M&A Lawyers Lob Stones at Goldman from Glass House

Agenda-Setting Financial Insight.
March 9 2012 3:35 PM

M&A Lawyers Lob Stones at Goldman from Glass House

104636395
Pershing Square Capital Management CEO Bill Ackman attended a dealmaker conference this week in New Orleans, where conversation focused on Kinder Morgan's purchasing of El Paso.

Photo by Stephen Lovekin/Getty Images for Rubenstein Communications

M&A lawyers tossed stones at Goldman Sachs from a glass house. Debate over how the bank played both sides of the El Paso sale to Kinder Morgan drowned out other hot topics at this week’s dealmaker jamboree in New Orleans. Bankers and chief executives took beatings over other conflicts of interest, too. For an event organized by and for mainly attorneys, however, there was surprisingly little self-reflection. 

Topics like investor activism, especially with Bill Ackman in attendance, and dodgy lawsuits also were on the docket. But like highway rubberneckers, no one could resist the deal wreck laid bare in a Delaware ruling last week. One panel’s moderator even tried actively to steer the conversation away from the case, but failed. 

There was plenty of outrage to go around the Big Easy’s Roosevelt Hotel. Goldman, Morgan Stanley and El Paso Chief Executive Douglas Foshee all drew fire for their roles, but the sharpest criticism from Merger Gras revelers was reserved for the Goldman banker who held a $340,000 investment in Kinder Morgan. 

Who would have dreamed to ask whether the lead adviser from the firm helping the seller held an investment in the buyer, one lawyer asked. Well, he might have had the good sense to come forward on his own, responded another. 

From there, it went downhill for the outnumbered bankers. Lawyers revisited last year’s controversial Del Monte case and the subject of staple financing. There was also a suggestion that perhaps a second bank brought in to “cleanse” another’s conflict should never get paid with fees contingent on closing. 

But the legal eagles avoided the subject of their own potential conflicts. Strict ethics rules and client checks often prevent them. But with so many lawyers and so many deals, mega-firms can find their own conflicts questioned, as occurred, for example, in the case of hostile target Airgas. Multiple bidders can make matters messier still. M&A lawyers can’t be too careful about tracking their own investments. And their deal advice isn’t beyond reproach. 

Banking conflicts are front and center in deal land right now. If they’re not careful, though, the lawyers could soon find themselves the topic of conversation.

Read more at Reuters Breakingviews.

Reynolds Holding is a Breakingviews columnist who writes from New York about the law in conjunction with Reuters Legal. Before joining Breakingviews, he was a national editorial producer for the Law & Justice Unit at ABC News, a senior writer for Time magazine and the executive editor of Legal Affairs, the first general interest magazine about the law.

TODAY IN SLATE

Jurisprudence

Scalia’s Liberal Streak

The conservative justice’s most brilliant—and surprisingly progressive—moments on the bench.

Scotland Votes to Remain in U.K.

There’s a Way to Keep Ex-Cons Out of Prison That Pays for Itself. Why Don’t More States Use It?

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

Can Democrats Keep Counting on Republicans to Offend Women as a Campaign Strategy?

Culturebox

Theo’s Joint and Vanessa’s Whiskey

No sitcom did the “Very Special Episode” as well as The Cosby Show.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Cliff Huxtable Explains the World: Five Lessons From TV’s Greatest Dad

Why Television Needs a New Cosby Show Right Now

  News & Politics
Weigel
Sept. 18 2014 8:20 PM A Clever Attempt at Explaining Away a Vote Against the Farm Bill
  Business
Moneybox
Sept. 18 2014 6:02 PM A Chinese Company Just Announced the Biggest IPO in U.S. History
  Life
The Slate Quiz
Sept. 18 2014 11:44 PM Play the Slate News Quiz With Jeopardy! superchampion Ken Jennings.
  Double X
Doublex
Sept. 18 2014 8:07 PM Crying Rape False rape accusations exist, and they are a serious problem.
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Brow Beat
Sept. 18 2014 4:33 PM The Top 5 Dadsplaining Moments From The Cosby Show
  Technology
Future Tense
Sept. 18 2014 6:48 PM By 2100 the World's Population Could Be 11 Billion
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.