News

Lawyers working within Fulbright & Jaworski’s securities and complex commercial litigation, bankruptcy, and white collar defense and government investigations groups have long handled matters that involve the issues emerging as the global subprime crisis continues to unfold.

In a time when some have suggested the turmoil in the credit markets could result in losses reaching as high as $1 trillion, Fulbright’s lawyers are addressing the needs of financial institutions, brokerage firms, title companies, corporate directors and officers, and public accounting firms through the international firm’s recently formalized Global Subprime and Credit Crisis Practice Group.

A team of lawyers from disciplines across the firm will work proactively to guide clients through the vast array of issues the subprime crisis presents, including complex litigation, internal and governmental investigations and bankruptcy, and will examine clients’ internal policies and practices.

“Issues similar to those we now face with the subprime fall out date back to the late 1980s when many of our lawyers were handling litigation involving the failed savings and loan industry,” said Stephen C. Dillard, the head of Fulbright’s Global Litigation Department. “This is an area where we can offer our clients the advice and experience they need to successfully deal with the subprime collapse.”

In 2003, lawyers now working in Fulbright’s subprime practice group successfully defended a nine-week class-action jury trial in California. The suit was brought on behalf of borrowers of a bankrupt subprime mortgage lender who alleged fraud by an investment banking firm in the sale of subprime mortgages.

Others in the group are actively assisting U.S. and European banks and fund managers in connection with sophisticated subprime matters involving restructurings and potential litigation. Fulbright has also assisted entities purchasing and selling subprime mortgages, including a mortgage subsidiary of a top Wall Street investment banking firm.

"The challenges are complex and typically span multiple jurisdictions," said Chris Warren-Smith, a partner in Fulbright's London location and co-head of the subprime group. "We have assembled what we believe to be a unique team of skilled lawyers to offer a single law firm solution to the domestic and international challenges that arise."

Five co-heads from various disciplines and offices within the firm have been designated to steer the practice group: Rodney Acker, a financial institutions litigator in Dallas; David Barrack, a bankruptcy litigator in New York; Anne Rodgers, a securities and complex commercial litigator in Houston; Richard Smith, a white collar defense and government investigations litigator in Washington, D.C.; and Chris Warren-Smith, a financial disputes and investigations lawyer in London.

“Given our experience and international platform, we are uniquely positioned to work with clients in tackling the complex, international issues related to subprime matters,” said New York partner Paul Jacobs, the co-head of Fulbright’s Corporate Practice. “This is an issue that is impacting markets across the globe.”

The ongoing investigations that are continuing into the collapse of the credit and subprime lending markets have also expanded into the auction rate securities market, which are long-term debt instruments where the interest rates are determined through weekly or monthly auctions. Due to the current credit crisis and its effect on bond insurers, auction-rate securities, which were once treated as cash equivalents, suddenly became difficult to trade given there were not enough purchasers for all the shares being sold, which created failed auctions.

“Our knowledge of markets worldwide combined with our experience with complex litigation, government and corporate investigations, public finance, and bankruptcy puts us in a position to assist our clients through the evolving issues some face as the subprime collapse continues to unfold,” said Barrack. “We’re doing what we have always done to serve our clients as this new surge of litigation takes root. We expect subprime litigation will be something we will help those who face it to work through for a number of years to come.”

For more information about Fulbright’s subprime capabilities, please visit www.fulbright.com/subprime.