Delaware Law Firm Skadden Arps Toes the Line with Conflict of Interest
Delaware-Based Law Firm Skadden Arps Continues to Make Negative Headlines
One of the most influential corporate law firms in the nation is also heavily involved in Delaware’s court system affairs. Skadden, Arps, Slate, Meagher & Flom is a corporate law giant that many Delaware citizens and working class Americans are growing wary of as conflict of interest issues continue to arise. The Chancery Court continues to face scrutiny after years of corruption and scandals that involved associates of Skadden Arps.
About Skadden, Arps, Slate, Meagher & Flom
Skadden Arps was founded in New York in 1948. In the decades since, the firm’s Litigation Group has grown to employ approximately 600 attorneys worldwide. The firm’s grip on Delaware in particular has a lengthy history—it was the first national firm to establish a presence in the state almost 40 years ago. This undoubtedly contributes to the strong influence the firm holds over the Delaware Court of Chancery; which has contributed to an abundance of conflicts of interest within the Delaware court system.
Delaware Court Chancellor Andre Bouchard and his court-appointed Custodian, Robert Pincus, have graced many headlines in recent years. Both Bouchard and Pincus worked for Skadden Arps, leading many to accuse Bouchard and the Chancery Court of conflict of interest. Chancellor Bouchard has been accused of being biased and bad for business while overstepping constantly at the expense of working class Americans.
Skadden Arps and WeWork
Another case bringing negative attention to Chancellor Bouchard and the Delaware Court of Chancery is the WeWork suit against SoftBank. In October 2019, SoftBank agreed to buy $3 billion of WeWork shares, then canceled the deal. After the deal fell through, WeWork’s valuation collapsed from $47 billion to about $8 billion. A special committee of WeWork directors sued SoftBank in the Delaware Chancery Court for breach of contract and breach of fiduciary duty. By the time suit was filed, because of the massive amount of shares promised to be purchased by SoftBank initially, half of WeWork’s board was appointed by SoftBank.
SoftBank, represented by Skadden Arps, is arguing that there is a conflict of interest regarding the board members in the committee suing SoftBank. Chancellor Bouchard allowed the appointment of new directors, siding with WeWork’s parent company. Yet again, both the Delaware Chancery Court and Skadden Arps are involved in a bizarre case making headlines.
Skadden Arps and Diversity Issues
Racial equity in America has been dominating discussions in recent months, forcing many companies and organizations to take a much-needed look at how they’ve handled diversity and equity in the workplace. Skadden Arps is no exception—the firm has faced scrutiny from many groups in recent months because of its lack of diversity. Civil rights advocate Al Sharpton has criticized Skadden over it’s lack of minority representation in its latest partner class. In a letter to Skadden, Sharpton notes:
“Take a look at judges like Chancery Court Chancellor Andre Bouchard, or even retired Delaware Supreme Court Justice Leo Strine, where did they come from? Skadden Arps. One firm, Skadden Arps, has an especially significant impact on an entire state’s justice system. Therefore, Skadden Arps needs to lead the effort to more completely diversify the ranks of law firm partners and judges in this state.”
Another group that has called out the firm over it’s lack of diversity is Citizens for a Pro-Business Delaware. The group has noted that Skadden has just a handful of African American lawyers in a state that’s nearly 30 percent black. This statement came in response to statistics released by Skadden Arps highlighting the diversity, or lack thereof, within their own firm.
Skadden Arps and TransPerfect
The TransPerfect case with Skadden Arps is riddled with scandal and conflict of interest. Aside from the forced auction of the company by Chancellor Bouchard, he appointed his former Skadden associate, Robert Pincus, as custodian to the case. Since his appointment, Skadden has collected more than $14 million in court fees.
Citizens for a Pro Business Delaware explained:
“Since being appointed custodian of the company, Skadden has never produced an itemized invoice for the services it claims to have performed as the firm, led by Jennifer Voss and Bob Pincus, has already collected over $14 million in court-ordered legal fees from TransPerfect. That needs to change. Our members and TransPerfect’s employees deserve to know where that money has gone.”
Chancellor Andre Bouchard is partially responsible for the abundance of legal fees, having issued a nearly $1,500 an hour no-bid contract for the case.
A Firm With a Negative Rap Sheet
Though Skadden Arps is one of the biggest corporate law firms in the nation, that doesn’t necessarily mean it adopts transparent practices. Current and former associates, such as Bouchard and Pincus, have been in headlines for bias and conflict of interest in cases such as TransPerfect and WeWork. The scandal extends far beyond the Delaware court system: Skadden made international headlines when the firm settled for more than $11 million to avoid a lawsuit by a former Ukrainian prime minister.
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