The G-Man a Week in the Life of a $1,000-Per-Hour Lawyer

The G-Man A week in the life of a $1,000-per-hour lawyer

TO: ALLEN PUSEY, managing editor fasts back at the Regency. (Mobil Travel Guide description: “Home of the original FROM: TERRY CARTER, senior writer power breakfast, where deals are sealed and fortunes are made.”) SUBJECT: Story pitch on $1,000-an-hour Since planting the Susman Godfrey flag in lawyer NYC a year earlier, Susman has been power- breakfasting, power-lunching and powering You asked me to look into doing a story on whatever else to get work from big New York Houston litigator Stephen Susman as an ex- law firms. He tells them he’s not out to steal ample of the new breed of $1,000-an-hour clients. His firm has some specialties and lawyers. some special ways of billing for them, and he It’s complicated. Seems he’s part of a breed pushes single-case litigations referred when all right. But it’s a breed of one. firms are conflicted and such. Billables account for less than 20 percent Says Susman: “I tell them we only do liti- of his work. He actually bills a bit more— gation for their clients as one-night stands, or $1,100. And he prefers making a lot more for like a heart surgeon. We’re not needed himself by taking on some of the risk with again.” other fee arrangements. The selling point is After the morning routine, he hoofs it to that clients will come out better, too. the office on Madison Ave. at 60th. The On a random week we chose in November views from the newly built-out offices—the (see attached), Susman showed me that he firm recently moved to double its space to billed 11.5 hours at that $1,100-an-hour rate 7,500 square feet—are OK, not spectacular. of his, though he wouldn’t say what matter(s) Unless you care that you’re next door to or which client(s) were involved. But he Calvin Klein’s flagship store and across from seemed pretty surprised to discover when he the upscale Barneys. looked a little deeper into his spreadsheets The offices themselves are nicely done, that in 2007, he had billed at hourly rates for though without the effort some firms go to for a higher percentage of his time than usual. an exalted aura of greatness. These folks are The Susman Godfrey firm opened an out- all about trying high-stakes commercial law- post in New York City a little over a year ago. suits. Nearly half the year he and his wife, Ellen, live in the Regency Hotel on tree-lined Park He’s a Avenue, just a block and a half from work. first-rate hustler. Each morning Susman either works out for Susman and his firm make for an amazing an hour or heads to nearby Central Park, story: him the wild man, the counterintuitive where he walks his two Cavalier King Charles business model, the high-stakes cases. There Spaniels, a toy breed that belies the nature of is no firm like it. this particular owner. “I’m hustling New York City’s big firms,” And most mornings he has business break- says Susman. “And they’re listening.” Continued on page 42

Reprinted with permission ABA JOURNAL, February 2008

stock photographs: istock; logos courtesy of websites; personal photos courtesy of stephen susman MONDAY TUESDAY WEDNESDAY 6 a.m.- 7 a.m. 6 a.m.-7 a.m. 6 a.m.-7 a.m. Workout in Regency Walk the dogs in Central Park. Aerobics workout. Hotel gym with trainer. 8 a.m.-9:15 a.m. 10 a.m. Breakfast at the home of George Soros Call ABA Journal reporter. with about 30 others, including 9 a.m. Democratic National Committee Chairman Meeting with Canadian lawyer Harry Howard Dean. The purpose: “Trying to 11 a.m. Bloomfield, former president, take back our country,” says Susman. Conference call in price-fixing class Canadian branch of the International action against Ready-Mix Concrete in Law Association. federal court in Indianapolis. Susman Re: Potential case on 9 a.m. is co-lead counsel. (At any given behalf of an investor From Soros’ house, a confer- time he’s involved in about 12 cas- in India. ence call to Susman’s NY office es.) In re Ready-Mix Concrete for regular weekly meeting with Antitrust Litigation, No. 1:05-cv- the lawyers. 