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Musk's Voter Giveaway & Law Firm Bets on Lawsuits · Bloomberg Law

0:03
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
0:14
Speaker 2: Every day, every day from now until the election, we're
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Speaker 2: giving out a million dollar prize. That is, and all
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Speaker 2: you have to do is sign a petition in support
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Speaker 2: of a constitution. It's very straightforward. You don't even have
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Speaker 2: to vote. You don't have to vote. You just have
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Speaker 2: to sign a petition saying you believe in the Constitution,
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Speaker 2: which if you already believe in the Constitution, you're just
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Speaker 2: signing something you already believe and you can ruin a
0:38
Speaker 2: million dollars.
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Speaker 1: That's awesome, awesome, Maybe straightforward, not really. Elon Musk left
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Speaker 1: out that being registered to vote is a prerequisite to
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Speaker 1: being eligible for that million dollar check. The world's richest
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Speaker 1: man has already committed at least seventy million dollars to
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Speaker 1: help former President Donald Trump in the presidential election. Now,
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Speaker 1: Musk is pledging to give away one million dollars a
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Speaker 1: day to voters for signing his Political Action Committee's petition
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Speaker 1: supporting the First and Second Amendments registered voters in swing states.
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Speaker 1: That is, he's already given out two of those million
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Speaker 1: dollar checks in Pennsylvania and has plans to expand the
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Speaker 1: sweep stakes to registered voters in seven battleground states this week.
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Speaker 1: Pennsylvania Governor Josh Shapiro, a Democrat who previously served as
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Speaker 1: the Swing States Attorney General, said Sunday on NBC's Meet
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Speaker 1: the Press that law enforcement should look into Musk's giveaway.
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Speaker 3: I think there are real questions with how he is
1:43
Speaker 3: spending money in this race, how the dark money is
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Speaker 3: flowing not just into Pennsylvania, but apparently now into the
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Speaker 3: pockets of Pennsylvanians. That is deeply concerning. Look, Musk obviously
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Speaker 3: has a right to be able to express his use.
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Speaker 3: He's made it very very clear that he supports Donald Trump.
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Speaker 3: I don't obviously we have a difference of opinion. I
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Speaker 3: don't deny him that right. But when you start flowing
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Speaker 3: this kind of money into politics, I think it raises
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Speaker 3: serious questions that folks may want to take a look at.
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Speaker 1: Does musks give away violate the law or not? Well,
2:21
Speaker 1: it depends joining me is elections law expert Richard Brofald,
2:25
Speaker 1: a professor at Columbia Law School. Rich tell us about
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Speaker 1: Trump's giveaway.
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Speaker 4: So elon Musk is offering to pay people to get
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Speaker 4: other people who are registered to vote to sign a
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Speaker 4: petition supporting free speech and the right to bear arms.
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Speaker 4: So if you're able to get somebody to do that,
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Speaker 4: you will get forty seven dollars for referring a registered
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Speaker 4: voter to sign the petition. In addition, he's going to
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Speaker 4: put the names in a lottery and one person a
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Speaker 4: day will then get a million dollars if they're a
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Speaker 4: registered voter who signed the petition. So that's the goal
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Speaker 4: is one petition signer and you are to sign the position,
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Speaker 4: you've got to be a registered voter will get a
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Speaker 4: million dollars in Pennsylvania. And then also he's doing the
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Speaker 4: same thing and other.
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Speaker 1: States, and it's just the swing states, just the swing states.
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Speaker 1: Pennsylvania Governor Josh Shapiro said, I think it's something that
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Speaker 1: law enforcement could take a look at. Does this violate,
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Speaker 1: first of all, federal law.
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Speaker 4: Well, there is a federal law that prohibits someone from
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Speaker 4: paying someone else to register to vote, not just to vote,
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Speaker 4: but to register to vote. The trick here is it's
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Speaker 4: not clear whether Musk is paying only new registrants or
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Speaker 4: whether if you register to vote twenty years ago, you're
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Speaker 4: still religible. You still get the money. If you're bringing
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Speaker 4: in people who registered twenty years ago, or you registered
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Speaker 4: twenty years ago, you're still eligible for the money. And
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Speaker 4: it's not clear if the federal law which prohibits people
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Speaker 4: for registering to vote also applies to paying people who
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Speaker 4: registered a long time ago, as opposed to in response
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Speaker 4: to the payment. I think the federal law is probably
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Speaker 4: intended to prohibit paying somebody in order to get them
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Speaker 4: to register to vote, but it's not that clear. It
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Speaker 4: just says pays or offers to pay or accepts payments
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Speaker 4: for registration to vote or voting, but voting isn't coming
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Speaker 4: up in this at all. He's not paying anybody for voting.
