October 23, 2011 1:47 PM

The Score: NBA Talks Collapse; Dodgers Drama Drags On

Posted by Brian Baxter

Collective bargaining negotiations between National Basketball Association players and owners collapsed Friday, increasing the likelihood that the entire 2011-2012 season will be lost.

Our former colleague Zach Lowe, writing for SI.com’s Point Forward blog, has more details on what led the labor talks to break down. As Lowe notes, the league and the players union had brought in federal mediator George Cohen—a former partner at Washington, D.C.–based boutique Bredhoff & Kaiser—last week in an effort to help both sides reach a deal.

But despite having already lost the first two weeks of a season that was scheduled to start on November 1 and negotiating almost nonstop over three days, the parties failed to agree on such thorny issues as how to divvy up league revenues and whether a new collective bargaining agreement will allow for limits on the length of player contracts.

The breakdown in talks means that lawyers for both sides will continue to rack up billables in connection with the labor dispute. In a preview of what those billables might end looking like, The Am Law Daily reported last month on the fees collected over the past five years by the NBPA’s lawyers, led by Dewey & LeBoeuf’s Jeffrey Kessler and associate union general counsel Ronald Klempner, who became the NBPA's top in-house lawyer in 2011 following the death of former general counsel Gary Hall.

As the current talks drag on, the union has had to weather barbs from a group of powerful player agents who essentially tried to insert themselves into the negotiations earlier this month by issuing a memo that warned the clients about the dangers of accepting a deal that reduces the amount of basketball-related income they receive from the current 57 percent to the 46 percent sought by ownership.

Of the seven high-profile agents that reportedly wrote the letter—Wasserman Media Group’s Arn Tellem, BDA Sports’s Bill Duffy, Lagardere Unlimited’s Dan Fegan, Excel Sports Management’s Jeff Schwartz, CAA’s Leon Rose and Henry Thomas, and Mark Bartelstein of Priority Sports and Entertainment—five are lawyers. (Some, like Schwartz, have been the subject of litigation when they sought to take their star clients elsewhere.)

Other agents, including former Mayer Brown associate and ex-college basketball player Rob Pelinka (he was the NCAA’s Scholar Athlete of the Year in 1993), are devoting their time trying to get their clients jobs in overseas leagues. Pelinka spent much of this month negotiating with Italian basketball team Virtus Bologna on behalf of his star client, Kobe Bryant, although a final deal remains up in the air.

According to a ranking of the top agents and agencies by HoopsHype.com, one Am Law 100 firm, Williams & Connolly, ranks among the top ten in client salaries for pro basketball. Longtime agent and former W&C partner Lon Babby left the firm, which is known for representing authors and media personalities as well as pro athletes, last year to become head of basketball operations for the Phoenix Suns.

Elsewhere on the NBA labor front, the league suffered a setback at the hands of the National Labor Relations Board last week when the agency denied Commissioner David Stern’s request to dismiss an unfair labor practice charge filed by the union. The NLRB could hold the key to ending the lockout, reports ESPN legal analyst Lester Munson. The players union—represented by lawyers from Dewey and Steptoe & Johnson—also sought to have a federal judge dismiss an antitrust suit filed this summer by the league.

Proskauer Rose and Skadden, Arps, Slate, Meagher & Flom are advising the NBA in the litigation, as well as in the collective bargaining talks. The league’s in-house team is being led by Stern, a former Proskauer partner, deputy commissioner Adam Silver (a former Cravath, Swaine & Moore associate), general counsel Richard Buchanan (a former Covington & Burling associate), and deputy general counsel Daniel Rube (a former associate at Ballard Spahr and Paul, Weiss, Rifkind, Wharton & Garrison).

McCourts Settle, But Bankruptcy Battle Continues

Frank and Jamie McCourt—and their many lawyers—agreed last week to settle their nearly two-year-old divorce battle. Though the settlement's terms were not disclosed, The Associated Press reports that Jamie McCourt will receive about $130 million from her former husband.

The deal gives Frank McCourt control of Major League Baseball’s Los Angeles Dodgers, a team he bought for $430 million in 2004, but was forced to put into bankruptcy this summer—the latest major pro sports team to seek Chapter 11 in Delaware—because of mounting liabilities stemming from the divorce case and a stalled media rights deal with Fox.

MLB commissioner Bud Selig appointed Akin Gump Strauss Hauer & Feld senior counsel J. Thomas Schieffer to take day-to-day control of the Dodgers in April. Two months later, MLB stepped in and scuttled an initial settlement between the McCourts because of the league's opposition to the 17-year television contract with Fox. McCourt planned to use revenue from the deal to fund the divorce settlement agreement and to alleviate the storied franchise's cash-flow problems.

MLB and its lawyers from Proskauer, White & Case, and Fox Rothschild have asked a bankruptcy court in Delaware to approve a restructuring plan to allow the team to be sold. The Dodgers, represented in the Chapter 11 case by Dewey and Delaware’s Young Conaway Stargatt & Taylor, were sued by Fox in September over McCourt's plan to scrap the team's TV deal with Fox and instead auction off the Dodgers' media rights in bankruptcy court.

While MLB withdrew its motion earlier this month to oust Dewey and Young Conaway from the bankruptcy case on the grounds they're conflicted because McCourt and the Dodgers do not have common interests, the firms remain under fire for their work on the case. As sibling publication The National Law Journal reported last week, the U.S. trustee’s office is objecting to about $350,000 in fees and expenses submitted for the court's approval.

