Attorney David Heffernan Talks LIVE with Special Guest Attorney Dan Newman

On Behalf of | Nov 16, 2021 | Podcasts

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Welcome to another episode of First off, let’s kill all the lawyers. I’m David Heffernan, and I’ve been practicing personal injury law here for 30 years in South Florida goal behind this show, and we named it after the Shakespeare quote, although a lot of people argued that that was a compliment to lawyers, but people still chuckled pretty loudly when it was. And when you talk to people today, they still think maybe not a bad idea to kill all the lawyers. So, goal here today is bring in other South Florida lawyers, different areas of law, kind of educate some people on it, maybe one by one, we can kind of take some people off the kill list. So, my guest this morning is a great, great friend been for the last 30 years. And a truly fantastic lawyer who does a lot of things that I know nothing about. So, this is definitely going to be entertaining, because I’m going to get to learn along but let me bring in Dan Newman, a partner Nelson Mullins. Dan, how are you?

Great today, and hopefully I’m going to get off that kill list by the end of this show.

Slowly, why did we get oh, yeah, the majority at least I don’t know, we get everybody off that list with you. But we can get the majority of so. So, Danny, let’s go back and talk. You went to George Washington, you studied finance? What was the path and why go to law school? Was that something that was always going to be done or had that come about?

So, when I went to college, I thought I was going to go into the investment field investment banking or something investment related. I was a finance majors you said, Bachelor of Business Administration, I took a business law class and in my business, curriculum and undergrad, and that really gave me a passion for the law. I had a great, great teacher and, and he taught us about contracts and about business deals and about litigation and how disputes arise and how there are different arguments and how to be an advocate. And that was fascinating to me. And so, after my junior year in college, I decided that I wanted to go to law school. And I wanted to be able to combine those two passions, the finance end, and the legal end, I knew I wanted to be a litigator, I knew that that was probably the best fit for my personality. And so that’s, that’s how it came about.

Alright, so that now at least gives me an explanation as to how you know about contracts, because you and I had the same contracts teacher at University of Miami law school. And I don’t think we learned a whole lot about contracts in that class. But we’ll leave that alone for now. We had a lot of laughs, though. So, we become friends in law school, you get out of law school, you take a job with the SEC, and I think oh my god, that’s fantastic. He’s working for college football. Wasn’t that sec. So, you go to New York for the Securities Exchange Commission. Let’s talk about that. Because I think that’s kind of fascinating.

It was great opportunity. It came about unexpectedly, there was there was the opportunity there. It was a bad time to during that period of time, it was the there was a banking crisis going on. And there was there was a little a downturn in the economy. And someone told me there was an opportunity to go work at the SEC. That was a passion of mine. It was finance, it was securities, I taken securities law in college, and learned about the securities laws learned about business and finance and tried to take courses fit for that in, in law school. And as well as the securities class of law school, went up to the SEC interviewed, extremely passionate about what they did, what they do and continue to do. There they are, you know, they essentially are the overseer of our financial markets in many different ways. And I went up and I worked for what’s called the enforcement division of the SEC. And our job was to enforce the securities laws. So, we would investigate potential violations and enforce those through legal actions, many cases settled or they go to trial. And, you know, in the process of that, I learned a tremendous amount, fascinating cases, everything from insider trading, which everyone hears a lot about financial filing fraud, where companies may file inaccurate information about what their numbers really look like, and people rely upon that and broker dealer, misconduct to I mean, anything that could be a fraud in connection with securities markets, we went out we would, that would be an aim of ours to investigate and potentially prosecute, enforce the laws.

Which, which again, I think is fascinating, because it’s something that we all sort of know a little about, you know, we hear the Bernie made offs and things like that, and the scams, but But little things like you’re talking about where information might intentionally be wrong, and that misleads investors and things like that. So I mean, just the scope of that enforcement, How broad is the SEC and how much, I guess, d a catch. I mean, you know, everybody is it’s sort of like the IRS, you know, how everybody cheats on their taxes. You know, but a lot of these companies do and how broad is that enforcement?

