Cleary Gottlieb Steen & Hamilton
||This article appears to be written like an advertisement. (October 2014)|
|Cleary Gottlieb Steen & Hamilton LLP|
|Headquarters||One Liberty Plaza
New York City
|No. of offices||16|
|No. of attorneys||1,200+|
|Major practice areas||General practice|
|Key people||Mark Leddy, Managing Partner|
|Revenue||$1.131 billion (2012)|
|Company type||Limited liability partnership|
Cleary Gottlieb Steen & Hamilton LLP is an international law firm headquartered at One Liberty Plaza in New York City. The firm currently has offices in Washington DC, Hong Kong, Beijing, London, Rome, Milan, Brussels, Moscow, Frankfurt, Cologne, Paris, Buenos Aires, São Paulo, Abu Dhabi, and Seoul.
The Firm employs over 1,200 lawyers worldwide. It was the first U.S. firm qualified to practice law in Japan, and has represented governments throughout Latin America.
Clearly Gottlieb is known for its representation of national governments in sovereign-debt cases. Lee Buchheit, a partner in the firm who has led debt-restructuring negotiations for several countries, is the originator of the “collective action” clause in debt agreements, whereby a supermajority of bondholders can compel all bondholders to accept a restructuring.
In 2014, Cleary Gottlieb “lost a string of historic cases,” as The American Lawyer noted in August of that year. Also in 2014, the firm was widely criticized for encouraging the government of Argentina, which was its client in a sovereign-debt case, to default on its debt and to take an “antagonistic and self-destructive” position toward its creditors.
- 1 History
- 2 Reputation
- 3 Notable lawyers
- 4 Sovereign debt
- 5 Buchheit and collective action
- 6 Congo and Mbemba testimony
- 7 Argentinian debt
- 8 Russia and Yukos case
- 9 Daoud Chehazeh asylum case
- 10 Chinese investment in Tanzania
- 11 Nortel Networks
- 12 Justice Department and BNP Paribas
- 13 References
- 14 External links
The firm was founded in 1946 when six partners from the firm of Root, Clark, Buckner & Howland left to found a firm which they initially called "Cleary, Gottlieb, Friendly, & Cox." One of those partners was Henry Friendly, whose name was removed from the firm's name after he was appointed as a judge on the United States Court of Appeals for the Second Circuit in 1959.
The firm is consistently rated as one of the ten most prestigious law firms in the U.S. by Vault.com. Chambers and Partners has given the firm high marks in the following practice areas: Corporate, Litigation, M&A, Private Equity, antitrust, capital markets, employee benefits, real estate, and income tax.
In August 2014 The American Lawyer ran an article headlined “Cleary’s Litigation Slump.” The article noted that in the previous six months Cleary Gottlieb had “lost a string of historic cases,” including cases in which it represented Russia and Argentina. “Powerful entities routinely ask Cleary to push the envelope in international law,” reported the publication. “Lately it hasn’t worked out well.”
Some of the notable attorneys who have practiced at Cleary, Gottlieb, Steen & Hamilton LLP include George W. Ball, Henry Friendly, and Melvin Steen. Current notable attorneys include former two-time SEC general counsel David M. Becker; former president of the New York City Bar Association, Evan A. Davis; former SEC general counsel Giovanni Prezioso; and capital markets lawyer Leslie N. Silverman.
Cleary Gottlieb has been engaged in several cases involving the restructuring of sovereign debt. “Over the past three decades,” noted a 2012 Reuters report, “the firm has become the go-to legal adviser for countries in financials. In the past five years it has represented Greece, the Republic of Congo and the Ivory Coast.”
The firm advised Argentina in the 2005 restructuring of its $81.8 billion global debt, and in 2012 it represented Greece in the largest ever sovereign-debt restructuring and the largest ever bond exchange. In 2014, a number of commentators criticized the firm severely for its handling of the Argentinian debt case.
