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Case of a Lifetime

By Sherri Salzman | May 2, 2002
News

Law Office Management

May 2, 2002

Case of a Lifetime

How the state Public Utilities Commission hired a top litigator as general counsel just weeks before it met PG&E in bankruptcy court.

In the past year Loretta Lynch and Gary Cohen, two veteran litigators from San Francisco's Keker & Van Nest, have made all the difference for the state Public Utilities Commission (PUC) in the PG&E bankruptcy case. Through political appointment, personal misfortune, and blind luck the PUC is unusually well prepared to represent the state's consumers.

Appointed as PUC president by Gov. Gray Davis during the state's energy crisis, Lynch quickly realized she needed help. With some foresight she hired New York's Paul, Weiss, Rifkind, Wharton & Garrison to provide bankruptcy law advice. Then in December 2000 she attended the Keker & Van Nest Christmas party and encountered Cohen, Keker's hiring partner, at a turning point in his career.

The year before, Cohen, at age 44, had been diagnosed with prostate cancer. "Everybody said to me, 'This is going to change your life,' " Cohen says. "My thought at the time was, 'I don't want any life-transforming experience. My life is just fine.' " But after undergoing surgery and radiation therapy, Cohen says, he began to consider public service workb.

Lynch had been looking for a tough litigator as PUC general counsel. Although she could offer Cohen just $118,000-a small fraction of his compensation at Keker-he accepted the next day.

PG&E filed for bankruptcy protection in April 2001, just three weeks after Cohen started work. Then in September the company submitted an audacious reorganization plan that asserted federal bankruptcy law preempted dozens of state laws and regulations. "I really did know what I was getting into," Cohen says. But he was badly outnumbered. PG&E's chief bankruptcy firm, San Francisco's Howard, Rice, Nemerovski, Canady & Falk, had more than 50 lawyers working on the case by late 2001. Cohen had 65 lawyers in his entire department, and assigned about 12 to the PG&E matter.

Cohen's first move was to reorganize the law department. He created practice groups based on the litigation-firm model he'd learned at Keker. One group concentrated on issues that generally came before the commission, while another focused primarily on practicing before federal regulatory agencies. The effect was to mix the veterans with the newcomers, giving younger lawyers increased responsibility and the chance to work with some of the top experts in the field.

Lynch and Cohen also used the tools of modern technology-email and airplanes-to even the sides. "We are in touch by email all day and all night," says Paul Weiss attorney Alan Kornberg in New York.

The new structure paid off. In late February, Bankruptcy Judge Dennis Montali granted the PUC permission to file a competing reorganization plan, which would retain full state regulatory authority over the company. Though such early signs were encouraging, Cohen says that both sides are girded for a long battle.

I don't think that throwing money and people at problems is necessarily the best way to deal with everything," he says. "It's a lot more important to be focused, to think creatively, and to make the right arguments."

Dennis Pfaff is an environmental reporter for the San Francisco Daily Journal.

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Sherri Salzman

Daily Journal Staff Writer

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