ago it was not a practice. Now law firms, accounting firms and consulting firms compete” for monitorships.
Since returning to Jenner & Block as a partner, Perrelli snagged three monitorships, for Citigroup’s $2.5 billion settlement with the Department of Justice, for Bridgepoint Education Inc. and for Education Management Corp. on compliance. Another Jenner partner, Neil Barofsky, is the monitor over Credit Suisse Group A.G.’s $715 million settlement with New York authorities.
One monitorship in New Jersey almost 10 years ago—which was awarded to former Attorney General John Ashcroft and came under ethical scrutiny because of its selection process—was worth up to $52 million in business for the monitor’s firm.
Still, the monitorship practice fills a relatively small niche, part of any regulatory firm’s white-collar and government department approach. The work doesn’t arise nearly as often as deals and litigation.
Last month, when the Federal Trade Commission needed a corporate monitor to oversee Herbalife’s $200 million settlement, it bypassed 25 applications from firms including Jenner; Squire Patton Boggs; McGuireWoods; Crowell & Moring; Venable; and Kasowitz, Benson, Torres & Friedman (which proposed a $1,250 hourly billing rate for the services of its senior counsel, former Sen. Joe Lieberman).
The parties instead chose the consulting firm Affiliated Monitors Inc. as monitor.
It’s not a surprise the creation of a new agency, the Consumer Financial Protection Bureau in 2011, led to a new corporate law practice.
“Between the regulation and the litigation that comes out of unfair financial practices, it has become the largest component of the financial services regulatory practices in Washington,” said Stephen Nelson, managing principal of legal recruitment with the McCormick Group Inc., based in Northern Virginia.
Yet most of the top CFPB practitioners aren’t fresh from federal government. Many have worked at law firms for years. One of the biggest names from the CFPB, former acting deputy director Meredith Fuchs, chose Wall Street over private-practice law. She joined Capital One bank in February. Richard Cordray, the agency’s director, is serving a five-year term until 2018.
A few firms have relished the experience the Dodd-Frank-created agency lends its lawyers, and have hired alumni.
BuckleySandler, the Washington-based financial-services regulatory boutique, landed two lawyers, partner Benjamin Olson and counsel Kathleen Ryan, both a former deputy assistant director for the CFPB’s Office of Regulations.
Other lawyers exiting the agency might not command rainmaker status immediately. Because of the agency’s youth and mission to help consumers, it doesn’t anoint young lawyers’ resumes with the same immediate power as the U.S. Justice Department or U.S. Securities and Exchange Commission.
“The CFPB is still so new, so the jury’s still out,” said Andrew Sandler, chairman of BuckleySandler.
Reprinted with permission from the October 16, 2016 edition of The National Law Journal © 2016 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.