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Speaker 4: He's entirely focused on registration. And when it says pays,
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Speaker 4: their offers to pay or accept payment for registration, it's
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Speaker 4: not clear whether that means new registration, you weren't registered
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Speaker 4: before you got paid, and now you're going to register,
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Speaker 4: or if it turns out he's paying everybody in the
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Speaker 4: States who registered it, even if they are registered in
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Speaker 4: nineteen eighty, because they're registered. Although his intention is clear
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Speaker 4: to get new people to register and doing that would
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Speaker 4: clearly violate the law. He's written it in such a
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Speaker 4: way that it would seem to apply to people who
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Speaker 4: are already registered, who registered before this, and therefore are
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Speaker 4: not being incentivized by this to register. It's not clear
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Speaker 4: if the law applies to them, and the way it's written.
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Speaker 4: I think people who registered a year ago or fifty
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Speaker 4: years ago would be eligible to count towards the forty
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Speaker 4: seven dollars for bringing in somebody and to be eligible
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Speaker 4: to sign the petition to get the million.
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Speaker 1: But even if some of the voters were registered already,
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Speaker 1: if some of them weren't registered, and the odds are
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Speaker 1: good that's the case, then he's violated the law.
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Speaker 4: Right If he's paying people to register to vote, that's illegal.
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Speaker 1: Now Musk is saying he's not paying them to register
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Speaker 1: to vote, he's paying them to sign a petition, but
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Speaker 1: he only wants people who are registered.
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Speaker 4: To registered to vote to sign artificial I think that
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Speaker 4: one's easy to get by. He is paying for the
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Speaker 4: joint activity of being registered and signing a petition. If
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Speaker 4: he signed the petition and weren't registered to vote, you
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Speaker 4: get nothing. So clearly being registered to vote is crucial
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Speaker 4: to getting paid and being eligible for the million dollars.
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Speaker 1: So then could he be prosecuted conceivably?
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Speaker 4: I mean it is a crime. I mean, it would
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Speaker 4: obviously be very controversial because he's written it relatively careful,
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Speaker 4: and it's true that many of the people he's paying
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Speaker 4: presumably were registered before. But if it does have the
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Speaker 4: effect of getting some people to register who hadn't been
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Speaker 4: registered before, then I think it does fall within the statute.
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Speaker 4: So the thing is, it's a federal crime. So although
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Speaker 4: Joshapiro is raised as a former Attorney general Pennsylvania, the
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Speaker 4: US Attorney would actually have to decide this. I guess
6:19
Speaker 4: the local US attorneys and the relevant states are possibly
6:22
Speaker 4: the attorney general, And it would be a pretty dramatic
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Speaker 4: thing to do, frankly, and what he's doing is pushing
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Speaker 4: the envelope, is not breaking through the envelope, but it
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Speaker 4: would be a pretty dramatic response.
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Speaker 1: Also, what about state laws? Don't most states have a right?
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Speaker 4: Most states have laws, some simils. I don't know the
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Speaker 4: speciffics of Pennsylvania or Michigan or the other battleground states,
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Speaker 4: but it's possible that there would be It makes sense.
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Speaker 4: I mean, federal law is interesting, and that it applies
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Speaker 4: to paying people to register, not just paying people to vote.
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Speaker 4: And I don't know for a fact that every state
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Speaker 4: has a similer rule, but it wouldn't surprise me.
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Speaker 1: Apparently, after people started talking about this, they reframe the
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Speaker 1: giveaway as a job opportunity, saying winners will be selected
7:03
Speaker 1: to earn one million. As a spokesperson for America Pack,
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Speaker 1: does that get around it?