00979-SEB-VSS (Southern District of 10:30 a.m. Indiana, Indianapolis Division). Conference call with 9:30 a.m. some members of Telephone call with Sallie Mae’s gener- 11:30 a.m. Susman’s law firm. al counsel concerning the breakup-fee Conference call concerning a patent- litigation. infringement case. (It went to trial in early December.) Susman represents Sky Technologies of Melbourne, 11 a.m. 10 a.m. Australia, which claims $40 million Meeting in Susman’s office with some- Conference call in a patent infringement in damages (asking they be trebled), one trying to sell him (for a change) case concerning a medical device against Ariba Inc. of Sunnyvale, a litigation services consultant. (stent). Susman represents the plaintiff Calif. It concerns online negotiation in Wall Cardiovascular Technologies v. technology. (Two partners and one as- Boston Scientific, No.2:2007-cv-00504 sociate from the Houston office (Eastern District of Texas). joined Susman in Boston for the tri- 1 p.m. al.) Sky Technologies v. Ariba Inc., Travel by train to Wilmington, Del., No. 1:06-cv-11889-WGY (District of for hearing in the Sallie Mae matter. 11 a.m. Massachusetts). Susman represents the student-loan Conference call for the NYC-based giant (SLM Corp.), which is trying to Foundation for Jewish Culture. Susman get a $900 million breakup fee from is on its executive committee and is several companies that backed out of vice chair. 12:30 p.m. a takeover agreement. SLM Corp. v. Lunch with Tom Janover, partner with J.C. Flowers, No. 3279-VCS (Delaware Kramer Levin. Janover specializes in Chancery Court). 12:30 p.m. distress investing matters: the pur- Lunch pitching Robert Goodkind of Pryor chase and sale of securities and Cashman at the Sidecar, the more ele- claims of companies in restructuring gant upstairs sister of P.J. Clarke’s, or bankruptcy. “I know these people,” the late-night draw for famous folks Susman says of his hustling for work. seeking a famously great hamburger. “I’m not doing cold calls.” They eat at Aquavit, a Scandinavian restau- 3 p.m. 3 p.m. rant. It rates four stars from New Conference call during a hearing Conference call with a York magazine. It also gets $$$$. break regarding two patent cases group of the firm’s law- Susman’s client, MicroUnity Systems yers to do root-and-branch Engineering Inc. of Santa Clara, review of their ongoing Calif., brought against Sony and AMD cases, from meeting deadlines to the in the Eastern District of Texas likelihood of winning. Susman and four 1:30 p.m. federal court. Both soon settled. other partners conduct these reviews on Conference call concerning a patent MicroUnity v. Sony Corp. of America a rotating basis. These often last a infringement case, Peter Sklar v. Inc., No. 2:05-cv-00505- couple of hours. “Mechanisms to make Microsoft, No. 206-cv- TJW. MicroUnity v. sure nothing falls between the cracks,” 7 (Eastern District of Advanced Micro Devices Susman says. Texas). Susman’s Inc., 2:06-cv-00486-TJW. client, Sklar, claims Microsoft ap- propriated his improved method for 4 p.m. database searches. (The case would Conference call in a breach of contract settle in early December.) 4:15 p.m.- 5:45 p.m. case Susman’s client brought in state Train back to NYC. court in Houston. Northville Product Services v. Green Earth Fuels, No. 2:30 p.m. 2007-45993 (11th Judicial Conference call concerning a Susman District Court, Harris client’s patent infringement case County, Texas). over computer networking software. Droplets Inc. v. Adobe Systems, No. 2:2006-cv-00307 (Eastern District 5 p.m. of Texas). 6:15 p.m.- 7:15 p.m. Telephone call with Susman’s client who Weekly conference is in arbitration in Connecticut in a 3 p.m. call among Susman claim against his former law firm— Conference call. Susman represents Godfrey’s nine-part- breach of partnership agreement. Platform Solutions, which developed a ner executive commit- way to use an IBM operating system on tee. a Hewlett-Packard mainframe. IBM sued and stopped licensing its OS for use 7 p.m.- 8:30 p.m. on non-IBM hardware. Susman’s client A reception at the firm’s NYC turned that into an antitrust claim 6:30 p.m.- 8:45 p.m. office for alumni of the University of against IBM. International Business Dinner at a benefit honoring a Houston Law Center. This is a favor for Machines Corp. v. Platform Solutions friend of Susman’s involved with Ray Nimmer, the law Inc., No. 06-cv-13565 (Southern the Aperture Foundation, an organiza- school dean. Two of the District of New York, tion that promotes fine-art photogra- three SG partners who White Plains). phy. Event is at the Skylight, 275 attended there come for Hudson, an 18,000-square-foot gallery the reception. space for special events. 4 p.m. Phone call with Joel Samuels, bankruptcy lawyer in Sidley Austin’s Los 8:30 p.m.- 9:30 p.m. Angeles office. He was possibly send- Dinner with Nimmer at the Post House, ing a matter to Susman, but it didn’t part of a restaurant group anchored by work out. Smith & Wollensky. Susman’s wife, Ellen, wasn’t feeling well and Susman was tired, so they canceled. 