We know we’ve been busy with this Paul Hastings news in the last twenty four hours, but there’s one more point (for now) we just have to hit.

The firing of Shinyung Oh, which has been the talk of the biz this week (click here for an interview with her and here for her performance review), points up just which big-firm lawyers might be most-vulnerable in this economic malaise.

It’s not the partners with the big books of business. They’re more in demand than ever. And it’s probably not the super-junior associates, either. Firms have just spent a fortune recruiting them and still don’t know their potential. “You can’t identify that early who’s not going to be a good performer,” says Dan Weiner, co-chair of the personnel committee at Hughes Hubbard, with whom we spoke about this brouhaha yesterday. You’d be “cutting them before you know their performance capabilities, which is not good business.”

No, the most vulnerable are the folks in the middle, lawyers say. These are the junior partners, counsel and senior associates who are paid a lot and so have to be super productive to justify their salaries.

It’s an issue that was spotted earlier this year by Dan DiPietro at Citi and Brad Hildebrandt in their joint report on the industry. The report flagged a concern about the cost to firms of “income partners” and other non-equity lawyers. “Many firms are now bloated with some income partners performing mostly associate-level work while, at the same time, generating less overall profitability.”

Weiner (who was talking generally and not about current conditions at Hughes Hubbard) says that when times get tough, firms look at “expensive people who are underutilized” starting with partners and then “going down to counsel and senior associates” based on performance.

Partner demotions or firings certainly aren’t unheard of (click here for a post on partner demotions at Jenner & Block earlier this year; here for a post from last year on Mayer Brown’s decision to terminate or demote some 45 partners). But despite notions that a law-firm partnership no longer has the job security of a tenured professorship, it’s still, at least for now it seems safer to be a partner than an associate.

LB’ers: Is it? What are you seeing? What are you fearing?

This just in from Jeff McCracken, WSJ’s bankruptcy reporter who’s in Wilmington covering the Linens ‘N Things Chapter 11 today.

For all of you bankruptcy lawyers who’ve been waiting in the wings for years for some action, here’s a small update on who’s getting it. In the Linens ‘N Things Chapter 11, counsel for the unsecured creditors committee has been chosen, and it’s Scott Hazan and his team at Otterbourg, Steindler, Houston & Rosen in New York.

The only other firm to pitch was a Cooley Godward Kronish team led by Jay Indyke. The secured creditor, GE, is using Bingham out of Boston. The financial advisors also pitched, and Carl Marks advisory group won the biz for the unsecured creditors.

Reminder that debtor’s counsel are Mark Collins of Richards Layton & Finger, Howard Beltzer of Morgan Lewis & Bockius and Gardere, Wynne & Sewell of Texas.

Photo: AP

Here at the Law Blog, we only bring you the most important legal news of the day. Which is why today we’re reporting that almost-Supreme Court justice Robert Bork has settled the $1 million lawsuit that he filed against the Yale Club after he fell stepping onto a platform to speak, according to the Associated Press.

How did this come down? Bork was at the club last June to speak at an event sponsored by the New Criterion, a monthly review of the arts and intellectual life. According to the suit, filed in federal court in Manhattan, the club failed to provide steps and a handrail to climb onto the dais. Bork fell backward as he was attempting to climb the dais, striking his leg on the stage and hitting his head on a heat register.

Bork suffered a large hematoma, or swelling of blood, in his lower left leg as a result of the fall and the hematoma eventually burst, according to the lawsuit. The injury required surgery and months of physical therapy, according to the complaint. He claims to have suffered “excruciating pain” as a result of the injury and continues to walk with a limp. Lawyers for the defendant blamed Bork, saying any injuries he sustained were at least partially his fault for not recognizing potential risks, according to the AP.

Here’s a copy of the complaint.

The AP said Bork’s lawyer, Randy Mastro, said terms of the deal are confidential.

Bork (Chicago, Chicago Law) taught at Yale Law School in the 1960s and 70s. He was acting Attorney General under President Nixon and a D.C. Circuit judge from 1982 to 1988. Last year, when we were first writing about this lawsuit, he was a professor at the Ave Maria School of Law in Michigan — but given all that’s gone on there we need to double check that for you. (Web site indicates he’s still there.)

Meanwhile, “to bork” has also become a verb — according to this story, it can be defined as “to destroy a judicial nominee through a concerted attack on his character, background and philosophy.”