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Speaker 4: It might. I mean the trickier one is is bringing
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Speaker 4: in the people who registered voters, I mean being rewarded
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Speaker 4: for bringing in registered voters also, But it might. I mean,
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Speaker 4: the whole thing is a gray area. I mean, he's
7:18
Speaker 4: being very careful in terms of what he's paying people for,
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Speaker 4: and as long as he has some deniability that registration
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Speaker 4: is the goal as opposed to something else, he might,
7:27
Speaker 4: you know. I mean, you might decide that you're an
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Speaker 4: employer and you only want to hire registered voters because
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Speaker 4: you think they're more responsible workers. It's not clear to
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Speaker 4: me that would be illegal.
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Speaker 1: So it seems like the line is blurry and a
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Speaker 1: little confusing. So sum it up for us here.
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Speaker 4: Okay, So I think he has walked up to the
7:46
Speaker 4: line of violating the law and might have violated the law,
7:50
Speaker 4: and might have just walked along the line. The law
7:53
Speaker 4: clearly prohibits paying people to registered to vote, But so
7:57
Speaker 4: long as he's able to treat this as registration, which
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Speaker 4: would include pre existing registrations as a qualification for something,
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Speaker 4: he might be able to get away with it. Certainly,
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Speaker 4: the people who might be able to get this reward
8:12
Speaker 4: who were registered in the past. It's hard to see
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Speaker 4: what the violation is, but yes, they sent that people
8:17
Speaker 4: are getting rewarded for registering. Now that would be a
8:21
Speaker 4: violation of the law. Now, I should also point out
8:23
Speaker 4: that registration in Pennsylvania closed yesterday, so at this point
8:28
Speaker 4: we're talking about people who registered in Pennsylvania at least
8:31
Speaker 4: I don't know when it closes in the other states
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Speaker 4: in a fairly narrow window of days, so I think
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Speaker 4: it's basically not much more than a week where this
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Speaker 4: offer was available and it's now closed. I mean, people
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Speaker 4: can continue to get the million dollars. I think they're
8:43
Speaker 4: pulling a name out of the hat or whatever. It's
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Speaker 4: like a lottery until election day. But registration in Pennsylvania
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Speaker 4: has closed. There will be no new registrations in Pennsylvania
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Speaker 4: before election day.
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Speaker 1: The federal law also makes it a crime for the
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Speaker 1: person who's accepting payment for registration to vote.
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Speaker 4: Yes, it does so, then if.
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Speaker 1: The people who get the million dollars weren't registered.
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Speaker 4: Already, they are potentially at risk. I mean the penalties
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Speaker 4: ten thousand dollars fine or five years in prison. It's
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Speaker 4: hard to imagine anybody going to prison for this. It's
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Speaker 4: not out of the question that out of their million dollars,
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Speaker 4: them I have to pay ten thousand. It seems unlikely
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Speaker 4: that the government would ever go after the voters as
9:20
Speaker 4: opposed to a must himself.
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Speaker 1: How often does the government go after anyone under this statute?
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Speaker 1: Is it rare?
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Speaker 4: I'm not aware. I mean there've been in since where
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Speaker 4: things that seem like they're really not well intentioned efforts
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Speaker 4: to get people to vote. I think at some point
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Speaker 4: it was one year a hogindass. Some ice cream company
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Speaker 4: basically was offering ice cream to people, came in with
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Speaker 4: the I Voted sticker and they were basically told they
9:42
Speaker 4: shouldn't do that.
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Speaker 1: Also, can we say that he has funneled almost seventy
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Speaker 1: five million dollars into his America pack witholdout citizens United
9:51
Speaker 1: Would any of these packs be possible?
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Speaker 4: Yeah, if it was his own money as opposed to
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Speaker 4: money from Tesla or his corporation. Individuals are free to
10:02
Speaker 4: spend as much as they want of their own money
10:04
Speaker 4: anytime since Buckby v. Valeo, Citizen and I have only
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Speaker 4: affected the use of corporate dollars. So I don't know
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Speaker 4: if he's using his personal dollars or dollars from one
10:13
Speaker 4: of his companies. If it's one of his companies, yes,
10:15
Speaker 4: then citizeney U I admitted, possible. But if it was
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Speaker 4: his personal funds, then Citisney Night had nothing to do
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Speaker 4: with it.
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Speaker 1: It may not be technically wrong, but it just seems
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Speaker 1: right big.
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Speaker 4: Yeah. No, it's it's paying people to register to vote,
10:28
Speaker 4: and it's designed to get people of a certain political
10:31
Speaker 4: perspective to register to vote. So yeah, but it's you know,
10:33
Speaker 4: right now, the law was written with other shenanigans in mine,
10:37
Speaker 4: and he came up with something different.