So, the enforcement is and I should say it’s civil enforcement, the the Department of Justice enforces criminally prosecutes, and a lot of times there are, they work together because the facts are the same. But it is, as you said, there’s a lot going on out there and the agency can’t go after everyone can catch everything that’s going on. So it tries to essentially go after cases that are going to have an impact on others. And they show the areas that are there, areas that they really want to make sure that people aren’t engaging in misconduct aren’t defrauding people. And that actually changes by each chairman of the SEC, you’ll see different areas where their focus may be. So, when I was there, because of the banking crisis, I go back to that a lot of the enforcement was directed to bank holding companies, they were public companies that held these banks, and all these banks held real estate on their books at levels that just wasn’t accurate. They were way over inflated. So, their financials look great, but it wasn’t really the case. And so that was a big, big pet peeve of the chairman of the of the SEC at that time. And also, insider trading was always big, you just come off of hearing about cases of Michael Milken and others like that there were a lot of insider trading cases out there. So those were big, and there was, you know, a lot of the enforcement, the enforcement division is not, it’s not huge, but it’s pretty substantial. And they’re enforcement attorneys throughout the country in different offices. And you see those big cases, and they’re meant to tell people look, the SEC is out there, they’re looking to enforce, don’t go sideways, you know, with the law don’t even try and go up to the edge.

I mean, look, you know, they can even ultimately, and I know it’s DOJ but you know, take down Martha Stewart. So, you know, I mean, you could do insider trading and Snoop Dogg and Martha Stewart gets interesting.

Yeah, it’s a an insider trading, those are tough cases, the fascinating things about those from when no matter what side you’re on, but if you’re in the SEC, it’s like a puzzle, you try and put pieces of the puzzle together, you may see that there was a lot of trading before a big announcement and the stock the stock rose as a result of the announcement or the event, whatever it may have been, maybe there was announcement of a merger with another company. And then you take a look at okay, who you know, what was going on with the trading? Why was there all this trading the day before the announcement, and then you try and look at who is trading and then try and figure out how they may or may not have known something, you know, look at phone records, calendars, relationships. And so they are fascinating cases. And there, there are so many of them that just have amazing facts. I mean, fascinating fact patterns, really on how people may have gotten the information. I mean, the bottom line now is today, two things are so sophisticated. There are so many ways to determine how information flowed and where money’s flowed that and communications, that, that there are a lot of ways to catch folks.

So a little unrelated to that. But I mean, and I just read another article this morning. So you go back and, and Gamestop basically seems to get manipulated through social media and goes through the roof. And now apparently Bed Bath and Beyond as something similar that’s going on? How does that tie into things? And I mean, you know, without getting into a legal opinion, but that effect of social media sort of playing with the market? What are your thoughts on that?

It is, and it was actually in the SES study just came out recently on that. And, you know, the, what, what the SEC and others were looking for is Was this some type of, you know, group effort, some type of mass manipulation that was spearheaded and the group move. But you know, there what you have now, as you have a lot more retail investors in the market, because of, because of broker dealers like Robin Hood and others, you have people who never traded before in the market. And they’re also out there on these blogs talking about things and talking about concepts and they’re moving, they are moving the stocks. And but it’s not necessarily illegal, it could be if it’s an organized effort to do that, to manipulate the stock, but it’s difficult, it’s difficult to know whether that’s the case, but if it was, and if there were people that were at spearheading that, that would be illegal, if that could be shown that it was happening. The other concept you have you’re not to get too technical is you have what’s called a lot of short sellers out there on these stocks. And what happens is, if a stock price starts going up, there’s a short squeeze, which means that the short sell was the people who sold the stock and don’t own it are saying and their goal is to basically if you sell the stock short, you think the price is going down, you’re going to sell it high and then try and buy it back low. And that’s where your profit is. If the stock price is going up, you have to cover that that short sell. And that’s what happens. A lot of them start covering and that drives the price even higher and drives the momentum and the volume of the of the stock even higher.

They’re very interesting. So let’s, let’s take the wealth of what you learned from the SEC. And you come back now to South Florida. Talk about that transition. What brought you back here

So what ultimately brought me back here is, is my fiancee at the time and now wife was a Floridian and she, she really liked living in Florida. And I really liked Florida and I had great friends down here like yourself and just really liked the lifestyle down here. So, I came back down, I was looking for a firm that would give me the opportunity to do both business litigation, contracts, breach of contract tortious interference, breach of non compete, you know, business fraud, come while called commercial divorces, right to partners in a business don’t get along, and things like that, and allow me to do the securities work from the other side. And so that I came down. And I started working with a firm called at that time it was called to and Garcy Pedroza and it gave me the opportunity to do that and hold my litigations by Business Litigation skills, and learn construction litigation as well. So it was just a great opportunity for me to accomplish all that, you know, and have the access to be able to learn new areas of law, because I think you always want to keep learning.