For the litigators busy suing over subprime, or corporate types waiting – praying — for that market to come back, a few news tidbits.

Securitization Spotted: The Journal’s Serena Ng reports today that the business of securitization – in which banks create securities out of big pools of loans – could be staging a modest comeback. The sudden slump in this kind of highly-leveraged legal work is what helped account for the layoffs at places like Thacher Proffitt and Cadwalader. But this week, GMAC bundled about $1.56 billion in auto loans into securities. That deal was part of about $12 billion in issuance of asset-backed securities in the last two weeks, roughly double the pace from earlier this year, according to BofA. Nowhere near where it once was, but a dab of sunshine for lawyers who’ve call this work a living.

• I-Bank as Victim?: The SEC, Cuomo’s office and others have been scrutinizing Wall Street as perpetrator of subprime woes. But a case this week out of the federal prosecutors’ office in Brooklyn suggests I-banks can be victims, too. According to Chad Bray at the DJ Wires, a former principal at a New York City lender was charged with fraud for an alleged scheme to sell to investment bank Credit Suisse nonperforming mortgage loans using falsified loan histories. CS purchased 12 of those nonperforming loans, prosecutors said.
• ARS Payout: For the newly minted auction-rate securities hounds, here’s a development: UBS earlier this week agreed to fork over some cash, about $35 million, to Massachusetts cities and other government entites. These weren’t ARS issuers. They were buyers. But it turns out that under state law, auction-rate securities were not a kosher purchase for them. For its part, UBS seemed to try to manage expectations that more such payments would not be forthcoming. “The reasons supporting this agreement apply only to the circumstances of this specific case under Massachusetts law,” the company said. Here’s the story.

Refer back, if you will, to Amir Efrati’s interview last night with Shinyung Oh, the Paul Hastings associate whose mass email after she was let go caused a stir in the blogosphere this week. Now, take a look at her 2006 performance review.

LB readers Setting aside the fact that Oh seemed to be a pretty highly regarded worker for the year previous to this review, what do you think about the format of the review? Does it ask enough questions? Does it ask the right questions? Are your reviews more detailed? Less detailed? Are the comments too much, not enough or just right? Let us know your thoughts on these questions and what you think about the review process at your firm.

Whenever a lawyer gets into hot water over insider-trading charges, we’re always inclined to think “why doesn’t this happen more often?” Not that we have such a dark view of lawyers and the profession (quite to the contrary), but given everything — the access, the money, the ease of pulling off a few trades and making a quick buck off of some insider information — we’d just think it’d come across our radar screen more frequently. (That said, click here and here and here for some relatively recent examples.)

We asked the question to ourselves again this morning in reading the latest, that Minneapolis-based Dorsey & Whitney fired a partner in Toronto in connection with government probes of alleged insider trading. Here are stories from the NLJ and Bloomberg.

The allegations involve former Dorsey lawyer Gil Cornblum and one of Cornblum’s Osgood Hall Law School classmates, Toronto business consultant Stan Grmovsek.

According to the Bloomberg story, Cornblum advised on Yamana Gold Inc.’s February 2006 acquisition of Desert Sun Mining Inc. as well as Goldcorp Inc.’s August 2006, acquisition of Glamis Gold Ltd. Grmovsek, using accounts in his, his sister’s and his brother-in-law’s names, bought 53,100 shares of Desert Sun from Feb. 7, 2006, to Feb. 20, 2006, according to an affidavit by Ontario Securities Commission investigator Stephen Carpenter, realizing a profit of $52,800 (Canadian) when the shares were sold Feb. 22, 2006.

Carpenter’s affidavit reportedly doesn’t name Cornblum, referring to him instead only as “the lawyer.” “I am very heart-broken about what my friend did as he has always been someone that I greatly cared for and admired and respected,” Grmovsek said in an e-mail to Bloomberg.

Cornblum reportedly didn’t respond to Bloomberg’s e-mail and phone messages seeking comment.

In a statement issued Thursday afternoon, the firm said it is cooperating fully with inquires made by investigators.

LB Readers, can you help us out with this one? Are trades based on inside information gleaned from lawyers really rare or is it that they happen fairly frequently but are hard for investigators to track down?

