A law firm received a $21 million loan commitment shortly after Rudy Giuliani signed on as a client and cratered months later with a $70 million debt.
Rudy Giuliani is reportedly in the crosshairs of federal authorities. Are his dealings with a law firm Pierce Bainbridge Beck Price & Hecht LLP of interest?
Rudy Giuliani hired Pierce Bainbridge Beck Price & Hecht LLP for issues with Ukraine after other law firms stayed away. One week later a litigation funder Virage Capital Management made a $21 million loan commitment to the firm. Virage had already reportedly sunk almost $30 million in capital into Pierce Bainbridge and it appears to have seen almost nothing by way of return. The law firm had severe public issues when Giuliani came aboard in November 2019. What went on here? Why would Virage Capital bet so big on such a dubious, red flag ridden horse?
Pierce Bainbridge, a litigation specialized firm, had been in existence for almost three years by November 2019. During that time, the firm one won trial, about mom & pop ice cream sandwiches for a net verdict of $500,000. Many other lawsuits were initiated, bombastic claims made and many resulted in $0.00 recovered.
These cases were used to justify a litigation lender like Virage Capital providing tens of millions of dollars to Pierce Bainbridge. Several months ago it was reported that Virage is owed $65 million by the firm, and Virage has said Pierce Bainbridge defaulted on the debt. The firm won zero trials during the time Virage apparently sunk in $65 million in capital.
By the time the $21 million commitment was made, in November 2019, a week after Giuliani was aboard:
- another lender had declared a $9.1 million default on Pierce Bainbridge in March 2019
- certain vendor invoices in the hundreds and thousands of dollars, allegedly outstanding since November 2018, had purportedly not been paid
- accusations of financial foul play at Pierce Bainbridge were reported widely, including in Forbes
- six senior partners quit the firm in August through October, after less than a year with the firm, one of those partners, Deborah Renner, had been involved in helping unwind the fraud of Bernie Madoff
- firm founder John Pierce, per an income statement he prepared in early November, had over $1 million in tax liens, owed Citibank $90,000 and his ex-wife’s mother $27,000
- Pierce was subject to a second domestic violence restraining order just a few months prior to the $21 million commitment, and related public filings say Pierce was in a UCLA psychiatric facility in 2016.
In addition, a few weeks before Giuliani hired the firm, he pocket dialed an NBC reporter and said, “we need some money.” A few months prior, in July, Rudy reportedly borrowed $100,000 from Marc Mukasey to pay taxes. At the time, Mukasey was working as an outside lawyer for Pierce Bainbridge.
So, in a nutshell, Giuliani apparently needed money, he signed up with the firm, there were serious red flags, yet Virage Capital already presumably tens of millions in the hole, made a $21 million loan commitment.
Then, within approximately six months, the firm was reduced from around 70 attorneys to almost nothing and had a reported debt of approximately $70 million.
Giuliani’s financial dealings are reportedly in the crosshairs of federal authorities.
One wonders if this Pierce Bainbridge situation is, or will be, of interest.
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Addendum. Additional information on Virage Capital and Pierce Bainbridge can be found here, here, here and here.)