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Speaker 1: Not long until election day. Bloomberg has reported there were
10:42
Speaker 1: some one hundred and sixty five cases about election law
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Speaker 1: percolating in the last two years. Can you tell at
10:49
Speaker 1: this point what might be an issue after the election.
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Speaker 4: It's hard to tell because we won't know until actually
10:56
Speaker 4: after it happens. I think what happened in twenty twenty,
10:59
Speaker 4: Nobody who was predicted that, and certainly in two thousand
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Speaker 4: nobody saw the hanging beets is an issue. So I
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Speaker 4: don't think we're gonna know until actually happens.
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Speaker 1: Okay, thanks so much, rich that's Professor Richard Brefalt of
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Speaker 1: Columbia Law School coming up next on the Bloomberg Law Show.
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Speaker 1: If it's Wednesday, a Houston based boutique law firm is
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Speaker 1: placing bets on lawsuits, and so far picking winners has
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Speaker 1: made the firm's partner some of the highest paid in
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Speaker 1: the country. If it's Wednesday and it's noon, one law
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Speaker 1: firm is placing bets on lawsuits in a unique vetting
11:34
Speaker 1: process that leads to up or down votes on cases
11:38
Speaker 1: that have cost American businesses billions of dollars in damages.
11:42
Speaker 1: The Sussman Godfrey firm has a knack for taking on
11:46
Speaker 1: cases that generate a lot of publicity and some stunning results.
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Speaker 1: Think about that seven hundred and eighty seven million dollar
11:55
Speaker 1: defamation settlement with Fox News, and they're the ones suing
11:59
Speaker 1: Open Ai on behalf of The New York Times By
12:03
Speaker 1: investing its own time and money with contingent fee arrangements.
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Speaker 1: The Houston based firm takes the risk that it can
12:10
Speaker 1: pick more winners than losers and in the process make
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Speaker 1: more money than it otherwise would by billing clients by
12:17
Speaker 1: the hour. It seems to be working for the boutique firm,
12:21
Speaker 1: with its back to back record setting years. Successfully picking
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Speaker 1: winners has made the firm's partners some of the highest
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Speaker 1: paid in the country, with profits of nearly seven million
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Speaker 1: dollars per partner last year. Joining me is roy Strom
12:36
Speaker 1: Bloomberg Law senior correspondent who's written about the firm. Roy
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Speaker 1: tell us what happens at Sussman Godfrey every Wednesday at noon.
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Speaker 5: So at noon on Wednesdays at Susman Godfrey, which is
12:50
Speaker 5: the big law firm well known for its point of
12:53
Speaker 5: side litigation work. These lawyers they filter into a conference room.
12:58
Speaker 5: They have offices in Hughes since that's their biggest office.
13:02
Speaker 5: They walk in, there's partners on Zoom and other offices,
13:05
Speaker 5: and they go around and they pitch their colleagues, maybe
13:09
Speaker 5: as many as one hundred and fifty lawyers on the
13:12
Speaker 5: next big lawsuit that the firm should invest its time
13:16
Speaker 5: and its money in. Thus, when godfre He takes these
13:20
Speaker 5: cases on contingency fee, which means they really only get
13:23
Speaker 5: paid if they win. And so they're a big partnership.
13:26
Speaker 5: They need some way to decide what they should be
13:30
Speaker 5: spending their time on, how they should be spending their money.
13:34
Speaker 5: And so they go in front of this group of
13:37
Speaker 5: lawyers and they make their case, and the colleagues poke
13:40
Speaker 5: holes in it. They probe this sort of legal theory.
13:44
Speaker 5: They question the damages, they talk about the judges who
13:47
Speaker 5: might be involved, where the appeals could be heard, and
13:50
Speaker 5: probably anything else that I couldn't even think about a
13:53
Speaker 5: lawyer would question a case about.
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Speaker 1: And then it just takes an up or down vote
13:58
Speaker 1: of the partners or of the too.
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Speaker 5: Yeah, the partners vote and the associates vote. The associates
14:05
Speaker 5: are involved in the meeting as much as the partners are,
14:09
Speaker 5: and they're asked to weigh in.
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Speaker 4: One of the.