Buchheit and collective action
“Much of Cleary Gottlieb's success in sovereign debt,” according to Reuters, “is based on the work of partner Lee Buchheit, who has led restructuring negotiations for 20 countries.” Buchheit’s “academic papers, books and legal briefs over the past three decades fill much of the void where no formal law exists.” For example, in 2002, “Buchheit developed a collective action clause, which says that if a supermajority of bondholders votes in favor of a restructuring, it becomes legally binding for everyone, even for those who voted against it.” Buchheit was a lead author of a 2013 Brookings committee report that proposed changes in the approach to sovereign debt, including the collective action clause.
Congo and Mbemba testimony
In August 2007, Manhattan federal judge Loretta Preska sanctioned Cleary Gottlieb for improperly trying to dissuade a witness, French-Congolese businessman Medard Mbemba, from testifying in Kensington International Ltd. v. Republic of Congo, in which Kensington, which was trying to collect on a nearly $57 million judgment against Congo and Clearly Gottlieb was representing Congo. It emerged that Paris-based Cleary partner Jean-Pierre Vignaud had e-mailed Mbemba on February 3, 2005, telling him that testifying would pose “very serious risks.” In a phone call, according to Mbemba, Vignaud had appealed to him as a “Congolese patriot,” had said his testimony could be “dangerous” for Congo, had described Kensington as a “vulture fund” that was capable of destabilizing national economies, and had said: “I'm warning you so that you'll know and not participate in this kind of a game because it is bad for your country.” Mbemba said that because he knew Vignaud had “privileged connections” in the Congolese government, he perceived the lawyer’s “warning” as a threat. At first he backed out of the deposition but later decided to proceed, whereupon Vignaud called Mbemba a number of times in a further attempt to prevent him from testifying.
Preska found that “a mass of evidence” existed that Cleary Gottlieb's actions “were taken with the purpose of preventing Mbemba's deposition,” and that “Cleary feared Mbemba might reveal damaging information or offer evidence of illegal conduct and thus attempted, in bad faith, to influence Mbemba's testimony or, better still, to avoid the deposition altogether.” The firm, Preska wrote, “has shown a willingness to operate in the murky area between zealous advocacy and improper conduct, and here it crossed the line.” She imposed monetary sanctions on the firm and ordered that a formal reprimand be circulated to all of Cleary's 950 lawyers, and officially reminded Clearly “that it has obligations beyond representing its client.”
||This section lends undue weight to certain ideas, incidents, or controversies. (October 2014)|
Cleary Gottlieb has long represented Argentina in sovereign-debt cases. On November 2, 2012, opposition lawmakers in Argentina submitted a resolution that would force the government to fire Cleary Gottlieb, saying the firm gave disastrous advice and failed to protect national interest.
At a hearing on November 9, 2012, Judge Thomas Griesa questioned Cleary Gottlieb attorney Carmine Boccuzzi about statements by Argentina's president and economy minister to the effect that the country would not pay holdout investors. Not paying those investors, Griesa noted, would represent a violation of U.S. court orders. Boccuzzi replied that Argentinian President Cristina Fernández de Kirchner was only trying to calm financial markets. “They are not thumbing their nose at your honor or the orders,” Boccuzzi told the judge.
In June 2014, the New York hedge fund NML Capital, which owned much of Argentina’s debt, stated in a court proceeding “that Argentina had a secret plan in case it was rebuffed at the Supreme Court,” citing a leaked memo from Cleary Gottlieb lawyers indicating “that Argentina intended not simply to default on its exchanged debt but immediately to restructure the bonds to put them out of the reach of U.S. courts.” NML described this as a flaunting of an October 2013 injunction in which Griega had barred Argentina from changing bond mechanisms to avoid payments to creditors. At a June 3 hearing, Cleary Gottlieb partner Carmine Boccuzzi maintained that the firm, in the memo, had just been outlining options for its client and that Argentina had no plan to restructure its debt. “We have never advised a client just to turn their nose up to the court's orders and to evade them,” Boccuzzi told Griesa. Within hours of the Supreme Court’s refusal to hear Argentina's appeal, however, Argentine President Cristina Fernandez de Kirchner vowed in a speech not to “submit to extortion” by the hedge funds, and the next day the country’s Economy Minister, Axel Kicillof, announced that Argentina was working on a means of restructuring its debt that would allow it to pay most bondholders while not paying the holdouts. NML lawyer Robert Cohen stated that Cleary Gottlieb’s “representations…about there being no restructuring plan were obviously untrue.”