It’s a fair bet that no high-powered American law firm will lend a caring hand to the relatives of the seven Iraqis murdered last month by a suicide bomber named Abdullah Salih Al Ajmi and two accomplices. That’s too bad, seeing as how Ajmi was himself a beneficiary of some of that high-powered legal help. WSJ Editorial, May 9, 2008

The “high-powered legal help” came courtesy of Shearman & Sterling and other firms, and has landed squarely in the sights of the WSJ’s editorial board for offering pro-bono assistance to a group of Kuwaiti detainees released from Guantanamo Bay in 2005. Today’s editorial takes specific aim at the firm’s representation of a group that included Abdullah Salih Al Ajmi, who was 29 when he blew himself and several Iraqis up in a suicide mission last month.

Ajmi was one of 12 Kuwaiti petitioners in whose favor the U.S. Supreme Court ruled in 2004 in Rasul v. Bush, which held that the detainees were entitled to a habeas corpus hearing. The ed board railed against that ruling; other articles critical of U.S. law firms’ pro-bono help for the detainees followed (click here and here.) The issue came to light in a different forum when Cully Stimson, a former Defense Department official, made comments critical of the firms lending pro-bono help to Guantanamo detainees.

At the time, many legal leading lights rallied to the support of Shearman and others. Karen J. Mathis, a Denver lawyer who was, at the time, the president of the American Bar Association, said: ”Lawyers represent people in criminal cases to fulfill a core American value: the treatment of all people equally before the law. To impugn those who are doing this critical work — and doing it on a volunteer basis — is deeply offensive to members of the legal profession, and we hope to all Americans.”

LB readers, we’ve asked you to kick around this issue before, and you’ve done an admirable job. But does the fact that someone who benefited from BigLaw’s help went on to become a killer change the equation at all? Let’s hear your thoughts.

When western companies get into dustups with Chinese companies — an increasingly common occurrence given the pace of western investment in China — what do they do? Well, increasingly they’re being asked to agree to what they consider a risky proposition — to resolve disputes through arbitration in China. Here’s the story, from the WSJ’s Ashby Jones (that’s me) and Andrew Batson in Beijing.

The leading Chinese arbitration organization, CIETAC, has made big strides in the last 20 years in an attempt to ensure that Beijing or Shanghai are places westerners feel comfortable arbitrating. But according to many western lawyers, the organization still has a ways to go.

Among the issues worrying to wstern companies is that the method for paying arbitrators is less transparent under CIETAC than it is under the predominant western systems. Pay for the arbitrators under CIETAC pay among arbitrators on a case can vary widely, often with western arbitrators making more. This can cause suspicion and resentment.

Wang Chengjie, CIETAC’s deputy secretary-general, resents any implication that that would make Chinese arbitrators less fair in their decisions. “Chinese salary levels are lower. But that does not mean we are irresponsible in our work.”

One case that has caused anxiety among western lawyers, though the arbitrations themselves were conducted on neutral ground, concerns two linked disputes between PepsiCo and a Chinese bottler. PepsiCo had agreed to resolve disputes with the partner through arbitration in Stockholm.

One of the three arbitrators, selected by PepsiCo, was at the time the head of CIETAC, Wang Shengchang (pictured). The Chinese company picked a Chinese arbitrator. The lead arbitrator was Swedish. Wang and the Swedish arbitrator voted for PepsiCo in both cases; the Chinese arbitrator sided with the Chinese party in both.

In March 2006, Dr. Wang was apprehended outside CIETAC’s Beijing headquarters. He has been detained ever since, and is currently awaiting trial in a Tianjin court, according to an official there. The charges against him allege financial impropriety within CIETAC, but people in the arbitration community have feared something else was at work. “It would be . . . more than disappointing if Dr. Wang were arrested and detained in prison for not deciding these two awards in favor of the Chinese parties,” said V.V. Veeder, a prominent British arbitrator, in a 2006 speech at a Dallas workshop presented by the Institute for Transnational Arbitration. “It would strike a malign blow to international arbitration everywhere.”

Wang Chengjie of CIETAC said he doubts Wang Shengchang was detained because of his decision in the PepsiCo case. “There are so many arbitration cases where the Chinese side loses,” he says.

Meanwhile, PepsiCo has yet to recover on the judgment — a figure a PepsiCo spokesman puts in the low millions of dollars and other individuals familiar with the case say approaches $100 million.

The BigLaw story of the week has without a doubt been about a mass email sent by an associate at Paul Hastings in San Francisco who was fired on April 30 — six days after having a miscarriage — allegedly for poor work performance. (See earlier LB post here, the ATL post that started it all here.)