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Speaker 5: Partners we spoke with said that he was pushed in
14:15
Speaker 5: one of these meetings by an associate and this associates
14:18
Speaker 5: questioning ultimately sort of swayed the group to vote the
14:22
Speaker 5: case down, and that associates ultimately went on to become
14:27
Speaker 5: a partner. And I think the firm thinks that having
14:30
Speaker 5: these associates involved is a good way to build the
14:33
Speaker 5: culture of the place. You could imagine that these sorts
14:36
Speaker 5: of meetings could be kind of contentious, and if not contentious,
14:40
Speaker 5: at least a level of sort of dispute that I
14:44
Speaker 5: think a lot of firms might not be comfortable with.
14:46
Speaker 5: So having these associates in there and having them having
14:49
Speaker 5: viewed these cases through the lens of their partners for
14:53
Speaker 5: years really prepares them, I think, in the firm's view,
14:58
Speaker 5: to ultimately stand up one day and pitch for the
15:02
Speaker 5: cases that they think the firm should be taking on. So, yeah,
15:05
Speaker 5: it's a wide range of the firm's lawyers who are
15:09
Speaker 5: here in these meetings and debating over these cases.
15:14
Speaker 1: And before the meeting, I mean, what's the prep before
15:17
Speaker 1: the meeting.
15:18
Speaker 5: So the meetings are on Wednesdays, and partners send around
15:22
Speaker 5: on Mondays a sort of outline or written pitch about
15:28
Speaker 5: the case that they're going to bring up in the meeting,
15:31
Speaker 5: and lawyers at the firm will read that Monday pitch
15:35
Speaker 5: and they will respond in writing over email, asking some questions,
15:40
Speaker 5: sort of getting some baseline understanding of what the case
15:43
Speaker 5: is about, and there'll be some back and forth over
15:47
Speaker 5: that email chain, and a lot of times that knocks
15:52
Speaker 5: cases out of the Wednesday meeting. One of the managing
15:55
Speaker 5: partners at the firm told us that there was no
15:58
Speaker 5: real way to get a sense of what the sort
16:01
Speaker 5: of acceptance rate is for the cases that the partners
16:05
Speaker 5: bring up, because many of the cases don't even make
16:09
Speaker 5: it into this Wednesday meeting by the time partners have
16:13
Speaker 5: picked them apart after the Monday emails. The partner who
16:16
Speaker 5: raised it might say, Okay, I have more to think about,
16:19
Speaker 5: I have more questions to answer before I go before
16:22
Speaker 5: the whole firm, or they might say, you know what,
16:24
Speaker 5: on second thought, I think you guys are right. This
16:27
Speaker 5: probably isn't the case for us.
16:29
Speaker 1: And does the lawyer who pitched it. Does that lawyer
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Speaker 1: take point on the case, Do they actually litigate the
16:35
Speaker 1: case or are they just backing some other law firm.
16:39
Speaker 5: The lawyers who pitched these cases will be working these cases,
16:43
Speaker 5: you know, to settlement or to trial. The firm staffs
16:48
Speaker 5: its cases itself, of course, and so they're not a
16:52
Speaker 5: litigation funder who might have a discussion like this about
16:56
Speaker 5: how to allocate their money at different law firms different cases.
17:00
Speaker 5: This is a law firm that's deciding how to spend
17:03
Speaker 5: its own time, and so the partners who are raising
17:06
Speaker 5: a particular case certainly intend to be involved in litigating
17:10
Speaker 5: that case alongside colleagues and.
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Speaker 1: Tell us about some of the high profile cases they've
17:16
Speaker 1: recently taken on.
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Speaker 5: I think probably the best known case Thatsessman Godfrey has
17:22
Speaker 5: taken on recently was the defamation claims brought by Dominion
17:28
Speaker 5: Voting Systems against Fox News over the sort of claims
17:34
Speaker 5: in the wake of the twenty twenty presidential election that
17:36
Speaker 5: these voting systems had somehow been corrupted or were part
17:41
Speaker 5: of a broader effort to steal the twenty twenty election.
17:46
Speaker 5: And of course those claims led to a seven hundred
17:50
Speaker 5: and eighty seven million dollars settlement that Fox News had
17:54
Speaker 5: to pay basically at the doorsteps of a trial, after
17:58
Speaker 5: a lot of discovery had happened and people learned about
18:02
Speaker 5: these sort of inner discussions at Fox News about these claims,
18:07
Speaker 5: some of the reservations that even the Fox News people
18:10
Speaker 5: had about what they were saying on the air, and
18:13
Speaker 5: assessment Godfrey represented Dominion in other cases as well that
18:18
Speaker 5: certainly were big time in the news and resulted in
18:22
Speaker 5: some huge settlements.
