December 23, 2011 3:00 PM
Report: Williams & Connolly Partner in Talks to Become Next News Corp. GC
Posted by Brian Baxter
UPDATE: 1/9/12, 11:20 a.m. News Corp. has officially named Gerson Zweifach as its new general counsel, according to The Associated Press.
Gerson Zweifach, a partner at Williams & Connolly in Washington, D.C., is reportedly in line to become the News Corporation's next general counsel. The media giant's former general counsel, Lawrence "Lon" Jacobs, stepped down in June to "pursue new opportunities," according to a company press release.
A spokesman for New York–based News Corp. declined to comment on Zweifach's potential hire, and Zweifach himself was not in his office Friday and unavailable for immediate comment.
One source familiar with the matter told The Am Law Daily that while there is no deal yet in place, Zweifach's hiring could be announced shortly after the start of the new year. This source says News Corp. conducted an extensive internal and external search for a new general counsel, a process that has been overseen by Joel Klein, a former head of the Justice Department's antitrust division who currently serves as a member of the company's board of directors.
News of Zweifach's potential hire was first reported by The Wall Street Journal, a newspaper owned by Dow Jones & Company, which became part of the News Corp. media empire in a $5.6 billion deal in 2007 that landed roles for scores of Am Law 200 firms. (Skadden, Arps, Slate, Meagher & Flom and Hogan & Hartson, now called Hogan Lovells, advised News Corp. on the transaction.)
Should Zweifach become the next general counsel of News Corp., he will oversee all legal work for a media empire facing a wide array of issues, the most pressing of which is an ongoing investigation into allegations of phone-hacking at the company's now-shuttered London tabloid The News of the World.
Zweifach, a seasoned litigator with three decades of experience handling everything from First Amendment to antitrust cases, has the requisite professional pedigree for a company seeking to bring order to its various legal entanglements.
His previous high-profile clients include representing former New York Stock Exchange chief executive Richard Grasso, who faced civil charges brought by then–New York attorney general Eliot Spitzer in a bid to recoup Grasso's $187.5 million severance package.
Zweifach successfully argued before a New York appellate court that Grasso should be allowed to keep his money, with the unjust enrichment claims filed by Spitzer eventually dismissed. Zweifach was also part of a defense team that beat an overbilling suit against Wilmer Cutler Pickering Hale and Dorr.
At the same time, Zweifach faces a tough task in navigating a thicket of internal politics at News Corp., whose in-house legal department has reportedly been in a state of disarray since Jacobs departed in June just before the phone-hacking furor broke involving The News of the World.
A New York magazine feature story in November about Murdoch's daughter Elisabeth, whose television production company Shine was bought by News Corp. earlier this year for $674 million, shed some light on the in-house turmoil at the company at the height of the phone-hacking frenzy.
Citing two anonymous sources familiar with the matter, the magazine reports that Jacobs advocated for an independent phone-hacking investigation. By that point, however, Jacobs had been marginalized by News Corp. chairman and CEO Rupert Murdoch, whom some executives felt unfairly blamed his general counsel for mishandling a $500 million settlement in 2010 involving the company's News America Marketing arm, according to the New York magazine story.
With Jacobs out of the picture, the elder Murdoch reportedly leaned on Klein, a Harvard Law School graduate who headed the U.S. Department of Justice's mammoth antitrust case against Microsoft, to lead the company's response to the escalating phone-hacking fracas. Murdoch hired Klein a year ago after he left his position as chancellor of New York City public schools to head News Corp.'s education division and serve on the company's board.
It was Klein who then took the lead in cleaning up the phone-hacking mess, recommending that News Corp. hire Williams & Connolly and legendary litigator Brendan Sullivan, Jr., to represent the company and conduct an internal investigation into the tactics employed by some of its journalists and investigators after the closure of The News of the World in July. As previously noted in a story this summer by The New York Times's Peter Lattman, Klein’s wife, current Sony general counsel Nicole Seligman, once worked at Williams & Connolly.
Like her husband, Seligman is a Harvard Law School graduate with other high-profile credentials, having once clerked for U.S. Supreme Court justice Thurgood Marshall (Klein once clerked for Justice Lewis Powell). Seligman joined Sony in 2001 after leaving Williams & Connolly, where she guided former President Bill Clinton through impeachment proceedings and, with Sullivan, advised Lt. Col. Oliver North during the congressional Iran-Contra hearings.
