December 10, 2009 1:17 PM
Second Chance for Former Locke Lord Partner Ends in Dismissal
Posted by Brian Baxter
Hiring a former Am Law 100 partner once charged with insider trading apparently didn't end well for Locke Lord Bissell & Liddell.
Court filings from Delaware Chancery Court show that David Schwinger was informed in March that the firm was terminating him. A Locke Lord spokeswoman told The Am Law Daily that the litigation between Schwinger and the firm stemmed from an "internal partnership dispute" on which the firm would not comment.
It's not the first time an Am Law 100 firm has fired Schwinger.
In November 2006 the real estate lawyer left his position as head of Katten Muchin Rosenman's Washington, D.C., office amid an investigation by the SEC into whether he had traded on inside information in Vastera, which a year earlier had been acquired by JPMorgan Chase.
As previously reported by The American Lawyer, Schwinger only made a $13,000 profit from his trades, which precluded the Justice Department from pursuing criminal charges. The SEC was less forgiving, fining Schwinger $26,000 and forcing him to disgorge all profits in a June 2007 settlement on civil charges.
Schwinger hung out his own shingle during the sixth months it took for him to weather the insider trading storm. In July 2007 he began working for Locke Liddell & Sapp, a Texas-based predecessor firm to Locke Lord. Schwinger joined several former Katten colleagues who comprised the firm's real estate finance group when they joined Locke Liddell's D.C. office.
A former colleague of Schwinger's at Katten who requested anonymity acknowledged to The Am Law Daily that lawyers at the firm were shocked Schwinger had landed on his feet so quickly.
That summer, Locke Liddell was working on a merger with Chicago firm Lord Bissell & Brook. The two firms finalized the merger in September--after Locke Liddell had omitted Schwinger's name on a press release touting the new Katten hires.
A Locke Liddell spokeswoman admitted to The American Lawyer's Vivia Chen for another story that appeared in the magazine two years ago that the firm deliberately left Schwinger's name off the release because of the sensitivity of merger talks. Schwinger ultimately became head of Locke Liddell's D.C. real estate practice, and the firm claimed that the real estate group from Katten was responsible for $8 to $10 million in business.
At the time, some of Schwinger's former Katten colleagues that joined him at Locke Liddell told The American Lawyer that they were enthusiastic about joining a new firm with Schwinger, and that they were disappointed Katten did not stand behind him.
None of those lawyers are talking now. Former Katten colleagues and current Locke Lord real estate partners Christopher Hart and Edward Zughaib in D.C. did not respond to requests for comment. Several other Locke Lord partners contacted for this story, including managing partner Jerry Clements, either declined to comment or did not respond to interview requests.
What can be gleaned from portions of unredacted court documents is that Schwinger's time at Locke Lord ended in March. While the reason for his dismissal in unclear, an April report by sibling publication Texas Lawyer stated that Locke Lord had conducted layoffs that affected all 13 of its offices. Clements told Texas Lawyer that the layoffs were made for financial reasons--she declined to give an exact head count--but said partners weren't affected.
Court documents show that Schwinger and his lawyer, Thad Bracegirdle from Delaware litigation boutique Wilks, Lukoff & Bracegirdle, sought financial records from the firm and a temporary restraining order to enjoin a Locke Lord partnership meeting in June. The partnership meeting was postponed and a subsequent memo by Bracegirdle in August shows that both parties agreed to a settlement.
Locke Lord's Delaware counsel in the matter, Michael Bonkowski from Cole, Schotz, Meisel, Forman & Leonard, told The Am Law Daily that as far as he is concerned, the litigation quietly concluded in September. He referred all additional questions to Locke Lord partner Michael Comiskey in Chicago, who represented the firm in the dispute. Comiskey did not respond to a request for comment.
Bracegirdle also did not respond to an interview request and an attempt to speak with Schwinger through Bracegirdle was unsuccessful.
One lawyer knowledgeable of the situation says that several partners at Locke Lord had "deep concerns" about Schwinger's troubles with the SEC after the merger was completed in the fall of 2007. The merger talks that created the firm had hit a snag on some Locke Liddell lawyers being caught up in a federal tax-shelter investigation, the lawyer says, and finding out after the fact that Schwinger was part of the Katten team joining the firm in Washington made some partners uneasy.
The same source tells us that the Katten real estate finance team only agreed to join Locke Liddell in the event that its proposed merger with Lord Bissell went through, thus the incentive on Locke Liddell's part to keep Schwinger's hire quiet until after the merger had been finalized.
While the lawyer was not sure of the circumstances that eventually caused Schwinger's departure from the firm a year-and-a-half later, he says supporters of the hire often pointed to the business his practice group was expected to bring in. The downturn in the real estate market undoubtedly had an adverse effect on Schwinger's practice, dampening Locke Lord's expectations.
Another former colleague of Schwinger's remembers him as a smart and likeable guy.
"Somewhere along the line something just went wrong," he says. "I don't know what happened, but it's sad."
Nate Raymond contributed reporting to this story.Make a comment