18:24
Speaker 1: Tell us about the NFL suit.
18:26
Speaker 5: Yeah, they also were behind this suit that accused the
18:29
Speaker 5: NFL of antitrust violations regarding their long time Sunday ticket package.
18:37
Speaker 5: This offering where you could watch sort of any game
18:40
Speaker 5: that the NFL was airing, no matter what market you
18:44
Speaker 5: were in. And I think this lawsuit alleged that they
18:48
Speaker 5: had artificially inflated the price of that package, and that
18:52
Speaker 5: led to a big verdict against the NFL. It was
18:57
Speaker 5: almost five billion with a b dollar vert A judge
19:01
Speaker 5: overturned that verdict recently, so that's not going to go
19:06
Speaker 5: into Sustan God for win column. But it was certainly
19:10
Speaker 5: a Newsy case and the NFL Commissioner, Roger Goodell, had
19:14
Speaker 5: to give testimony a trial and at least the jury
19:18
Speaker 5: ruled in their favor, but a judge overturned it.
19:21
Speaker 1: Like I said, Roy, do you know how other firms
19:23
Speaker 1: decide whether they're going to take on cases? I mean,
19:26
Speaker 1: do the partners usually vote? Yeah?
19:29
Speaker 5: I mean that's part of the thing that is unique
19:32
Speaker 5: about this firm is that they have grown to such
19:35
Speaker 5: a size. I think last year they brought in nearly
19:38
Speaker 5: seven hundred and fifty million in revenue, which makes them
19:41
Speaker 5: one of the hundredth largest law firms in the country.
19:45
Speaker 5: And it's just rare that a firm with such a
19:48
Speaker 5: big contingency practice grows to that scale, And so the
19:52
Speaker 5: firms that they're competing with are oftentimes these sort of
19:55
Speaker 5: at least on that revenue figure, are these sort of
19:59
Speaker 5: corporate defense firms that have a much less risk tolerant
20:03
Speaker 5: business model. They're billing by the hour, they're defending the
20:07
Speaker 5: types of claims that Lessman Godfrey would bring. But those
20:10
Speaker 5: firms do from time to time take up contingency fee
20:14
Speaker 5: cases the way Sussmen has made its name, and they
20:18
Speaker 5: oftentimes have a much less democratic sort of process for
20:22
Speaker 5: selecting those cases. Some of these firms will have a
20:26
Speaker 5: contingency fee committee that might take the information and then
20:31
Speaker 5: sort of make their own decision. It might just be
20:34
Speaker 5: a sort of litigation department leadership making those types of decisions,
20:39
Speaker 5: but certainly very rare to have a dialogue between one
20:45
Speaker 5: hundred and fifty people over one case.
20:49
Speaker 1: And you mentioned defense oriented firms. Some of the questions
20:53
Speaker 1: that Sussman Godfrey lawyers ask are based on the defendants
20:58
Speaker 1: in the case. Does the lawsuit threat the defendant's fundamental
21:01
Speaker 1: business model that might motivate a defendant to fight you
21:04
Speaker 1: to the death. So they're looking at all aspects of
21:08
Speaker 1: the case.
21:09
Speaker 5: Yeah, that was one of the sort of topics that
21:12
Speaker 5: I thought was really interesting. They think about the posture
21:16
Speaker 5: the defendant sort of mentality going into a case. What
21:21
Speaker 5: might prevent them from settling a case like this If
21:24
Speaker 5: you are threatening this sort of fundamental business model that
21:30
Speaker 5: this business the defendant uses, what does that mean for
21:34
Speaker 5: the likely outcome of the case? Does that mean that
21:37
Speaker 5: they're going to really go to the math? Does that
21:39
Speaker 5: raise the cost of fighting this dispute? And just some
21:44
Speaker 5: of that sort of psychological discussion that they laid out
21:48
Speaker 5: I thought was really interesting.
21:50
Speaker 1: Successfully picking winning cases has made lawyers at the firm
21:54
Speaker 1: of Sussman Godfrey among the highest paid in the country.
