Lookzy: all your daily legal news in 0.1 billable hours. Litigation, deals, lateral moves and industry news; we cover it all.

Welcome (back) to Lookzy and Happy New Year! Back to our regularly-scheduled programming. In today's Lookzy:

• Shearman's bonus mess and merger rumors; what's going on?

• Proskauer sues its own ex-COO

• SpaceX seeks to raise $750 million, worth $137 billion

• ChatGPT takes the bar; next, your job?

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WHAT'S GOING ON AT SHEARMAN?

Attorneys at Shearman & Sterling have had a volatile end of 2022.

Shearman initially announced 2022 year-end bonuses on the market scale. This was welcome news for associates in a year like 2022, given that Shearman has historically not required any billable hours minimum for associates to receive their bonus (at least in certain practice areas; Shearman reportedly operates differently by department).

According to reports by Shearman associates, though, a later Zoom meeting informed associates that an hours minimum would in fact apply, not just for 2023 but also retroactively. Moreover, the hours minimum for a full bonus is 2,225 hours, perhaps the highest billable hours minimum for a market-level bonus of any BigLaw firm. Below 1,845 hours and associates would receive nothing (though pro bono does count), and between 1,845 and 2,225 hours, the bonus would be prorated. One associate confirmed that they billed 2,200 hours and did not receive a full market bonus.

After this hours bait and switch, associates were further thrown when many associates did not receive their bonuses on December 30th, the day the firm announced it would be paying bonuses. Instead, at least several associates reported only receiving their bonuses yesterday, on January 3rd. The firm apparently failed to communicate about the delayed bonus payments in any way.

Shearman's bonus mess follows earlier reports of a potential merger with Hogan Lovells, which both firms said they neither confirm nor deny. Given these rumors and the firm's delayed bonuses, many associates are asking whether the firm is facing cash flow issues or is simply attempting to cull associate ranks to improve its position in merger negotiations or rather than conducting a formal layoff. We'll look out for more transparency from the firm going forward.

ECON SNAPSHOT

The difference between special bonuses and layoffs

THE VERDICT

Arguing today's litigation news

Stealing firm secrets. Proskauer sued its ex-COO over theft of trade secrets, including its 'black book' of partner compensation and evaluations and the firm's expenses. The "brazen and malicious" theft, according to Proskauer, took place right after the COO received his bonus, bypassed internal controls to download the trade secrets and delete thousands of emails, announced his resignation and took a vacation to Mauritius.

FTX catchup. Sam Bankman-Fried, the FTX founder, pleaded not guilty on all counts in front of SDNY Judge Lewis Kaplan, with a tentative trial date of October 2, 2023. The original judge overseeing the trial, Judge Abrams, recused herself due to her husband's historic legal work for FTX at Davis Polk. The Bahamas hired Brown Rudnick for legal and lobbying help with respect to the FTX collapse and related US Government and media management.

SPAC CFO. SDNY announced that Cooper Morgenthau, the former CFO of two SPACs, pleaded guilty to a fraud scheme in which he embezzled more than $5 million to trade meme stocks and crypto, nearly all of which he lost. Morgenthau was CFO to African Gold Acquisition Corp. and Strategic Metals Acquisition Corp. I and II.

Firm vs. firm.  Kasowitz sued Glenn Agre Bergman & Fuentes, which was formed by seven former Kasowitz attorneys who left the firm, claiming that Genn Agre is refusing to share the appropriate percentage of legal fees tied to a settlement of a former Kasowitz client.

Southwest revenge. A Southwest Airlines passenger whose flight was cancelled in the midst of Southwest's holiday meltdown filed a proposed class action for breach of contract, claiming that Southwest offered him a credit toward a future flight but no refund.

THE DEAL

Wheelin' and dealin' today's corporate news

Funding to the moon. SpaceX is reported to be raising a new $750 million equity round at a $137 billion valuation, with a16z expected to lead the round. This round follows a December tender offer, which valued the company at around the same price, and a $250 million round in July 2022. SpaceX was valued at $127 billion in May 2022 and raised $2+ billion in 2022 alone.

Buying on credit. Amazon disclosed that it entered into a $8 billion 364-day term loan agreement with lenders including DBS Securities and Mizuho, noting in a statement that it is a hedge against the “uncertain macroeconomic environment.”

Spending that tuition money. University of California agreed to invest $4 billion into Blackstone's BREIT, which was being hit by a wave of redemptions. Goodwin is representing UC and Simpson is representing Blackstone.

PE wants an annuity. Iowa-based fixed annuities company American Equity Investment Life rejected an unsolicited $4 billion bid from a rival controlled by Paul Singer’s Elliott Management over the holidays, striving to remain independent as it similarly rejected hostile bids from Apollo and others in the past. Now that Elliott's bid is public, analysts expect that Apollo, Brookfield, KKR, Carlyle Group, Ares and Sixth Street, among others, may make bids early this year in an attempt to control AEL's $70 billion in AUM.

DOJ antitrust loss. The DOJ dropped its challenge to Booz Allen Hamilton's attempted acquisition of EverWatch Corp. for $440 million, paving the way for the acquisition to close. The DOJ and FTC have collectively challenged 22 mergers since President Biden entered office, though they have faced a number of losses. Shearman represented Booz Allen in the DOJ suit.

BUSINESS OF THE FIRM

Lateral Moves:

• Quinn Emanuel hired partner Christopher G. Michel, formerly Assistant to the Solicitor General in the DOJ.

• Winston & Strawn hired partner Paul Fleming in London.

• Polsinelli hired a team of seven international trade lawyers from DC law firm AMS Trade LLP for a new litigation and trade remedies practice; AMS Trade is dissolving.

Industry News:

• Mintz announced it will open a Miami office in 2023, it's 7th office in the US.

• Two researchers fed ChatGPT, the impressive large language model AI chat app created by OpenAI, questions from the multi-state bar exam. While ChatGPT did not yet pass the overall multiple choice exam, it reached the average passing rate for Evidence and Torts on parity with humans, and is expected to fully pass the exam as soon as the next iteration of ChatGPT is released.

• Morrison Foerster closed its planned combination with litigation boutique Durie Tangri LLP.

• The US News & World Report announced it will modify its law school rankings to rely solely on publicly available data collected by the ABA and other surveys.

• More than 50% of the Vault 100 has now announced bonuses, some better than others. Check out the Lookzy Reverse Bonus Tracker to see who's left.

BOILERPLATE

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Alright, back to billing. That's all, folks!