Later in June, Boccuzzi informed Griesa that Argentine officials would be in New York in a week’s time to begin negotiations with its hedge-fund creditors. The next day, at a press briefing, Argentine Cabinet Chief Jorge Capitanich said, “There is no delegation prepared for a possible trip to the United States.” It was noted that Capitanich was the third Argentine official in a week “whose public comments seem to be at odds with positions the country's lawyers have taken in U.S. courts.” One observer noted that “Argentina's pronouncements, at the very least, have put Cleary Gottlieb in the awkward position of trying to explain to Judge Griesa why he should disregard the public proclamations of its client.”
Another observer, Josh Rosner, wrote on July 25, 2014, that “President Kirchner appears to be following the seemingly self-interested recommendations of her attorneys at Cleary Gottlieb Steen & Hamilton to default and then restructure outside of the jurisdiction of the U.S. Courts….it appears that the advice received from Cleary, Gottlieb is demonstrating who are the real ‘holdouts’ in this dispute.” Rosner accused Cleary Gottlieb of “‘advising chaos’, which, of course, benefits the lawyers, not the client….by pushing the Government to avoid settlement and to choose default, even in violation of the Orders of the U.S. Court, the law firm would place its client in direct violation with several Court Orders while continuing to benefit from millions of dollars of legal fees. Moreover, by pushing the Argentines to default, the law firm may be attempting to minimize its own liability for poorly advising Argentina on the structure of the RUFO Clause (Rights Upon Future Offers) in the highly unlikely event that a settlement with the holdouts results in a colorable RUFO Clause claim.”
Rosner further stated that “a settlement, whether it triggers RUFO or not, is all downside for Cleary, Gottlieb” and urged Argentina to “engage an independent negotiator to lead its settlement talks and should recognize that the path toward settlement is in direct conflict with the interest of her attorneys.” Yet he lamented that “President Kirchner has yet to see that her own interests, and the best interests of the Argentine people, are being poorly served by continuing to take the advice of lawyers who have more to gain by pushing her to become a holdout and to default. After all, while the Argentine public will suffer from another default and, once again, isolate herself from the global community, the lawyers will benefit from being able to bill for all of the work involved with further legal actions and the management of a new restructuring.”
In August 2014, Argentina published a two-page ad in the New York Times and The Wall Street Journal stating that it had not defaulted on its debt obligations because it had deposited the funds to cover an interest payment due June 30. Griesa called this a “false and misleading” statement and said that if Argentina continued to make such statements, “it will be necessary to consider contempt of court.” He also said that Argentina's lawyers were responsible for monitoring its statements. One report stated that Griesa, at a meeting in his office in Manhattan, “railed at Argentina’s lawyers from Cleary Gottlieb Steen & Hamilton following the publication of another so-called legal notice insisting the government has met its payment requirements and was therefore not in default.” Stating that “these notices were regularly and systematically omitting what he described as the country’s vital obligations,” Griesa “threatened the contempt-of-court order.”