Well, 100% and we have to give props to Stephanie, who is a badass prosecutor in her own right, who’s had a tremendous legal career, maybe we’ll have to get her on because it’d be very interesting to have a prosecutor on so you can tear up for that, because I’m going to call her I will. I will. Alright, so you come down now. Now what I’m fascinated about is so you come down and the firm you start with is not a huge firm. Now things have sort of evolved and you’ve kind of gone the gambit, because we’ll get to Nelson Mullins, but now you’re part of an 800 Lawyer firm with 25 locations throughout the country. But talk about that transition midsize firm, bigger firms, to a very, very large firm now what what’s the difference in the practice of law.

So the difference is in the when I went to what was tuned Garcy Pedro’s ultimately was to Cardenas, at the end, by the time I had left was what we call boutique litigation firm, it did very high end Business Litigation at a very sophisticated high end level. But you could you could represent you had a lot more flexibility on who your clients may or may not be right because as lawyers, we always have to check for conflicts that no one else in our firm represents the other side that we may be in litigation with. But it really gave me the opportunity what and what I still think was greatest thing is, you know, it puts your feet to the fire right away, you’re either you know, you pour the cement on the shoes, you’re going to sink or swim or learn, you run it the cases where lean and mean it was a partner and an associate, and you had to be familiar and know everything and you had to jump in and, and learn how to be a litigator, you know, right away and learn by doing which I still you know, there, there are different theories on that. But you know, you always want people that are overseeing you and mentoring you and teaching you but it’s great one at a young age, you have the opportunity to do things like that, that was great about the government, they gave me the opportunity to a lot more than a private firm would have when I first went out and this firm to tune Garcy Pedroza gave me the opportunity to do a lot of things early on, exposed me to a lot of things, and I had to learn, I had to become, you know, knowledgeable about and learn things I didn’t know about and forcing me into that situation was great for me personally.

And that’s one of the difficulties I think young lawyers face. And I talk to my students about that a lot. You know, it’s very difficult now, as a litigator, to get into the courtroom, to get cases where you’re actually going to be able to get in there. And why I tell a lot of them, much like you went to the government there, you know, if you can state attorney, the public defender, that’s a good way to get a practice of being in court, because part of the problem now is there’s less and less trials. And then clients want the big dog to try the case. They don’t want to handle it to some underling. And, and so it does get more and more difficult. So, you’re blessed in that regard to have really gotten that baptism of fire.

It was great, I got to work with terrific people. And in about 10 years after getting there I moved to a firm called Broughton Caselle, which was a Florida firm had been around for at that point in time, probably more than 60 years. And that was bigger firm was a Florida based firm, but we have offices all throughout the state. So going into a bigger organization. It didn’t necessarily change my practice area. And what I did accept it basically, the clients became a little bit bigger. And some of the cases that we may have dealt with at the old firm because of conflicts we could no longer do. And then in 2018 Brian Kursaal merged with Nelson Mullins and now Samoens is a national firm and it’s been a great merger very, you know, very similar corporate philosophies. You know, the way the way people look the the people have similar outlooks, they’re very entrepreneurial, but With a big firm, obviously, there’s, you know, there’s more administration. And there’s more potential for conflicts you always have, because other people are representing other, you know, other folks. And when you have 100, plus lawyers, there’s a potential that someone else is representing someone who may be adverse to your potential client. But the amazing thing is, in a big firm like this, and the resources, we have every practice area, I have people with expertise in everything. So, whenever I have questions, I have all kinds of people I can go to, to, you know, to talk about issues. And, you know, the greatest thing and one of the greatest things about practicing was talking to people and getting other ideas, even about cases and about facts and about the law. And when no matter what we do, there are other areas of law, that impact on the case, you know, you may be doing a contract case, but there may be healthcare issue in that contract, there may be a HIPAA issue, you know, on whether certain documents can be disclosed, and how they have to be protected. So, it’s great to have that, that wealth of knowledge to be able to go to or you may have a client that is a litigation client that wants to do a real estate transaction, and you have people that will handle that end of it. So, it’s been great, very calm, you know, complimentary, as far as the people that I work with, I’m really very lucky in that regard.