5:30 p.m.-8:30 p.m. Reception at the firm’s Manhattan office. city—with money. Thenightsectionofhisdaybookis pokes alittlefunathim;somehowitworks. pretty explicitexpletiveatanewacquaintancewho on stageatthesametime,suchthathecanbellowa walks by, it’s likethey’remakingwayforKong. They’re gorillasamonglawyers.ButwhenSusman the associatesandpartners,world-beatersontheirown. Nagy, saysSusman“isaforceofnature.”Imetsome side. Theoppositionisoftenterrified. you getinhispresence.Hescarespeopleonown Continued frompage39 Susman’s eveningsmakeyouwanttoliveinthis It seemslikehisid,egoandsuperegoareallalways An associateinthefirm’s NewYork office, Tibor He islikeavoraciousanimal,andthatthefeeling THURSDAY FRIDAY 6:30 a.m. 7 a.m. Walk the dogs. Workout with personal trainer. 8 a.m. Breakfast at the Regency with a non- 10:30 a.m. lawyer met through Democratic political Conference call regarding an an- activities. (Susman’s breakfasts are titrust case against NASCAR. Susman’s almost always aimed at hustling up client, Kentucky Speedway, has sued business from big law firms.) Though to force bids for NASCAR sanction at this one is purely social, the guest tracks that meet spec. Without presents a matter that Susman says NASCAR’s imprimatur, the Sparta, Ky., “could turn out to be the biggest case speedway cannot host one of the cher- of my career.” ished Nextel Cup series races. Kentucky Speedway v. National Association 9:30 a.m.-12 p.m. for Stock Car Auto Blocks time for interview with ABA Racing, No. 2:05-cv- Journal reporter at his office. 00138 (Eastern District of Kentucky). taxes andspendmoretimethere.) return totheRegencyinMarch.(TheypreferTexas Ellen weretoleaveatThanksgivingforHoustonand lots arebackinHoustontillheneedsthem.Heand hibits andshows,thebestrestaurants,etc. to diefor:thebestofpreviewsandopeningsforex- becoming theplaintiffs patent-barvenueofchoice, is more recently, thankstotheEasternDistrictofTexas having mademuchofitsreputationinantitrustand, as itisaggressive. S-G isasprofitable His planeisparkedinNewYork, thoughthetwopi- 12 p.m. 11 a.m. His now-90-lawyerfirmisalitigationassaultweapon, Lunch at 21 Club with Stephen Lash, Conference call on the Sallie Mae chairman of Christie’s America and a case. college classmate. When the economy dips, some who committed to buy 12 p.m. hugely expensive pieces Conference call on Sky v. Ariba. of art sometimes renege, and Susman wants to han- dle the contract disputes. 12:30 p.m. Lunch with Joe Whatley, an Alabama lawyer who has worked cases with 2:30 p.m. Susman over the last 15 years. A conference call that includes a Whatley recently moved to NYC, so Houston lawyer who is now general coun- Susman wants to know what he’s doing. sel for a company in New York that has “I’m looking for him to cut me in on a portfolio of patents it believes are some action,” says Susman. being infringed upon. He is trying to They go to Aureole, an up- decide whether the infringement cases scale restaurant with com- are certain winners. Every lawyer in forting food and no the firm votes on whether to accept pretension, according to cases pitched by others in the firm. New York magazine. They don’t take possible losers, or those without significant profit potential. 3 p.m. 1 p.m.- 5 p.m. Regular Thursday conference call with After clearing up certain matters

co-counsel in Indianapolis on a case during the morning conference call on his opinions. first clerkthatJusticeHugoBlackallowedtodraft the highestGPA ever. Legendalsoholdshimasthe the UniversityofTexas, whereheissaidtohavehad then returnedtotheLoneStarStateforlawschoolat He leftHoustonforcollegeatYale intheearly1960s, emerging game. tive feearrangementswasadecadeortwoaheadofthat Heavy emphasisoncontingencyfeesandotheralterna- reportedly farandawaythehighestofallU.S.firms. big intoIPlitigation. they have there. It is a certified his case against NASCAR, Susman The firmhiresalmostexclusivelyformerfederal His candlepowermatchesthephysicalpresence. Revenues andprofitsperpartnerareoff thecharts, class action on behalf of state employ- spends four hours in the afternoon ees suing for back wages. preparing for oral argument set for Nov. 19 on a summary judgment motion. 4 p.m. He would be up against David Boies. Regular weekly phone call for updates and strategy in a patent infringement case in the federal Eastern District of Texas. Susman’s firm is joint-venturing with a Fort Worth firm in a suit against Skype, maker of technology for free or inexpensive Internet telephone calls worldwide. Peer Communications Corp. v. Skype Technologies, No. 6:06- cv-370. 