Turns Out The Second Circuit . . . Uh, Heh Heh . . . Tossed Gibson Dunn For A Very Good Reason

So yesterday I wrote about the seemingly wrongheaded decision by the U.S. Court of Appeals for the Second Circuit to strike Gibson Dunn’s appearance from Lynn Tilton’s case in that court.  Its apparent issue was that Judge Sack, one of the three members of the panel to reject Tilton’s constitutional challenge to the SEC’s administrative process, was a Gibson Dunn partner way back in the Clinton Administration and that the firm therefore could not participate in the case. I got on my high horse and said that was crazy talk.

I went through the ethical standards as laid out in In re FCC, 208 F.3d 137 (2d Cir. 2000), and carefully laid out my case for why the Second Circuit was smoking crack and should have let the firm stay in the matter. What I should have done was dig more deeply into the facts that might have played into In re FCC’s citation of Advisory Opinion No. 24 of the Committee on Codes of Conduct. That opinion says, among other things:

A partner who leaves a law firm to become a federal judge should, if possible, agree with the partners on an exact amount that the judge will receive for his or her interest in the firm, whether that sum is to be paid within the year or over a period of years. Such agreed-upon payments may be made to the judge provided (1) it is clear that the judge is not sharing in profits of the firm earned after the judge’s departure, as distinguished from sharing in an amount representing the fair value of the judge’s interest in the firm, including the fair value of the judge’s interest in fees to be collected in the future for work done before leaving the firm, and (2) the judge does not participate in any case in which any attorney in the former firm is counsel until the firm has paid the full amount the judge is entitled to receive under the agreement.

The opinion went on to discuss the amount of time a former partner ought to be recused, the relationships the former partner has with specific lawyers at the firm etc., and I thought, they must mean one of those things. Because surely Judge Sack isn’t still getting money from Gibson Dunn 18 years after he left the firm. But au contraire!  Shortly after I published my post, Law360’s Carmen Germaine pointed out her July 22 piece explaining that Judge Sack “is still pulling in $6,000 a month — $72,000 a year — from the firm under a retirement agreement signed in 1998.”  And the agreement apparently never expires!  So the court actually seems to have had a quite sound reason not to allow Gibson Dunn’s participation in Tilton’s case.

But this raises new questions for me.  Look back at Advisory Opinion No. 24.  It imposes obligations on the judge/departing partner, not the firm. And it says that the judge “should, if possible, agree with the partners on an exact amount that the judge will receive for his or her interest in the firm, whether that sum is to be paid within the year or over a period of years.” I have to say, it doesn’t seem like the payments to Judge Sack are an exact amount. If he left this mortal coil sooner than later, the payments would be less. Was it not possible to come to such an agreement? Is it ever impossible to do that?  Gibson Dunn has a strong appellate practice and a lot of work in New York. Should it be barred from advocating in panels where Judge Sack is participating as long as he’s on the court?  Are there other federal judges out there with similar, lifelong agreements? I think I would be less concerned if Judge Sack were on the district court rather than the court of appeals.  Anyway, I only have questions.  Not answers.