In yet another twist to Dodgers drama, news emerged this month that retired federal judge Joseph Farnan, Jr., has been serving as a mediator trying to broker a settlement between Selig’s office and the Dodgers, which balked this week at a bid by a group of season ticket holders (advised by Steptoe) to secure official committee status in the case. (Morrison & Foerster was retained over the summer to represent an official committee of unsecured creditors in the case.)

Another firm still firmly stuck in the thicket of litigation surrounding the Dodgers is Bingham McCutchen, which drafted the ill-fated marital property agreement that cut to the heart of a dispute between the McCourts over ownership of the team. Bingham, as recounted in this feature story from The American Lawyer, is facing a potential multimillion-dollar malpractice claim by Frank McCourt over its actions leading up to the divorce case.

Frank McCourt has retained Bartlit Beck Herman Palenchar & Scott—named Litigation Boutique of the Year by The American Lawyer in 2009—to fight a suit filed by Bingham earlier this year seeking a declaratory judgment absolving the firm of any liability from losses its former client might suffer in his divorce case. (W&C, Gibson, Dunn & Crutcher, and Foley Hoag are representing Bingham in the matter.)

What do all these legal machinations mean for Frank McCourt and the future of one of baseball's marquee franchises? The Los Angeles Times’s Bill Shaikin has a nice breakdown on where the $130 million reportedly due Jamie McCourt by next spring will come from—and how Frank McCourt might want to settle with Bingham soon.

Around the Horn

—As of Sunday afternoon, the St. Louis Cardinals had won two of their first three World Series games with the Texas Rangers. One Am Law 200 lawyer enjoying the Redbirds' run: Thompson Coburn partner Nicholas Lamb, who, as reported by SI.com last week, was sitting in the firm's seats at Busch Stadium on August 24 when the Dodgers completed a three-game sweep of the Cards that supposedly ended their playoff hopes for the year. As SI.come reports, Lamb was also on hand—as was Bryan Cave partner Kenneth Mallin—that night for the annual dinner at the Missouri Athletic Club sponsored by the Knights of the Cauliflower Ear. More than half the team's players, manager (and lawyer) Tony LaRussa, and general manager John Mozeliak also attended the dinner, the positive mood of which SI.com suggests helped turn the team's season around. One Am Law 100 lawyer not enjoying the way the postseason has played out: Akin Gump senior counsel Randy Levine. The president of the New York Yankees lashed out at the team after they were eliminated from postseason play earlier this month.

—Brown Rudnick partner Mark Tuohey III, who missed out on Stephen Strasburg’s scintillating debut for the Washington Nationals last year, penned this paean to Nats manager Davey Johnson last week for The Washington Post. Tuohey, who left Vinson & Elkins after nearing the firm's mandatory retirement age, played a key role in bringing pro baseball back to Washington six years ago when the Nats moved to D.C. from Montreal.

—MLB has asked a New York state court to order a Connecticut-based Beazley Insurance to comply with a request to provide documents that could reveal who leaked the financial statements of several teams to the AP and sports gossip site Deadpsin last year. MLB’s lawyer, Willkie Farr & Gallagher partner Martin Klotz, stated in court papers that Beazley was the only one of six insurers that declined to cooperate with the league’s investigation, according to the AP.

—Paul, Weiss is defending the National Football League, no stranger to litigation this year, in a suit filed by 125 former players over the increasingly polarizing issue of concussions, the AP reports. The NFL Players Association, meanwhile, is also being sued by Zuckerman Spaeder on behalf of a group of retired players who claim their benefits were cut so that current players could get a better deal in this year's labor negotiations, according to the AP.

—Dickinson Wright sports entertainment partner Trevor Whiffen in Toronto wrote this letter to the editor of The London Free Press in London, Ontario, about what he believes is the best way to pursue a hockey career in puck-crazed Canada. Whiffen, a longtime adviser to pro hockey clients, serves as president of the London Knights, a junior league team that plays in the Ontario Hockey League.

—The NHL Players’ Association has suffered some churn among lawyers over the years over the past few years. Its former general counsel, Ian Penny, resigned in October 2009, two months after the union fired ex-executive director Paul Kelly. (Kelly settled an employment suit with the union last year.) Now the NHLPA has hired Don Zavelo as its new top in-house lawyer, according to sibling publication Corporate Counsel. Zavelo, a former NLRB attorney, takes over at a time when the union is gearing up for new CBA talks with the league.

—Labor unrest in a professional sports league isn’t confined to North America. Players in the Australian Football League—better known as Aussie rules football—are being advised by large Australian firm Clayton Utz in a dispute over pay, according to the Melbourne Herald Sun.

—The U.S. Golf Association has nominated attorney Glen Nager to become its next president, according to the AP. Nager, chair of the issues and appeals practice at Jones Day in Washington, D.C., previously served as the USGA’s general counsel and currently is a member of its executive committee.

—Morgan Spurlock’s new documentary on sports agents for ESPN Films, The Dotted Line, features former Fish & Neave and Brown Raysman Millstein Felder & Steiner associate Eugene Lee, now president and CEO of his own New York–based agency, ETL Associates. Also shown in the film, according to sibling publication Texas Lawyer, is Eugene Egdorf, a senior associate at The Lanier Law Firm in Houston, who serves as ETL’s general counsel.

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