SBJ/June 4 - 10, 2001/No Topic Name

Proskauer Rose pipeline fills sports world’s executive suites

 Background: Founded in 1875 in New York City, Proskauer Rose has 550 attorneys in five U.S. offices and Paris. It lists among its non-sports clients an array of firms in many industries, including chemicals, financial services, health care, information technology, insurance, Internet, manufacturing, media/communications/entertainment, pharmaceuticals, real estate investment and transportation.
  Corporate clients include: ABC, CBS, NBC, HBO, The New York Times, the Daily News, Paxon Communications Corp., Dow Jones & Co., New York Stock Exchange Inc., Radio City Music Hall, RCA Records, Bear Stearns & Co., Bristol-Myers Squibb Co., Miller Brewing Co., Exxon-Mobil, GMAC Commercial Mortgage Corp., J.P. Morgan Chase & Co., Madonna, MetLife, MGM, Viacom, Walt Disney Productions and Warner Bros. Pictures.
  Sports clients include: NBA, NHL, Major League Baseball, Madison Square Garden, Major League Soccer, New York Jets, Philadelphia Eagles, Montreal Expos, WNBA and TRAC, the new auto racing league scheduled to debut in 2003.

Tandy Meghan O'Donoghue vividly remembers the day she set her sights on joining the powerhouse New York law firm Proskauer Rose LLP. An undergraduate at Cornell University at the time in 1992, O'Donoghue had just learned that Cornell alumnus Gary Bettman, a former Proskauer lawyer, had been named the first commissioner of the NHL.

"I knew Proskauer's reputation in sports law practice and in producing sports executives," O'Donoghue recalled. "And I knew it would put me on the path to ending up at a league, which is what I always wanted."

She was right. Earlier this spring, O'Donoghue left Pros-kauer to accept the position of vice president of legal and business affairs/general counsel for the Women's Tennis Association. Her move raised to 15 the number of former Proskauer lawyers holding high-powered positions in the sports business world — believed to be the most top-level sports executives in the country to flow from a single firm (see chart).

David Stern, commissioner of the NBA, came from the firm as well, meaning two of the four commissioners of the major team-sports leagues are Proskauer alumni.

Ironically, Proskauer prides itself on not having a sports law department per se. Beyond the sports realm, Proskauer ranks as one of the largest corporate law firms in the country, especially in labor and employment issues. Proskauer's labor lawyers are heavily recruited by several industries. But in terms of sports, its attorneys specialize in other areas and then are brought into sports law work.

O'Donoghue, for example, was an associate in the firm's litigation and dispute resolution department.

"The NBA gets the best corporate lawyer we have available for its corporate work, for example," said Michael Cardozo, a partner in Proskauer's litigation and dispute resolution department who also chairs the firm's sports law group. "We don't have any one client that we know each year will occupy 50 people full time. We want to bring the best quality people to bear when a sports client has a problem."

The would-be sports executives, though, first prove themselves on the sports legal battlefield. In the last decade, Proskauer has handled cases affecting nearly every major issue in professional sports, from last month's announcement of a new stock car racing league, to last December's court victory defending Major League Soccer against antitrust charges, to the 1999 crushing of the Major League Baseball umpires' strike, to the negotiation of the NBA's salary cap.

Proskauer stands, competing attorneys agree, among the top three sports law firms representing management in the country. The other two are Skadden, Arps, Slate, Meagher, and Flom in New York; and Covington & Burling in Washington. Paul Tagliabue, commissioner of the NFL, was an attorney with Covington.

That means three of the four major commissioners are attorneys, symbolizing the legal complexity of professional sports today. Baseball's Bud Selig is the only nonlawyer.

But Selig often turns to Proskauer. When the baseball players' strike of 1994 erased the World Series and dragged on for months, Selig brought in a former Proskauer lawyer, Randy Levine, to negotiate a settlement. Levine succeeded where many others had failed.

Since then, Selig has recruited two Proskauer labor lawyers to his staff. Not coincidentally, the players' latest collective-bargaining agreement expires
Nov. 1.

Most Proskauer alumni cite the firm's nurturing atmosphere and its ties to leagues and teams for creating what has become America's incubator of sports business leadership.

