Rogers & Wells, Law Firm Stung in J. David Affair, to Close Office
Rogers & Wells, the prestigious law firm that paid $40 million to defrauded investors in the J. David financial scandal, is closing the San Diego office that embroiled it in the fraud-ridden investment company’s affairs.
Partners in the New York-based firm insisted Tuesday that the taint of its ties to J. David & Co., which it represented in securities matters, had nothing to do with the decision to consolidate Rogers & Wells’ San Diego practice into the firm’s Los Angeles and New York offices.
But attorneys in San Diego said it was evident the J. David cloud had stalled the firm’s growth locally, especially in corporate law, and that many lawyers in the San Diego office were eager for a fresh start out from under the Rogers & Wells banner.
Mitchell Lathrop, partner-in-charge of the local office since it opened in 1980, is leaving the firm, it was announced Tuesday. He is taking a group of about 15 lawyers and paralegals with him to establish a San Diego office of Adams Duque & Hazeltine, a Los Angeles law firm best known for its work defending insurance companies.
The departing lawyers comprised Rogers & Wells’ environmental litigation team, defending toxics-related lawsuits for clients nationally. They will do similar legal work for Adams Duque, the Los Angeles firm said in a press release.
Ronald Brackett, supervising attorney for Rogers & Wells, declined Tuesday to say why the San Diego office was being phased out. “The J. David matter is not the factor that occasioned our decision,” he said.
Lathrop agreed, saying he and his colleagues were leaving Rogers & Wells primarily for the opportunity to work with a firm whose interests and specialties complemented their own.
“J. David just had nothing to do with this,” Lathrop said. “No one who is in this group had anything to do with the J. David matter.”
Investors alleged that Rogers & Wells aided J. David & Co.’s fraud by continuing to represent its founder, J. David (Jerry) Dominelli, even after it discovered that the investment company’s foreign currency trading activity was illegal.
Waller Taylor, a member of Adams Duque’s executive committee, said the Los Angeles firm had no fears that potential clients would be put off by its newest lawyers’ pasts.
“We don’t believe they were associated with any of the negative things that occured or may have occured at Rogers & Wells,” Taylor said. “They’re very outstanding lawyers in their own right.”
Former Rogers & Wells partner Norman Nouskajian, the firm’s primary J. David lawyer, is a potential target of a federal grand jury continuing to investigate the failed investment company, according to sources close to the case. The Times previously has reported that confidential Rogers & Wells documents showed that the firm and several of its attorneys knew J. David was illegally selling unregistered securities more than a year before disgruntled investors forced J. David into bankruptcy.
The cost of the firm’s involvement with J. David was high. In March, Rogers & Wells settled J. David investors’ claims against it for $40 million--the largest settlement ever entered into by a U.S. law firm. Brackett said last week that the firm was cooperating with a continuing informal inquiry into J. David by the Securities and Exchange Commission.
“J. David didn’t do us any good,” Lathrop conceded in an interview early this month, just as he was beginning talks with Adams Duque.
“The bottom line was they probably lost control of what was going on in San Diego,” said Patrick Frega, one of the investors’ attorneys who negotiated the $40-million settlement. “Back East, I don’t think it hurt their image at all. But out here, everybody involved with the J. David thing was going to have problems.”
Michael Aguirre, another attorney for J. David investors, said the investment scandal had clearly harmed Rogers & Wells. “It looks to me like it’s an opportunity for some lessons to be learned and for some fresh starts for the the attorneys,” he said.
Former U.S. Secretary of State William Rogers, who recently was chairman of the commission that investigated the Challenger space shuttle disaster, heads the firm which bears his name. He maintained an office in the firm’s comfortable suite atop the Wells Fargo Bank Building in downtown San Diego. Brackett said Rogers & Wells has talked to several law firms and other businesses about assuming its lease for the penthouse offices.
Leonard B. Mackey Jr., the sole partner to remain with Rogers & Wells in San Diego, was named to replace Lathrop as partner-in-charge during the phasing out of the local office.
Adams Duque becomes the latest in a parade of Los Angeles law firms to set up shop in San Diego in the last several years. Former President Richard M. Nixon was associated with the firm in the early 1960s. It, too, has been the victim of defections: Several lawyers in its real estate department quit last fall to join a competing firm.