Fantastic. Well, yeah, Mark, Mark, and I have a very complex conflict check, I asked him, Hey, do you have a conflict with this, he asked me to have a conflict, that pretty much covers it. And then from there, but you bring up a great point, and, and, you know, with a pandemic, and a lot of people started working remotely. And I’ve talked to a lot of lawyers about this. And, you know, lawyers have the ability to function and working remotely. And we’ve seen that with a lot of firms. But what’s missing from that is, I think what you just alluded to, it’s the dialogue of being able to maybe walk down the hallway to talk to somebody else and bounce ideas off of them, or talk to somebody in a different field, that sort of is gone. I mean, it’s there, you can do it technologically. But I think a lot of that sort of natural organic things that happened a law firm, have been kind of taken away from the pandemic, and it’s going to be very interesting to see where things go. So what have you guys done? You know, Are you fully back into the office? Are you hybrid? Or what are you doing?

So we are, I would say, we’re a little bit of a hybrid, you know, technically the goal is to have people back in the offices, but you know, different people have different situations and different comfort levels. And so, and people may have a situation where they have someone at home that’s compromised, or they, you know, during the pandemic, they may have had childcare issues where kids weren’t in school. So it brought up a whole host of issues. So we are, we’re hybrid, mostly, most of our offices are out with most of the people in the office. But that’s not the case at all offices. And in some offices, we have most of the people working are a good number of people, I should say, working remotely. For me, personally, I’m a dinosaur, I always. So, I never stopped coming into the office. I like being in the office, I do better work in the office when I’m separated from being home. And I like to collaborate with people. So when the cases that I was working on the people I was working with, we were in the office, so we were having that collaboration, we were having that discussion, when an idea came up, I would go down the hall and I would talk to my colleague and say, look, what do you think about this? What about that? Here’s what I think we should do? Let’s try it or what do you think of this document I just found take a look at this, or, Hey, you know, the witnesses coming in for a case and I don’t think you can work with a witness unless they’re with you. For me, it’s much better than in front of me. So, you know, the way I would have witnesses always come in to talk with them. And you know, and meet with them. Because I like that, you know, that approach to me is the best way to do it. It’s hard to replicate that video. It’s not impossible, and some people are great at it. But for me, it just worked better with having that collaboration. I think we’re social creatures as especially as litigators, right. We like to be with people. We like to bounce ideas off. And that’s when we do our best work when we’re talking to other people.

100% And we were blessed in that regard in that with a small firm, and we had adequate space. We gave people the option, but yeah, pretty much from day one. I was able to go back in the office, I’m going to park my car, go up the elevator, bring my lunch with me. But there was something about sort of the mechanism of driving to the office, going to the office being in the office. And then yeah, the ability to kick things around because I don’t know about you I often find just verbalizing something. I’ll talk to Mark about it. I’ll be going back and forth. And when I hear it out loud, I either go oh, that’s going to work or Oh, that’s really dumb. Without even getting feedback, you kind of sorted out yourself but but yeah, alone sort of on your keyboard. That’s a lot harder to do.

It is tough. I mean it for me, it is tough when you can, when you can verbalize when you can bounce around ideas when you can, you know, sit with other people, and sometimes just thinking, you know, sometimes it happens at social conversation, you’re not even need to talk about the particular case, but then you have an idea and you’re like, you know, what do you think about this, and it makes a world of difference, I think, to be able to do that. And so the pandemic raised the, you know, a lot of a lot of interesting issues, though. And, you know, for it did cause the, you know, disruption in some regards, still has with, you know, anyways, and but I do think some great things came out of I mean, motion calendar for state court, non evidentiary hearings, motion calendars, probably the greatest thing to do on Zoom, it’s five minutes, you’re not going to the courthouse, it saves the clients money, it saves the attorneys time, it’s a win win for everybody. And, you know, we were allowed to come in at the beginning of the Panda, even though the courts, you know, have been remote. And although they’re getting back to, you know, having trials, because apparently some lawyer must have written the Dade County ordinance, it said the lawyers were essential personnel and could come into business, even during the shutdown.