21:59
Speaker 1: Last year, it brought in nearly seven hundred and fifty
22:01
Speaker 1: million dollars in revenue, the result of major contingency wins,
22:07
Speaker 1: including the seven hundred and eighty seven million dollar Fox
22:10
Speaker 1: settlement with dominion voting systems. The firm's unique process of
22:15
Speaker 1: vetting cases plays a central role in its skyrocketing revenue.
22:20
Speaker 1: I've been talking to Bloomberg Law senior correspondent Roy Strom. Roy,
22:24
Speaker 1: these Wednesday meetings are nothing new. They date back to
22:27
Speaker 1: the firm's founding some forty five years ago.
22:30
Speaker 5: That's right. The firm got its start in Houston. Founder
22:34
Speaker 5: Steve Sussman was a very big personality, a very well
22:38
Speaker 5: known successful lawyer who sort of crafted this business practice
22:44
Speaker 5: and who was well known for the types of cases
22:47
Speaker 5: assessment still does now. Steve Sussman died in twenty twenty
22:54
Speaker 5: unexpectedly after a bicycle accident, But the firm is really
22:59
Speaker 5: molded and shaped by the way he ran things.
23:04
Speaker 1: How do they determined partner compensation?
23:07
Speaker 5: The partner compensation there is sort of interesting because it's
23:11
Speaker 5: a course of partnership, and so the profits of the
23:13
Speaker 5: firm are divided up every year to the partners. But
23:18
Speaker 5: the partners sort of have their own risk tolerance and
23:22
Speaker 5: they kind of manage their own books of business for
23:26
Speaker 5: lack of a better term. They sort of choose which
23:28
Speaker 5: cases they're going to be working on, and some of
23:31
Speaker 5: the partners are very risk tolerant. They might have sort
23:35
Speaker 5: of all of their cases being all their time being
23:38
Speaker 5: spent on contingency fee cases, and as the managing partners
23:42
Speaker 5: of the firm explained to us, that will impact their
23:46
Speaker 5: personal compensation. They might have some leaner years while they're
23:51
Speaker 5: waiting for those cases to finalize, and then they'll of
23:55
Speaker 5: course be compensated in line with the conclusions of those case.
24:00
Speaker 5: Their firm does do hourly billing cases, it's a smaller
24:05
Speaker 5: portion of their revenue compared to most any other firm,
24:09
Speaker 5: but partners who work on those will be compensated more
24:12
Speaker 5: like your typical big law attorney. So the partners are
24:16
Speaker 5: sort of almost operating. They're making decisions based on their
24:20
Speaker 5: own risk tolerance in terms of what their compensation will
24:24
Speaker 5: look like year to year. But the basic aspects of
24:28
Speaker 5: that compensation model are the revenue the partner generates and
24:33
Speaker 5: the work that partner does for other cases that they
24:36
Speaker 5: didn't bring in. So that's fairly consistent with other firms.
24:40
Speaker 5: It's just the partners kind of pick and choose how
24:43
Speaker 5: much of their work is done on this contingency the basis,
24:46
Speaker 5: which just by its very nature has a much lumpier
24:49
Speaker 5: return model compared to the billable.
24:52
Speaker 1: Hour in a lawsuit. Last year, an agreement between the
24:57
Speaker 1: litigation funder and the law f became public, showing the
25:02
Speaker 1: funder agreed to pay the firm's monthly fees of up
25:05
Speaker 1: to six million, nine hundred and fifteen thousand dollars. But
25:10
Speaker 1: usually the firm is the one funding the litigation.
25:14
Speaker 5: Yeah, you know, of course, litigation funding has grown has
25:17
Speaker 5: become a much more prominent piece of contingency fee litigation.
25:23
Speaker 5: And there was this episode last year lawsuit where the
25:28
Speaker 5: agreement between Sussmen Godfrey and a litigation funder became public
25:32
Speaker 5: and the course of the litigation, and it did show
25:35
Speaker 5: that Sussman was receiving sort of monthly fees on the case.
25:40
Speaker 5: And from what I have heard and from what they said,
25:43
Speaker 5: that was more of an outlier for the firm. They
25:47
Speaker 5: often prefer to use litigation funders to pay for the
25:51
Speaker 5: cost some of the expenses and costs of cases, but
25:55
Speaker 5: they're less likely to use it in a way that
25:59
Speaker 5: would impact the actual return or the damages such that
26:03
Speaker 5: the funder is getting a large portion of the total
26:07
Speaker 5: award from a case.