In an August 20, 2014, article for the Guardian, hedge-fund manager Hans Hume called on Argentina to fire Cleary Gottlieb. Noting that he had “co-chaired the Global Committee of Argentina Bondholders leading up to the country’s 2005 exchange of its bonds for better terms,” he said: “I had never before or since encountered representatives of a country who were more duplicitous, arrogant or who demonized the representatives on the other side of the table more.“ He described Argentina’s conduct toward creditors in recent years as “antagonistic and self destructive,” and attributed its behavior to Cleary Gottlieb, stating that Argentina had been following “the course laid out” by Cleary Gottlieb in its May 2 memo, in which it had “advised Argentina to intentionally default on its bonds, in order to force a renegotiation of the debt and to take the case away from American judges.” Hume called this “bad advice,” stating that “If Argentina moves to restructure all its debt outside the United States to avoid the jurisdiction of the courts, it will deepen its status as a pariah country. The government of Cristina Fernandez de Kirchner risks leaving deep structural problems for any subsequent administration, not only in the Argentine economy but in the legal and financial relationship with the developed world, all of which may take years to repair.” Instead, he counseled, Argentina should “fire Cleary Gottlieb….Firing Cleary would provide a legitimate way to ask Judge Griesa for a stay. I suspect it might also clear some of the toxic atmosphere in the dialogue with the holdouts. Argentina could certainly benefit from legal advice that isn’t contaminated with a decade of being vested in the fight.”
An August 21, 2014, Reuters article headlined “Argentina Has Started To Go Totally Rogue” stated that Argentina, by seeking “to pass a law nullifying a U.S. Court’s ruling that the country pay all its creditors,” was “effectively turning its back on the rules governing international finance.” The article blamed this course of action on Cleary Gottlieb.
Russia and Yukos case
Cleary Gottlieb represented the government of Vladimir Putin in the case of Yukos, a firm that the Russian government had broken up in 2003 after arresting its owner, Mikhail Khodorkovsky, on charges of tax evasion. Courts in several countries later ruled that the Russian government’s real intent was to destroy Yukos and seize its assets, and punish Khodorkovsky, a political enemy. In October 2011, Vasily Aleksanyan, a former Cleary Gottlieb lawyer and former head of the legal department at Yukos who had been arrested and imprisoned in connection with the government seizure of Yukos, died from AIDS-related complications; government critics said that “his detention was directly responsible for his death.”
Cleary Gottlieb lawyers were present at a meeting with Putin in March 2013; a July 2014 article about the Yukos case referred to “Vladimir Putin’s team of Cleary Gottlieb and Baker Botts.” In 2014, the largest arbitration award in history, $50 billion, was won by Yukos' former owners against Russia. On July 28, 2014, Kodorkovsky commented: “‘From beginning to end, the Yukos case has been an instance of unabashed plundering of a successful company by a mafia with links to the State.” Emmanuel Gaillard, head of Shearman & Sterling’s international arbitration group, which represented Yukos investors, said Russia had not been collecting legitimate exercise in tax collection but had “aimed at destroying Yukos and illegally expropriating its assets for the benefit of State instrumentalities Rosneft and Gazprom.”
Daoud Chehazeh asylum case
Pro bono attorneys from Cleary Gottlieb secured asylum in the US for Daoud Chehazeh, “a known associate of the 9/11 hijackers” who according to one investigator had been part of the 9/11 conspiracy. Jim Bush, a New Jersey state criminal investigator who had been part of the 9/11 investigation, called this “a slap in the face to Americans, especially the victims of 9/11 and the families.”
Chinese investment in Tanzania
In 2011, Cleary Gottlieb represented the Chinese company Sichuan Hongda Group in its $3 billion investment in Tanzania, a joint venture with Tanzania’s National Development Corporation (NDC) that constituted the largest investment venture in East Africa to date.
A January 2013 article in the Toronto Globe and Mail reported that the remnants of the Nortel Networks Corp. is being drained away by lawyers and consultants. The article noted that, “Nortel’s main U.S. firm, Cleary Gottlieb Steen & Hamilton LLP, charged Nortel $1.25-million in legal fees and another $300,000 in expenses such as photocopying and meals in November, 2012. It also charged the company $40,000 to produce a 180-page document to submit to U.S. Bankruptcy Court in Delaware detailing all its charges and fees, declaring that it took 80 hours of staff time."
Justice Department and BNP Paribas
The U.S. Department of Justice stated in 2014 that Cleary Gottlieb had given incorrect legal advice to BNP Paribas in regard to international transactions, resulting in penalization by US authorities that might otherwise be avoided.
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RUETwas invoked but never defined (see the help page).
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