So I’ll leave it to the lawyer to find the loophole to get everybody there in the midst of a pandemic, but, but we’ve talked about in the past, and I do give a lot of credit, really, the South Florida judiciary, but But I mean, a lot of the state court judges and what they did here in Dade County, they were on the, on the front of a lot of this. And so yeah, those zoom, the efficiency and use of time for the court and the lawyers and to the benefit of the client to have a motion calendar where everybody can be sitting at their office, you know, and knock out a five minute as opposed to going to the courthouse being down there. So it has been and I think you’re right, we’ll draw a lot of interesting things out of that. I want to ask you about something because again, another concept that I find fascinating with what you do. And again, I heard you were going to be receiving that, well, he’s not that tall. But you know, maybe he could make it in the league. And I know you’re a hockey player, but talk about the concept of a receivership. Because I know that’s part of what you’ve done. And you’ve done it in some literally hundreds of millions of dollar transactions that have gone on what is what is a receiver do and how does that come about.

So, a receiver basically comes in at the, at the order of a court generally in cases. So, there are many instances where many situations where it can come about. And actually in Florida, we have a statute called the Uniform Commercial Real Estate receivers act for property cases where a court can appoint a receiver, it had been equitable in nature. Before that, in a lot of ways in that the courts have the equal power to appoint a receiver, the receiver comes in in a very broad, high level receiver will come in, and the receiver will essentially be put in charge of a situation whether it’s a group of companies or a business. And the idea of the receiver basically, is to make the best decision for that, for that business or that or that property. In the Florida Statute. in federal court, many times, a federal judge will appoint a receiver, the SEC, or the FTC, or CFTC, will sue somebody for fraud, maybe they were maybe there was a Ponzi scheme that was going on. And they will say, Judge, we need to have the agency will say we need to have received or appointed. So the herd can marshal the assets is kind of one of the points that the phrases that’s used a lot, that means there’s a lot of people that have been defrauded here, let’s find out what assets are still there, because assets evaporate and those fraud cases, Marshal those assets, figure out how to recover additional monies for the benefit of the estate. And ultimately, hopefully, for those, you know, defrauded investors in that type of situation. In a property situation, it’s trying to figure out the best way to continue, you know, to run that property, collect the rents make and there are other parties involved, there may be a bank that has a mortgage in it. And then a lot of times it can come about by, you know, the bank action. So the receiver comes in in Florida and we have statutes that allow folks to recover monies for called fraudulent transfers. And that means if something has been at a very high level transferred without value to try and either defraud creditors or for you know without value at a time when the entity was insolvent, and the receivers a lot of times will bring what are called callback cases in these fraud case and say, You know what, you got paid out money, but you know, John Smith over here, didn’t get paid out money and they’re down that money, you got paid out more than you put in. So that money has to come back to the estate to be divvied out or I was receiver over a group of companies in the healthcare industry. At one point in time. We actually kept operating those companies and ultimately gave the defrauding shareholders interests in those companies, as well as pursuit litigation, recover additional monies to distribute out to those folks to try and make them as you know, get them as much money back as possible. ball or in this situation, like I said the property to keep the property running to put it back on its feet, make sure it’s been administered responsibly. And then the report to the court.

So you’re sort of appointed by the court and then work for the court, correct back and say, here’s how we sort of assess it. But it’s fascinating because it it gets to be I guess, so multi technical, because you talk about, you know, the drawbacks. Well, all of those sort of spun off into their own almost little litigation. Right.

Right. They are they are each their own separate litigation. I mean, you try and do without litigation. And but if you can’t, you will pretend it’s the appropriate case. And the facts of the law are on your side, you did some litigation and litigation may be for other things in addition to the drawbacks, you know, in connection with those cases, but the business background, at least for me, was a great asset in in serving as receiver and representing receivers. Because understanding how businesses work, even financial statements and an operations and having that law degree background of you know, of issue spotting was a great combination, because ever see everywhere, a lot of hats, you’re reporting, you’re appointed by the court, you report to the court, you’re essentially you know, working for the court, and trying to do the best you can to get money back for the investors or right to ship, if it’s some other type of receivership. But it is you wear a lot of hats here, you know, trying to litigate, you’re trying to potentially run a business and keep the business, if it’s a viable business, you want to keep that business running, and hopefully spin it off on the other side of the receivership. So, it can continue to be a viable business just because something bad happened, the business may be, it may still be a good idea. And there may be value to it. And you don’t want to, you want to try and protect as many people as you can, you know, employees and things like that also. So, you wear a lot of hats. And it’s a fascinating process.