4:30 p.m. Telephone call with a soon-to-be-de- posed witness in IBM v. Platform Solutions. Susman doesn’t bother with facts and details. He tells the witness that everything is videotaped, so don’t get caught picking your nose. brothers inTexas. vey, Susmanwasgetting$600fromthenotoriousHunt especially contingencyfees. malpractice. Thatmeantalternativefeearrangements, lawyers dointoxictorts,personalinjuryandmedical commercial litigationbutmakethemoneyplaintiffs started inHouston1980withanunheard-ofplan:Do at thecircuits. two ofthemattheU.S.SupremeCourtandthree court clerks.Allsixwhojustcameonboardwere: 5 p.m. “At thebeginningIwantedtohirelawyerswhowere When $450anhourwasthetopcharged ina1987 sur- The businessmodelprobablyisnotreplicable.They The Susmans go to Chelsea Piers for the 6 p.m. opening of an Asian-art exhibit. Opening night reception for an exhibit of new paintings by Pat Steir at 6 p.m.-8 p.m. the Cheim & Read Gallery. The Susmans visit Gagosian Gallery for a reception opening the exhibition of painter Cy Twombly. 7:30 p.m.- 9:30 p.m. 8 p.m.- 9 p.m. The Susmans take three other couples

The Susmans go to a Broadway preview at to Coco Pazzo, a pricey Upper East Continued onpage44 the Music Box Theatre. They see The Side Italian Farnsworth Invention six days before it restau- opens. The play—by Aaron Sorkin, cre- rant. ator of TV’s The West Wing—is about a patent infringement case. The story takes place in 1929 when two separate inven- tors were racing to de- velop television. Continued from page 43 personable and could persuade juries, young case with Carmody. They were convinced Joe Jamail types,” he says. In the one-law- he’d make the grade, and Susman finally got yer, one-vote system that continues today, his wish. Susman lost. The firm wanted credentials: Carmody is now the No. 5 rainmaker this law review, top of class, federal clerkships. year in a firm that’s been averaging revenues Quality attracts quality, they said. of about $2 million per lawyer (including associates). In 2004, no partner took home Susman is flexible, less than a million bucks. In some years, and Bill Carmody proves it. associates have doubled their salaries with Susman was able to recall only one excep- bonuses. tion to the rule—an exception who now oc- Carmody is near the top of the chart most cupies the only corner office in the firm’s NY dear to Susman: contingency work. This year branch. his portfolio is 64 percent contingency, 32 When Susman set up a shop in Dallas in percent fixed fee and 4 hourly. Partners get the mid-’80s to represent the Hunts, a local 40 percent to 60 percent of the premium lawyer named Bill Carmody sent him a letter from cases they bring in. Now it’s harder for inviting Susman and his wife to dinner. Carmody to outspend his success. “The letter seemed cold,” says Susman, Susman calls Carmody the firm’s concierge. and he didn’t respond. But Carmody kept at “He can get reservations at the hottest places it, letter after letter. “I finally told my wife in New York, that day,” Susman says, ticking we might as well take the free meal at a good off the names of several prime locations. restaurant.” They arrived early and were at the bar. Susman can Carmody, whom they’d never met, came in throw a party. and clearly was known to the restaurant’s The guest list from November’s first-an- management. He’d done his homework: niversary party for the New York office had Susman’s favorite wines, and a version of the plenty of Who’s Whos. It was, says a guest “Susman Tuna Tartare” then featured at the from Cahill, the most amazing and impossi- famous Tony’s Restaurant in Houston. ble mix of defense and plaintiffs bar imagina- At that initial dinner Carmody, knowing ble in NYC at one 250-person fete. where Susman went to college, asked if he’d “Only Susman could pull this off,” the be attending the Harvard-Yale game. Susman guest says. didn’t have tickets; Carmody could get them It was catered to the max. By the Veuve from a friend, former Dallas Cowboys run- Clicquot champagne stood bottles of Lone ning back Calvin Hill, himself a Yalie. Star beer—an unexceptional brew, but a “I asked Bill whether he went to Harvard great label for the occasion. or Yale,” Susman says. There was Stanley Arkin of Arkin Kaplan, Neither. He’s from the Merchant Marine Bernie Nussbaum from Wachtell; and chat- Academy. ting for a long time by a table set with caviar “I like hustlers,” says Susman. “His law and Russian vodka in Susman’s glass-front office in Dallas was the swankest I’d ever