Monday, March 25, 2019

An O'Melveny alumnus gets arrested while negotiating an "independent investigation" retainer

       Under the "independent investigation" business model, alleged wrongdoers pay O'Melveny's white collar practice millions of dollars to investigate and judge their acts. For example, when USC was accused of mishandling sexual abuse, they hired O'Melveny to investigate and decide who was at fault. When a Lions Gate executive was accused of sexual misconduct, they hired O'Melveny to perform a "thorough and independent" investigation and decide whether there was any wrongdoing.

       One reason I started this blog, was to warn victims about these "independent" investigations. Back in 2015, I went to O'Melveny with wrongdoing. Seeing how they responded -- I realized that these were not the most ethical of people. So I created this blog, hoping that victims would find it and be informed about who they are dealing with.

       Soon, corroborating stories came out. For example, O'Melveny had witnessed Harvey Weinstein's behavior back in 2004, and did nothing (actually, they reportedly threatened the victim.) The nondisclosure and arbitration agreements that I wrote about in the original post were discovered by law students, who created a movement to ban them. Eventually, things got so heated that O'Melveny threatened to sue me for the blog -- but then a saint of a woman appeared and vindicated my original post. She revealed that the attorney whose investigation I criticized in my original post, Adam Karr, also reportedly performed a sham investigation at Lions Gate. (And this woman gave back a large seven-figure settlement to go public. Imagine that in our day and age. She went into her bank account, took out over a million dollars, and gave it back to the people who harmed her -- so that she could inform and protect others.)

       Common sense states that you can't handpick someone and pay them a fortune to investigate and judge you. On an academic level, it goes against the fundamental principle of the common law legal system. Under the adversarial system, the alleged victim and defendant are each supposed to be represented by their own attorney, who argue before an impartial judge. When O'Melveny acts as an "independent investigator" -- for example when they investigated the USC sex abuse scandal -- they are ostensibly helping the victims, but in reality they are picked and paid by the defendant. On top of that, they act as the impartial judge -- deciding who is at fault and for what -- having now assumed all three roles of the adversarial system. It's a risible fiction.

       And it begs so many questions. For example, how does one get hired as an independent investigator? How do you convince a client to pay you many millions of dollars to investigate them? Are you competing against other firms for this work? To beat those other firms, do you have to explicitly or implicitly promise an outcome, or promise to put your thumb on the scale? Imagine Robert Mueller asking Donald Trump to be hired for an "independent investigation" of Trump's campaign, and having to compete with Mr. Trump's long-time attorneys for this work, and having to get Mr. Trump to sign a retainer paying Mr. Mueller $10 million.

       Well, O'Melveny alumnus Michael Avenatti just gave us a window into one such negotiation. Mr. Avenatti wanted Nike to pay him to do an "internal investigation" of Nike. So he allegedly gave them three options: (a) Nike could pay Mr. Avenatti $15 to $25 million to perform this investigation, after which Nike could self-report the items they choose to reveal, (b) Nike could pay Mr. Avenatti and his client $22.5 million to keep everything confidential, or (c) Nike could refuse those offers, and Mr. Avenatti would reveal the wrongdoing at a press conference that would harm Nike's stock price. Unfortunately for him, the FBI was listening and arrested him shortly thereafter. (And please note I'm not accusing O'Melveny of using this particular tactic. I don't know what O'Melveny tells clients when asking to be hired as their "independent investigator.") 

       I wasn't surprised to see an O'Melveny alumnus act this way. I've personally never overvalued money (one of my first law review articles was about mammonism.) But at O'Melveny you were surrounded by ravenous money-grubbers, the sort of thing you'd see in a stereotypical boiler room or sales hustle. I don't want to repeat the prior two posts, but at O'Melveny the law was just a tool to get rich, and that's all Avenatti was trying to do.

       [Addendum: O'Melveny boasted about the money they received from USC, for their "thorough and independent" investigation of USC's alleged wrongdoing. By they way, that investigation has been criticized because it is not going as promised.]
white collar, omm, Apalla Chopra, Brad Butwin

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