Well, you’re also I would guess, a little bit of a King Solomon, and that you’re trying to sort of balance the fairness in that versus what you’re spending sort of scorched earth to go after everybody out there when, you know, yeah, I guess you’ve got to make a determination, what ultimately is recoverable, so that you’re not just wasting resources chasing something and not being able to recoup?

Now, great. It’s a great point. I mean, you have to make economic decisions the whole time, you may have a great case, but you may not be able to recover $1, you may get a piece of paper if you want, that doesn’t make a lot of sense. So you have to make economic decisions on what is, you know, going to be the best use of usually very limited resources that you have, and so that you’re constantly making those decisions. And that’s both on deciding whether to bring a case, whether it’s Bible, whether it’s collectible, and whether to settle a case, you know, and what levels make sense because of the same determinations.

So what do you find, and it may not, you may not be able to sort of tell me an average, but in cases that you’ve been involved in and have others, where there’s a receivership and a lot of people have been defrauded to us what sort of percentage do you see of recovery for the people that were defrauded? You know, is it a 30? Is it a 50? Is it a 10? You know, where does that sort of rank out?

It really depends. Each case is different on the cases that I’ve seen, or the cases that I’ve watched others be involved in, I mean, it, you know, unfortunately, there are some cases where there’s no money, the money is it is gone, it has been stolen, it has been sent offshore, and there may and it may be very limited on who you may be able to pursue to recover monies and it doesn’t you don’t have the resources or it doesn’t make economic sense, all the way to, you know, cases like in the in the made off litigation, there were significant dollars that were recovered for invest. Now, there was one very big recovery out of Florida, actually, that was in the multiple billions of dollars that, you know, helped that a lot. I’ve had a receivership where we’ve been north of you know, we’re north of 50%. You know, usually, so it runs the gamut. It can be it really it generally is never and very, very, very rarely ever anything close to 100, we usually see them trend somewhere between five cents to 25 cents in the area. That’s why we’re real proud of the one where we’re north of 50% on the dollar, and we’re still going at present, but each case depends on the facts on what assets may be there and what claims may be available and who you can bring those claims against them. How you know whether you can recover anything from those folks, so they collectible.

Well, Danny, listen, we could we could talk about this because I’m fascinated by it. Because again, something I know very little about. And so to kind of learn this and see the scope of what goes on is really fascinating. But unfortunately we’re running out of time but I think we’ve established enough, you know, given your expertise and you’re just a good guy to, you know, that we might be able to move you off the kill list. And so hopefully we’ll get the general consensus on that.

Well, I appreciate that. And I really thank you for giving me the opportunity to speak with you today. First of all, you know, I love speaking with you in general. So it’s always great to see you. And, you know, it’s great conversation this morning. So thanks for giving me the opportunity.

And anytime, and I will also point out to Danny is what’s your role now and in the alumni.

The income I will be I am the president elect. So next year, I will be the incoming president of the US law Alumni Association.

Fantastic. And I’m blessed along with Danny and others that we’ve got a core of people that got three decades hard, hard to believe, graduated from law school three decades ago, that still call each other friends, which is great, get together frequently. And more importantly, I’m able to pick up the phone and get some really good advice from you, which I rely on and often do. Now, same

here and the stories that our dinners keep getting better. Same story.

The lies, the lies get longer, the stories get better. Yeah, it is. It is it would be fun to chart it out, you know, the 10 and 2030. Because it is the same story. But it’s amazing how 30 years and now it’s a much better story than it was.

It is it is amazing.

We’ve got a cast of characters and I appreciate it. Danny really appreciate spending time today. Partner Nelson Mullins fantastic firm that seems to be growing and growing. And just good luck with all of that and we will definitely see you soon my friend.

Thank you very much. Thanks again. I’ll talk to you soon.

You got it. All right. That’s it for this week. Next week. We will continue on our quest not to kill all the lawyers. Have a great week and we’ll see you next time!