private office were Mel Weiss and Ted Wells. seen.” (People noticed. Weiss has been indicted So Carmody must have been quite suc- by the feds; and a former partner, Bill cessful already? Lerach, had recently pleaded guilty. A “No,” says Susman. “He was spending far prominent client of Wells, Scooter Libby, beyond his success at that time.” got off not long ago without serving a day in Susman wanted Carmody. But the firm prison—albeit via commutation from the blackballed him. Didn’t have the credentials. White House.) Some years later, a couple of other promi- The Houston firm has branched out over nent Susman Godfrey litigators worked a the years: Dallas, Los Angeles, Seattle and now New York. In each instance it has done buying high-priced art back out—and need so for what others would consider the wrong to be sued. He does that sort of thing. reason. Guests at the anniversary party included Law firms typically open new offices to Peter Hewett, a director for a medical device follow clients or chase business. “We’ve done manufacturing company that hired Susman it when we’ve either wanted to get or keep a for a patent battle in Texas. Hewett pushed good lawyer,” says Susman. aside his New York patent lawyers who Why now New York? The Big Apple was worked up the case—he sees two of them ripe for his hustle. And Susman wanted to be across the room—and got Susman because near his three grandchildren. Now 66, he he wanted a Texas lawyer litigating. wants to go another 10 or 15 years, if not First there was mediation with William more. The sheer élan in his approach to this Sessions, former federal judge and former new venture seems to have reversed the ag- FBI director ... and also a Texan. Susman was ing process. there with his client, Hewett. On the other Susman Godfrey looks for and holds on to side was a group of New York lawyers. They entrepreneurial lawyers. The formal partner- spoke first to “Judge Sessions.” ship track is four years, but no one stays that When they finished, Susman was brief: long without making partner. Everyone “Bill, we are out of here in 60 f---ing seconds knows within two years or less whether mojo if these guys can’t assure us that they can matches book smarts. Candid and pointed re- make decisions right now on behalf of their views at six-month intervals ensure it. client.” Each Wednesday all the firm’s lawyers, Liberal use of the f-word might be a verbal even if on the road, meet via conference call tick, or it might just speak to Susman’s di- to consider three or four pitches to take on rectness in all matters. work. On Mondays, memos of 10 pages or Did I tell you this? Robert Rivera, who fewer are circulated for each. About 20 per- joined the firm in 1990 and recently made cent are shot down. One that lost out this the move to New York, got the Houston of- week was great on the law, precedent and fice tour from Susman when he was hired. other necessaries except for one thing: un- A big, irregularly cut piece of cardboard clear on the money. was stuck to the wall in Susman’s office, and the new hire asked if it was a memento from If all that Susman’s famous Corrugated Container anti - doesn’t convince you ... trust case, in which he got one of the biggest He teaches environmental law on the side dollar verdicts in history. at the University of Houston. He has been The quick explanation: “No, f---face, it’s a working with the Inuits, who are losing their Rauschenberg.” Arctic lands and lifestyles to global warming. Some years later, Rivera had a chance He did pro bono work last year that stopped to tell that story to the artist, Robert development of coal-burning power plants in Rauschenberg, a Port Arthur, Texas, na tive. Texas. He’s waiting for a federal circuit opin- It prompted Rauschenberg himself to play- ion that either will open or shut the door as fully jab at Rivera, saying Susman’s estima- to these being political or legal matters. tion had been pretty much on the mark. Though he is collecting piles of pelts and But then Susman has made quite a mark as heaps of money in patent litigation—among a litigator who doesn’t just eat what he kills— major cases, he is countersuing IBM right he consumes live prey in a most unconven- now—Susman thinks business might slow tional practice. He bills at $1,100 an hour but down. On the day I was there, he had lunch tries to avoid it so he can make a lot more. with the CEO of Christie’s auction house, his Like I said, it’s complicated. ■ classmate from Yale ’62. Susman says as the economy gets worse, people who commit to [email protected]