The decision to go with Williams & Connolly over Jacobs's request for an independent inquiry caused the former general counsel to make some demands of his own, according to the New York magazine story on Elisabeth Murdoch. The magazine reports that Jacobs told News Corp. COO Chase Carey that the company was in breach of his contract because it was, in effect, using Klein as its general counsel.
While the source familiar with the search for a new general counsel tells The Am Law Daily that the perceived tensions between Jacobs and Klein have been overblown, New York magazine reports that Jacobs was let go with four years left on a multimillion-dollar contract. (Click here for a copy of Jacobs's previous employment agreement; Jacobs started making nearly $2 million a year and saw his compensation rise to nearly $3 million per year during the duration of the contract, according to an annual GC Compensation Survey conducted by sibling publication Corporate Counsel.)
Jacobs, who could not immediately be reached for comment, served as deputy general counsel of News Corp. from 1996 until 2004, when he moved into the top in-house legal position upon the retirement of predecessor and longtime News Corp. legal chief Arthur Siskind.
Siskind remains with News Corp. as a senior adviser to the chairman and serves on the company's board of directors. He has also been an adjunct professor at Cornell Law School and the Georgetown University Law Center.
A current member of Georgetown's law school faculty, noted conservative legal scholar and former assistant U.S. attorney general Viet Dinh, also serves on News Corp.’s board. Dinh, who enjoys close personal ties to Rupert Murdoch, is also the founder of Washington, D.C.–based litigation boutique Bancroft, which made waves earlier this year when it hired former U.S. solicitor general Paul Clement from King & Spalding. The firm is seeking to become a major player in appellate litigation, according to a story by sibling publication The National Law Journal.
Dinh and Klein have been leading News Corp.'s legal team overseeing the phone-hacking probe. A copy of Klein's employment agreement including in an SEC filing by News Corp. in May shows that the former civil servant will make a base salary of not less than $2 million with an annual bonus not less than $1.5 million. According to the most recent Am Law 100 financial data, profits per partner at Williams & Connolly were a little more than $1.2 million in 2010.
If Zweifach does get the top in-house legal job at News Corp., he will likely have to work closely with both Dinh and Klein in coordinating a response to criminal investigations being pursued by authorities in both the United States and United Kingdom, as well as lawsuits filed on both sides of the pond. (News Corp. is facing shareholder derivative suits in Delaware.)
Zweifach's hiring could also have some ramifications for the firms that the company employs as outside counsel. News Corp. has hired Debevoise & Plimpton and Paul, Weiss, Rifkind, Wharton & Garrison to advise it on legal matters related to phone hacking, according to our previous reports. That being said, Williams & Connolly's bread-and-butter is litigation, meaning the corporate lawyers counting on the media giant for transactional work should feel safe.
Hogan Lovells, whose relationship with Rupert Murdoch stems from predecessor firm Hogan & Hartson's acquisition of New York's Squadron Ellenoff Plesent & Sheinfeld back in 2002, has been a key legal adviser to News Corp., the world's second-largest media conglomerate after Walt Disney.
News Corp. turned to Hogan Lovells for its acquisition of Shine and the $35 million sale of embattled social media site MySpace this year. Hogan and Skadden were also one of a half-dozen firms advising News Corp. on its $11.5 billion bid to take a 61 percent stake in British Sky Broadcasting, a deal that collapsed in July as a result of political and regulatory pressure prompted by the phone-hacking scandal.
Whoever becomes News Corp.'s chief legal officer will take over an in-house department that has been lead on an interim basis in recent months by deputy general counsel Janet Nova, who gained a measure of notoriety over the summer for blocking a protester attempting to toss a pie in Rupert Murdoch's face. A source says Nova is expected to remain with the company.
Other top in-house lawyers in the News Corp. empire include general counsel Rita Tuzon of the Fox Networks Group, which restructured its legal affairs team this summer, and Mark Jackson, who became general counsel of the company's Dow Jones unit in 2007 after leaving HarperCollins Publishers.
Tom Crone, another former in-house lawyer for News Corp.'s News International unit, which owned The News of the World, has made waves for turning against the company by testifying in British parliamentary proceedings about all he knows about phone-hacking. Crone has testified that he advised his former employer on phone-hacking matters as far back as 2006.
Make a comment