We caught up with the former associate, Shinyung Oh (University of Chicago ’93, Georgetown Law ’98), a commercial litigation lawyer, who says she sent the now-infamous email because she didn’t want other associates who may be laid off because of downsizing by the firm – but told it is because of their performance – to doubt their own abilities.

“I want them to feel like they’re not completely alone and not to worry about their own performance when it’s the firm doing something for economic reasons” and because of a “desire to increase partner profits,” she said.

Oh said two other associates who were widely believed to have been fired recently from her office had “left the firm with their tails under their legs,” and that she didn’t “want to walk out under the guise that I’d done something wrong.”

She said if a supervising partner hadn’t told her that she was succeeding in her work just a week before her last performance review, in which she was told she was doing poorly, “I would have seriously doubted myself.” (To see her 2006 performance review, click here.)

She added that she knew that the email, which was sent to associates firm-wide, litigation partners in her office and the top management of Paul Hastings, could ruin her chances of landing another big-firm job. She said she isn’t considering suing the firm, and said she doesn’t feel she was discriminated against because of her pregnancy.

“I understand it’s a business, but I had personal relationships,” she said. “I was shocked by the lack of human understanding and their inability to be honest with me, even on confidential basis,” about the firing.

As for what’s next, Oh, who immigrated from South Korea when she was eight and grew up in New York and Houston, said she’s not sure. But she said that since the email was posted online, she’s received an outpouring of support from lawyers in the Bay Area and across the country. Several are trying to help her find a new job.

To see her bio on the Paul Hastings web site, while it lasts, click here. The firm, which declined comment earlier this week, did not immediately respond to requests for comment on the interview.

If a firm is going to fire associates, what’s the best way to handle it?

That’s one of several questions raised by the email sent by a former associate at Paul Hastings that landed on Above the Law earlier this week. (Click here for the post.) The implication of the associate’s email: that the firm had laid her off for pretextual reasons, blaming her work performance when, in actuality, the firm wanted her gone before she had “a chance to get pregnant again.” (According to the email, the associate had recently suffered a miscarriage.)

A Paul Hastings spokeswoman told Above the Law: “We disagree with the person’s description of what occurred, but. . . we don’t comment on internal employment matters.”

Granted, we don’t know what actually happened between the Paul Hastings associate and the firm, and that situation also raises the issue of possible pregnancy-related discrimination. But the email also talked about business slowing at the firm.

Given the economic climate, other firms already have and may need to fire associates: If they do, what’s the right message, internally and beyond?

Some associates, apparently like this one, feel firms blame their performance when the issue has entirely to do with the firm’s economic performance. The firms’ motivation? Fear of what impact the “L” word, as in layoffs, can have on law-firm recruiting. “It conveys an image to the talent out there that they’re fungible,” says law-firm consultant Peter Zeughauser. “And lawyers or law students don’t want to be thought of as fungible. So, given an array of choices, they’ll go to a firm where they’re not perceived that way.”

But Zeughauser and others say that when a law firm is forced to lay off associates, it’s important to be honest about the reasons behind the moves. “In the world of inside sources and blogs, everyone knows why you’re doing what you’re doing anyway,” says Dan Weiner, the co-chair of the personnel committee at Hughes Hubbard & Reed in New York. “To try and put a false face on it is not going to help you at all.” Weiner says the firm hasn’t done and doesn’t anticipate layoffs, though it dealt with the issue many years ago.

Both Weiner and Ashley Brightwell, a labor & employment partner at Alston & Bird in Atlanta (firm name corrected from first version of this post), say that often multiple issues are at play in the decision. “Is it economic or is it performance-related is a false dichotomy,” says Weiner. “If you’re required to trim staff, you’re not going to pick people randomly” he says. “Expensive people who are underutilized” are the ones firms look at first.

“A lot of times the decision is easier because you’ll know that a certain practice group is one you need to cut,” says Brightwell. “But if you’ve got a group of five that are relatively equal in terms of seniority and background, then it comes down to performance.”

The trick for a firm, says Brightwell, is to have solid documentation to back up a claim that a termination is performance related. “I would never advise someone to say it’s performance-related when it’s not.”

LB readers: Should firms be as worried as they are about the reputational ramifications of layoffs? What’s the best communication policy when the firings have to get done?