The NHL's Bettman said, "As a young lawyer, I found a great environment for developing and teaching young lawyers their craft." Also important, Bettman said, was that Proskauer early on had the NBA as a client. "That kept them on the cutting edge of sports issues," he said.

Another boon to Proskauer came when Stern left the firm in 1978 to become general counsel of the NBA, then league vice president and finally commissioner in 1984. When opposing lawyers are asked about Proskauer's success in producing sports executives, they cite Stern's influence as the key.

It worked for Bettman. "I was at a farewell party for David Stern in 1978," Bettman said, "and I turned to someone and said, 'He's got the greatest job in the world. I'd really like to go to work for him.' " Three years later, Stern hired him.

The NBA job eventually led to Bettman's NHL appointment. Currently, the NBA has three other Proskauer alumni on its legal staff, as does the NHL.

Stern, like Bettman, attributed Pros-kauer's success in part to having the NBA as a client before the field of sports law exploded in the 1980s and '90s with complicated issues in labor, intellectual property, media deals, antitrust, bankruptcy, pensions, acquisitions, sponsorships, the Internet and global sports competition.

Stern, however, has been referring an increasing number of NBA legal issues to Skadden, Arps, raising questions in the legal community about whether Proskauer has reached a turning point in its sports law practice.

Jeffrey Mishkin, who spent 20 years at Proskauer before joining the NBA in 1992 and then Skadden, Arps in January 2000, is now one of the NBA's top outside counsels. He points out, though, that Skadden did a substantial amount of work for the NBA even before he joined the firm as a partner.

Mishkin had been Stern's executive vice president and chief legal officer at the NBA. Stern said, "I have worked with Jeffrey since 1971, when we represented the NBA [at Proskauer]. We have a long history together and he is a good friend. We will use him a little more, but we will also use Proskauer. And we'll use Covington & Burling, too."

Howard Ganz, a veteran Proskauer lawyer who directs the firm's NBA work, said simply, "The NBA did not move to Skadden, Arps. The NBA's legal business was always divided among firms — Proskauer and Skadden principally. That remains the case now."

Ganz said Proskauer continues to handle all of the NBA's labor and employment issues, as well as corporate ones such as transactions or team relocations. He added that Proskauer would have liked to have rehired Mishkin when he moved from the NBA.

Mishkin said of his choice between Proskauer and Skadden: "It was impossible for me to make a mistake. I simply chose the best opportunity for me."

Skadden, with 1,600 attorneys, is nearly three times the size of Proskauer. In 1999, Skadden, Arps became the first law firm in the country to gross over $1 billion in revenue, according to the most recent annual survey of the top 100 law firms by American Lawyer magazine. Skadden's 292 equity partners each received $1.6 million in profits that year after ranking No. 1 in revenue for several years in a row.

In comparison, Proskauer dropped from 43rd to 48th in revenue with $243 million. Its 125 equity partners each received $740,000. Proskauer wouldn't discuss what percentage of its revenue derives from its sports law practice.

Bettman said he has no plans to switch his legal work from Proskauer. And Stern indicated the growth of sports litigation in general means there will be plenty for both firms to do. Besides, Stern's ties to Proskauer remain deep.

Stern joined Proskauer in 1966 — as part of what some members of the firm fondly call "the class of '66." That group also includes Robert Batterman, Cardozo and Ganz. Cardozo and Ganz were classmates at Columbia Law School with Stern, and all three served on the law review together.

The four speak fondly of "learning at the knee of George Gallantz," the now retired lawyer who first brought NBA business to Proskauer more than 35 years ago. At that time, one and sometimes two Proskauer attorneys worked part-time on sports issues; today, at any one time, that number can reach 60.

Ganz represented Major League Baseball in breaking up the ill-fated umpires' strike in 1999. He has served as principal outside labor counsel for the NBA for more than 20 years and worked on many of the major cases that have shaped players' salaries and rights.

Ganz recalled his early years when the NBA's collective-bargaining agreement was five or six pages long. Now, he said, it is 279 pages plus 25 pages of exhibits plus some side letters. He has described the current pact as "Biblical in its proportions and Talmudic in its complexity."

Cardozo primarily represents the NHL and Major League Soccer. He established a major legal precedent last year in an antitrust decision that held that the MLS is a legal "single entity" and not a monopoly. That federal court precedent could lead to reduced antitrust litigation against sports leagues.

