I know I am not alone in marvelling at the absolutely incredible deal that was done between the Department of Justice and Groupe Bernard Tapie at the end of last week.
Hats off to Behnam Dayanim, a partner at Washington DC law firm Axinn Veltrop Harkrider, who not only negotiated the deal on behalf of Tapie but structured it for him too. And hats off to the DoJ and its lawyers in the Southern District of New York. And I guess, hats off to Tapie too. Hell, hats off to everyone who has touched this. Because it really is remarkable.
(Those players who are out of pocket might want me to wait before handing out the bouquets but I am writing purely from a business standpoint.)
So first off to Tapie. Congratulations. The deal to buy Tilt is not yet done, of course (let alone relaunched), but this is the big obstacle cleared. I, for one, doubted it could ever happen. But then I didn’t know Dayanim at the time.
In-house lawyers, of whom I have known a few in a previous life, constantly refer to choosing “horses for courses” when appointing outside counsel. Tapie did his homework in picking Dayanim. His track record in sealing deals for PartyGaming and Optimal Payments speaks for itself. But this really is his pièce de résistance….or maybe his Arc de Triomphe if I am extending the racing analogy.
Dayanim does not work for one of Wall Street’s megafirms. Axinn Veltrop Harkrider is a young litigation boutique launched in 1997 by three lawyers from the world’s largest law firm Skadden Arps Meagher & Flom.
They tired of life in the megafirm, as did Dayanim when he joined them. The feeling was that the megafirm stifled their entrepreneurialism and to a lesser extent stifled the development of their practices given the frequency of conflicts of interest at such a large firm.
This is their mission statement: “We believe that clients want the skill, experience and determination that the best megafirms can provide without the impersonal attitude or layers of staffing that can make any project difficult and expensive.”
Skadden is the biggest of Wall Street’s megafirms and was PokerStars’ choice of counsel when it started fighting the indictments. It has an army of lawyers working on the case. Stars founder Isai Scheinberg plumped for another white shoe firm Debevoise & Plimpton and its head of litigation Mary Jo White, who just happens to be the former US attorney for the Southern District of New York.
It does not seem unreasonable when facing the ruin of your business and possible incarceration to call on the lawyers considered the very best money can buy. It is not beyond the realms of possibility that Stars could be paying 15 or more lawyers in excess of $3m a month. But where has it got them?
That is not entirely clear yet. There is clearly a huge difference between negotiating for a billion-dollar business and a bankrupt one and sources suggest a certain intransigence from Scheinberg, who genuinely believes he has done nothing wrong and will not part with a single penny.
Perhaps he believes he can fight this case all the way to freedom. If so, hats off to him. Because setting UIGEA, the Wire Act and all the legal arguments to one side, he is clearly right. The US stance on gambling is hypocritical and nonsensical.
However, if Scheinberg had wanted a deal all he needed to do was call Dayanim. He was free until Tapie turned up on the scene several months after Black Friday.
When you are working with the DoJ you have to have their trust and respect and Dayanim clearly has that in spades. When he walked into the US Attorney’s office at One St. Andrew’s Plaza near Foley Square in lower Manhattan and presented his deal to Preet Bharara, he had a good negotiating position but crucially he also had Bharara’s trust.
The DoJ, whose Ponzi scheme language has been so inflammatory, has shown that it is not inflexible. It will be fascinating how it fights the rest of these cases.
And as for Tapie and Full Tilt. Well, Tapie still has a long way to go until he has a viable online poker business. Firstly, he has to get a licence. But after the DoJ, negotiations with Alderney (or elsewhere) really should not be a problem. The biggest hurdle will be rebuilding the trust of players. They clearly love the Full Tilt software but Tapie will need an advocate as skilled as Dayanim to sell his product to them – especially if he does not plan on paying them back in full.