Money Problems — Pierce Bainbridge & February 2020
Spin-off firms Hecht Partners LLP and Bainbridge Law APC were formed amid what appears to have been turbulent financial times for the law firm Rudy Giuliani hired several months earlier. A cash crunch was accompanied by unusual surrounding activity.
The financial problems at Pierce Bainbridge Beck Price & Hecht LLP have been well documented. Rudy Giuliani announced the hiring of the firm in November 2019, it imploded months later while carrying a $65 million debt to a litigation funder. The funder then fueled spin-off firm Hecht Partners LLP, while firm founder John Pierce formed “Pierce Bainbridge P.C.” When the gang was still altogether, the month of February 2020 featured some unusual activity.
Notwithstanding massive capital infusions —for example, despite glaring red flags, Virage Capital made a $21 million loan commitment to Pierce Bainbridge a week after Giuliani was aboard — it appears Pierce Bainbridge was suffering a severe cash crunch in February.
Let’s take a look at some events.
January 31, 2020. Pierce Bainbridge then-named partner David L. Hecht submits a filing which says the law firm is taking over a New York case for Lenny Dykstra. Per a Federal Bureau of Investigation (FBI) press release, Dykstra plead guilty to money laundering in 2012.
February 4, 2020. Pierce Bainbridge and then-firm client Advsr LLC appear as co-debtors on a UCC lien filing. The identity of the “secured party” — the entity that presumably made a loan — is unknown. Advsr is now represented by Hecht Partners, where all of the partners were partners at Pierce Bainbridge.
February 4, 2020. The same day in California, Pierce Bainbridge files a motion on behalf of Lenny Dykstra asking a court to return a $25,000 payment he made in 2019 as an out of state plaintiff. In order for the money to be returned, Dykstra must establish that he is a California resident.
So, in his initial request to the court, what did Dykstra submit as “proof of residence?”
A driver’s license?
No, no, and no.
Simply a letter mailed from Dykstra in New York to Dykstra in California.
The court unsurprisingly denied his request. (The other side’s response brief is interesting.)
This seeming Hail Mary attempt at $25,000 is interesting given the clear financial duress of the law firm Dykstra had hired, which duress is also apparently illustrated by the firm, in the preceding months, securing millions in cash advances by repledging the same collateral already pledged to Virage Capital.
February 18, 2020. Pierce Bainbridge allegedly stopped payments on a cash advance from West Coast Business. The lender later sues; a WCB complaint and an exhibit tracking payments, which appear to have stopped on February 18, are filed.
February 19, 2020. The very next day, the Los Angeles-based Pierce signs for a $2.5 million cash advance with a pay day type lender at a residential address in Queens, New York. The agreement calls for daily repayments of $37,500 until $3,750,000 is paid. Nothing is paid for months; in July 2020 an almost $4 million money judgment is entered against Pierce Bainbridge and related entities.
February 19, 2020. The very same day as the $2.5 million agreement, a Pierce Bainbridge tied litigation fund, Talon LF LLC, files for foreign agent status in New York. The fund was first incorporated in Delaware on September 14, 2018. This was shortly after Pierce appears to have been introduced to Rudy Giuliani.
Talon LF investor solicitation materials, as well as an accompanying transmittal email, contain representations about the Pierce Bainbridge litigation track record that do not appear to comport with reality.
The materials list Pierce, and former Pierce Bainbridge partners Douglas S. Curran (BraunHagey & Borden) and Thomas D. Warren (Warren Terzian), as affiliated with Talon LF — Curran as co-founder, Pierce as founder.
March 20, 2020. Pierce Bainbridge named-partner James D. Bainbridge files articles of incorporation for Bainbridge Law APC. Years ago the Federal Trade Commission (FTC) accused Bainbridge of running an $80 million telemarketing scheme, along with a Daniel A. Fingarette (aka William A. Burke), who per Pierce, had some level of involvement in Pierce Bainbridge finances.
March 20, 2020. Hecht forms Hecht Partners LLP, and two days later it’s reported that Hecht had resigned from Pierce Bainbridge. Hecht’s post “resignation” conduct is definitely worth a review; outside counsel for the firm declared in May that Pierce Bainbridge and Hecht Partners are “entirely separate” firms. The Hecht Partners boss has already hired law firms located on at least three continents in just eight months of his firm’s existence.
April 22, 2020. Law360 reports that Pierce Bainbridge has an estimated $65 million debt to Virage Capital.
May 20, 2020. Pierce forms Pierce Bainbridge P.C.
May 21, 2020 and thereafter. The very next day after Pierce filed for the new name, Hecht Partners is listed as a debtor on a UCC lien filing which appears to be with Virage Capital as the lender.
A week earlier, Hecht said he’d secured millions in funding for the Boeing 737 Max case. A major law firm named Susman Godfrey jumped in to work on the case with Hecht Partners two months later. Susman appears to have a close relationship with Virage Capital.
Susman quit about three months later.
Shortly thereafter, Hecht Partners was off the Boeing 737 Max case as well.
Then court papers were filed which say Hecht’s own ex-clients said he deceived them into signing up with both his firm and Susman Godfrey.
Deceiving your own clients into signing up, that is different, very different; perhaps a high — or should we say low — point to end on.
A cash crunch appears quite clear.
The surrounding activity odd and unusual.
The issues here are virtually all documented.
Draw your own conclusions.