Among the mementos in Cardozo's Manhattan office are a baseball cap emblazoned with the words "Salary Cap," an official red-striped Spalding football from the late XFL (a Proskauer client) and a simulated basketball scoreboard that reads "NBA — $5.6 million" on one side, and "Clippers — 0" on the other. The scoreboard refers to a Proskauer case in the late '80s involving the San Diego Clippers' move to Los Angeles without permission from the NBA. Earlier, when Al Davis had moved his Oakland Raiders football team without permission and the NFL tried to sanction him, Davis won a $50 million judgment against the NFL.

Not only did the NBA not have to pay the Clippers, but Proskauer's lawyers won a $5.6 million settlement from the team. Hence the souvenir scoreboard.

Perhaps the only drawback to 35 years of experience in sports law is that it points out that Proskauer's warhorses from the class of '66 are aging. But they have an answer for that.

First is their work ethic. Batterman, 59, proudly proclaimed that he billed 2,000 client hours last year. And Cardozo, soon to be 60, litigated two major trials last year — a seven-week one in San Francisco and the three-month MLS trial in federal court in Boston.

Second, they point to a stable of bright, young partners and associates who are making their own marks on the sports world. Those include:

n Joseph Leccese, partner in corporate law, who helped structure the WNBA, worked on NFL and NHL expansions, and helped owners buy the Philadelphia Eagles, Cleveland Browns and New York Jets.

Jeffrey Lurie, owner of the Eagles, called Leccese "not only my lawyer, but a constant adviser as well." After helping Lurie buy the team, Leccese has worked nearly six years to gain the financial and political approval to build a new stadium in Philadelphia. Groundbreaking was scheduled for Sunday.

"I don't think I ever realized until I owned the team how important your relationship is with your key lawyer and law firm," Lurie said. "So many of the decisions you make have to be grounded in legal policy and just good judgment, which Joe has in abundance."

n Jeffrey Levitan, corporate partner specializing in bankruptcy and leveraged buyouts. He has represented numerous sports clients and licensers in bankruptcy cases. He also represented the NHL in the Pittsburgh Penguins' bankruptcy case, the first such case by a major sports team in nearly 30 years.

n Bradley Ruskin, partner in the litigation and dispute resolution department. Ruskin has worked on issues for the NBA, NHL, ATP Tour, ownership groups in the NFL and MLB, media companies in sports-related disputes, and Fila Sports. Ruskin, 44, is the youngest member of Proskauer's six-person executive committee.

Most recently he and Leccese structured Team Racing Auto Circuit, the new national stock car racing league announced last month, using the single-entity concept.

As for these or any other young Pros-kauer lawyers potentially moving to the offices of teams and leagues, like so many have before them, the firm's partners call the raiding of their talented lawyers "a bittersweet compliment." On the sweet side, those who leave often refer business back to their mentors.

"Now that I'm on the other side and will look at firms to provide me a service, it is a nice component for a firm to be a one-stop shop," the WTA's O'Donoghue said. "Proskauer has the greatest breadth in sports law practice of all the litigators out there, whether it's tax, bankruptcy, corporate, pension ... whatever."

Proskauer Rose alumni
15 former employees, with their positions at the law firm in parentheses
David Stern, commissioner (litigation partner)
Harvey Benjamin, senior vice president for business affairs of NBA Properties (corporate partner)
William Koenig, general counsel of NBA Properties (litigation partner)
Vicki Pica, associate counsel of NBA Properties (litigation associate)
Gary Bettman, commissioner (litigation associate)
Douglas Perlman, group vice president of media ventures and strategy development (litigation associate)
David Zimmerman, senior vice president/general counsel (corporate associate)
Daniel Ages, associate counsel (corporate associate)
Jennifer Rosar Gefsky, deputy general labor counsel (labor associate)
Paul Mifsud Jr., counsel for labor relations (labor associate)
Tandy Meghan O’Donoghue, vice president for legal and business affairs/ general counsel (litigation associate)
Robert Brandon, senior vice president for legal and business affairs (corporate associate)
David Kahn, general manager (litigation associate)
Thomas Lynn, director of hockey administration and legal affairs (litigation associate)
Jared Bartie, vice president of legal affairs (labor associate)
* The XFL folded last month.
Source: Proskauer Rose LLP

Sue Reisinger is a writer in Florida.

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