Tag: Baker v. Goldman Sachs


Lessons from a Jury Trial

Paul Vizcarrondo is a partner in the Litigation Department of Wachtell, Lipton, Rosen & Katz specializing in corporate and securities litigation and regulatory and white collar criminal matters. This post is based on a Wachtell Lipton memorandum by Mr. Vizcarrondo, John F. Lynch, Carrie M. Reilly, Lindsey M. Weiss, and Molly K. Grovak.

Paul Vizcarrondo is a partner in the Litigation Department of Wachtell, Lipton, Rosen & Katz specializing in corporate and securities litigation and regulatory and white collar criminal matters. This post is based on a Wachtell Lipton memorandum by Mr. Vizcarrondo, John F. Lynch, Carrie M. Reilly, Lindsey M. Weiss, and Molly K. Grovak.

A recent Yale Law Journal article describes a “striking trend in the administration of civil justice in the United States”—“the virtual abandonment of the centuries-old institution of trial.” In recent times, only approximately 1% of federal civil cases end in jury trials. Deep-pocketed companies often settle before trial because they fear that jurors will sympathize with individual plaintiffs and that jurors may lack the patience and ability to weigh complicated evidence. This is especially true for financial institutions in the current public-relations climate. But our recent experience co-defending Goldman Sachs in a five-week jury trial demonstrates that corporate defendants need not avoid juries at all costs, especially where important principles are at stake and there is a strong belief that the claims are baseless.

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Lessons for M&A Advisors in Crafting Engagement Letters

This post is based on a Wachtell, Lipton, Rosen & Katz memorandum by David A. Katz, William Savitt, and Ryan A. McLeod.

This post is based on a Wachtell, Lipton, Rosen & Katz memorandum by David A. Katz, William Savitt, and Ryan A. McLeod.

A federal court decision interpreting an investment bank’s engagement letter on a motion to dismiss highlights the risk that—absent careful drafting—financial advisors may be held liable to third-party beneficiaries on both contract and fiduciary duty claims. Baker v. Goldman Sachs, Civ. No. 09-10053-PBS (D. Mass. Sept. 15, 2009).

The financial advisor represented a closely held company, founded and controlled by the Bakers, in connection with its review of potential strategic transactions in early 2000. Allegedly relying on the financial advisor’s advice, the company entered into a stock-for-stock merger agreement with a Dutch buyer, and the deal closed in June 2000. Just months later, the Wall Street Journal uncovered a massive accounting fraud at the Dutch buyer, whose shares subsequently lost all value and whose collapse cost the Bakers their investment. Seeking to recoup some of their losses, the Bakers filed suit against the financial advisor for breach of contract and fiduciary duty. The financial advisor moved to dismiss, arguing that its engagement agreement was with the closely held company alone and that it owed neither fiduciary nor contractual duties to the Bakers.

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