26:09
Speaker 1: What I thought was interesting also was the hiring practices
26:12
Speaker 1: that they only hire people who have clerk for federal judges,
26:17
Speaker 1: and they don't hire lateral partners.
26:20
Speaker 5: Yeah. Yeah, So the firm from the beginning, I was
26:23
Speaker 5: really looking for a sort of you know, the top
26:26
Speaker 5: of the top talent coming out of law schools. Of course,
26:29
Speaker 5: they are litigators, and so they do hire people requisite
26:35
Speaker 5: to have a federal clerkship before coming to the firm,
26:40
Speaker 5: which kind of sets the bar pretty high to begin with.
26:44
Speaker 5: And then they really hope unlike a lot of big
26:46
Speaker 5: law firms which kind of accept and acknowledge that associates
26:51
Speaker 5: might work there some amount of time and then go
26:53
Speaker 5: find something else to do, I think this firm really
26:56
Speaker 5: does want these associates to stay there for the law hall,
27:00
Speaker 5: to understand their business, to grow into it and become partners.
27:04
Speaker 5: And they are much more focused on promoting partners from
27:08
Speaker 5: their internal ranks as opposed to hiring from other law firms,
27:12
Speaker 5: which of course does set them apart from your typical
27:14
Speaker 5: big law firm which today very very active and you
27:18
Speaker 5: poaching partners from rivals is just something that this firm
27:22
Speaker 5: hasn't done much of doesn't intend to do.
27:25
Speaker 1: So if it's Wednesday, we know where all the lawyers
27:29
Speaker 1: at Susman Godfrey are. Thanks so much for coming on
27:32
Speaker 1: the show, Roy, it's a really fascinating story. That's Bloomberg
27:36
Speaker 1: Law senior correspondent Roy Strom in other legal news today.
27:40
Speaker 1: At a legislative committee hearing today in Texas, a death
27:44
Speaker 1: row inmate who's proclaimed his innocence for more than two
27:48
Speaker 1: decades had some high profile supporters speaking on his behalf.
27:53
Speaker 1: Criminal defense attorney turned author John Grisham says the system
27:58
Speaker 1: rushed to judge Robert roberts an autistic man who was
28:02
Speaker 1: convicted of shaking his two year old daughter to death
28:05
Speaker 1: in two thousand and two.
28:07
Speaker 6: The science was terrible, the juris selection was awful. From
28:09
Speaker 6: the opening bill, the prosecutor was allowed to point a
28:13
Speaker 6: finger at Robert and call him a a baby killer
28:17
Speaker 6: whatever that persisted throughout the trial.
28:20
Speaker 1: Shaking baby syndrome has been discredited as the basis for
28:23
Speaker 1: criminal prosecutions, and psychologist Phil McGrath, better known as Doctor Phil,
28:29
Speaker 1: told the committee that his review of Robert Robertson's case
28:33
Speaker 1: has convinced him that the fifty seven year old did
28:36
Speaker 1: not shake his young daughter to death.
28:39
Speaker 5: If we start executing people in Texas absent due process,
28:43
Speaker 5: absent fair trial.
28:45
Speaker 3: We are going down a really dangerous Roade.
28:49
Speaker 1: Robertson's absence at the highly anticipated hearing was another twist
28:53
Speaker 1: in last ditch efforts to spare his life. He had
28:57
Speaker 1: been set last Thursday to become the first person in
29:00
Speaker 1: the country executed over a murder conviction connected to a
29:04
Speaker 1: diagnosis of shaken baby syndrome. He was actually taken to
29:09
Speaker 1: the death chamber and was waiting in a holding cell
29:12
Speaker 1: when the Texas Supreme Court abruptly halted plans to give
29:16
Speaker 1: him a lethal injection. And that's it for this edition
29:19
Speaker 1: of the Bloomberg Law Podcast. Remember you can always get
29:22
Speaker 1: the latest legal news by subscribing and listening to the
29:25
Speaker 1: show on Apple Podcasts, Spotify, and at Bloomberg dot com,
29:29
Speaker 1: slash podcast slash Law. I'm June Grosso and this is
29:33
Speaker 1: Bloomberg