Ethics
Former BigLaw partner’s lack of ‘introspection’ leads to recommendation against reinstatement
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A former partner at Hunton & Williams hasn’t proven that he is fit to resume law practice, according to a recommendation against reinstatement by a hearing committee in Washington, D.C.
Suspended lawyer Robert M. Schulman “has not demonstrated that he recognizes the seriousness of his conduct” following his 2017 conviction for insider trading, according to a March 22 report and recommendation by an ad hoc hearing committee of the District of Columbia Court of Appeals’ Board on Professional Responsibility.
“Schulman does not appear to have engaged in much introspection during his suspension about what led him to violate the Rules of Professional Conduct,” the hearing committee said. “To the contrary, the tenor of his testimony was that while he technically violated the rules, he does not believe he truly did anything wrong.”
Schulman had agreed to a three-year suspension, with reinstatement conditioned on fitness, after his 2017 conviction for tipping his investment adviser about a pending pharmaceutical merger. He was an intellectual property partner at Hunton & Williams, now known as Hunton Andrews Kurth, at the time of the wrongdoing.
The potential merger was between Hunton & Williams client King Pharmaceuticals and Pfizer. Schulman maintains that he made just one statement during a 2010 dinner that led his investment adviser to buy King Pharmaceuticals shares in advance of the merger: “It would be nice to be king for a day.”
The investment adviser, Tibor Klein, had testified that Schulman went further, the hearing committee said. According to Klein, Schulman said he had to give his client files to someone at Hunton for a meeting with Pfizer. Schulman then made the statement about being “king for a day”—and made it a second time more emphatically when Klein didn’t respond, Klein alleged. Schulman then allegedly told Klein that he can’t trade it himself.
Schulman’s arrangement with Klein allowed the investment adviser to make stock trades on Schulman’s behalf without seeking permission.
Klein proceeded to buy King Pharmaceuticals stock for 48 of his clients, including for Schulman. A friend of Klein’s, another financial adviser, also traded in the stock.
Schulman was sentenced to three years of probation in the criminal case against him, fined $50,000 and ordered to forfeit about $15,500. He was also required to serve 2,000 hours of community service.
Schulman maintains that he is innocent of the crime, he did nothing more than “blurt” out the “king for a day” comment, and never intended for Klein to trade on the information. Asked about the reason for his misconduct, Schulman concluded that it was a “combination of hubris, stupidity and a disregard of ethical obligations.”
“But Schulman was not suspended for hubris or stupidity,” the hearing committee said. “He was suspended because a jury found him guilty of securities fraud and conspiracy to commit securities fraud, which necessarily entailed finding that he said more than ‘king for a day’ and that he did intend that Klein trade on the information.”
The hearing committee said Schulman “continues to implausibly downplay the extent of his disclosure to Klein,” and his “story does not add up.”
It is hard to understand, the hearing committee said, why Klein would spend more than a half-million dollars on King Pharmaceuticals stock if all he had to go on was “king for a day.”
And Schulman “does not see anything wrong” with the arrangement that allowed Klein to make trades for him without seeing a no-trade list maintained by Hunton.
The hearing committee noted Schulman’s description of Klein as a person who “hurt me more than any other human being in my life has hurt me.” When asked whether he considers himself a victim, Schulman replied that he is not a victim in the sense that his disclosure violated ethics rules.
“Unspoken in that testimony is the belief reflected in the rest of the testimony, that in other senses he very much was the victim,” the hearing committee said.
On the plus side, the hearing committee noted that Schulman disgorged his profit, paid his court-ordered fine, served more than 2,000 hours of community service, completed a master’s degree, started a community garden and tutored students learning English as a second language. And Schulman and his wife have transferred their financial holdings to a firm with instructions to purchase only mutual funds.
He has also kept abreast of developments in the law, the hearing committee said.
Character witnesses testified on Schulman’s behalf, but their testimony did not demonstrate that he “has changed as an individual” or that he fully appreciates his misconduct, the hearing committee said.
The disciplinary counsel did not oppose Schulman’s reinstatement.
Publications with coverage of the hearing committee recommendation include Reuters and Law360.
