Mayer Brown Simpson Thatcher Make Epic Screwup, by Joe Patrice, Above The Law Blog
Mistakes happen. It’s why pencils have erasers. But it’s also why law firms install tier after tier of increasingly senior professionals to second-guess every ounce of work product. It’s remarkably effective — and fairly lucrative on an hourly basis.
Unfortunately, the flip side of a tiered system is a tendency toward over-delegation. And that’s how an unwary paralegal ends up costing a bank millions.
era; loaned a good chunk of cash to General Motors as part of a $300 million synthetic loan. It also, in a completely unrelated agreement, joined other lenders in loaning GM $1.5 billion. When GM paid off the first loan, it prepared documents to release J.P. Morgan’s interest in GM property used to secure the $300 million. And that’s when this happened, according to the Second Circuit’s opinion:
A Mayer Brown partner assigned the work to an associate and instructed him to prepare a closing checklist and drafts of the documents required to pay off the Synthetic Lease and to terminate the lenders’ security interests in General Motors’ property relating to the Synthetic Lease. One of the steps required to unwind the Synthetic Lease was -to create a list of security interests held by General Motors’ lenders that would need to be terminated. To prepare the list, the Mayer Brown associate asked a paralegal who was unfamiliar with the transaction or the purpose of the request to perform a search for UCC‐1 financing statements that had been recorded against General Motors in Delaware. (emphasis added)
The paralegal passed the assignment on to one of the dudes in the mailroom and the cheese stands alone. . . .