Law Firm Receiving Lucrative Contracts Has Donated to Mayoral Candidate Brad Lander

Top officials at companies with sizable government contracts are generally barred from making big donations in city elections and from having their donations matched, under campaign finance rules designed to combat corruption. But the Pomerantz donations appear to be legal, thanks to a city accounting practice that records its contract at a value of just $1 — even though it’s for work that often earns law firms tens or hundreds of millions of dollars.

That practice undermines the law, according to campaign finance experts. “Pomerantz attorneys get to make fully matched contributions when, in fact, any person would look at this and say, ‘They’re doing business with the city,’” said John Kaehny, executive director of the good government group Reinvent Albany.

It’s not just Lander: Attorneys at the firm have donated to New York City comptroller candidates in every election since at least 2009 (including former comptroller Scott Stringer, who is also running for mayor), all while being repeatedly awarded contracts that could earn them millions in attorney’s fees.

Legal experts have documented that firms like Pomerantz cultivate relationships with pension officials to win the business of representing them in investor lawsuits.

According to Lander’s office, the comptroller does not select the law firms that represent the pension funds in those cases. That is the task of the city Law Department, which provides legal representation to city officials and agencies or hires outside law firms to do that work.

But his office is still involved in the process. When the Law Department proposes a legal strategy for pension cases, including which law firm will serve as lead counsel, the comptroller’s designated trustee votes on it, along with the pension funds’ other trustees. The comptroller also has the power to reject city contracts. (The mayor or contracting agency can overrule his decision.)

City campaign finance rules are under scrutiny as Mayor Eric Adams faces federal corruption charges, including for alleged schemes that allowed him to gain improper public matching funds. Even before the federal corruption charges, the city Campaign Finance Board, which enforces the rules, found that donors to Adams’s campaigns for mayor violated the rules covering contractors hundreds of times.

After Adams, Lander is leading the mayoral race in fundraising.

“The campaign works diligently to comply with all campaign finance regulations,” a spokesperson for the Lander campaign said in a statement.

Pomerantz LLP and several of its attorneys did not respond to repeated requests for comment.

Even though Pomerantz has a city contract, the pay-to-play rules don’t apply to it.

That’s because the rules only cover contracts worth more than $5,000 — and Pomerantz’s contract isn’t officially worth anything. According to city records, the contracts that Pomerantz and other law firms have to represent city pension funds in shareholder lawsuits have a value of just $0 or $1, even though they have the potential to earn firms tens or hundreds of millions of dollars.

The contract is recorded at such a low value because it works on a contingency basis — meaning Pomerantz only gets paid when it wins or settles a case — according to the Law Department, which awarded the contract to Pomerantz.

The city sometimes records contracts for services at a lower amount than they end up being worth, because it’s not clear in advance how much time the contractor will work.

“There are all kinds of loopholes in the ‘Doing Business’ rules” — those covering city contractors — “that revolve around how agencies report [their contracts], and who’s checking to make sure it’s accurate, and how it’s evaluated,” said Kaehny, of Reinvent Albany. “This is not the first time we’ve seen ‘doing business’ activity where it’s obvious that the contract could potentially be worth a lot more down the road.”

Pomerantz has taken a particular interest in comptrollers. Pomerantz attorneys have donated more than $42,000 to comptrollers or candidates for comptroller since the 2009 election cycle, and those campaigns flagged more than $11,000 of the donations for matching funds, according to city campaign finance records. In that time period, Pomerantz’s contract with the city was re-awarded or renewed three times.

Donations from attorneys at the firm include more than $15,400 to former comptroller Scott Stringer during his 2013 campaign for the position and his time in office. (Stringer’s campaign did not respond to a request for comment.)

During the 2021 comptroller election, Pomerantz attorneys donated to four candidates: Lander, Helen Rosenthal, David Weprin, and Michelle Caruso-Cabrera.

Pomerantz has made similar donations elsewhere. In 2019, the firm cut checks to Oregon’s treasurer and attorney general, who decide which law firms represent the state pension funds in shareholder lawsuits, according to reporting by Oregon Public Broadcasting. Pomerantz was awarded the contract to be added to the state’s shortlist of firms.

Large pension funds are often at the helm of those shareholder class action lawsuits, thanks to a 1995 federal law that made it more likely they would be selected as the lead plaintiff. And they retain outside law firms, like Pomerantz, to help them.

“That created the incentive for these lawyers to make contributions to large pension funds,” said Adam Pritchard, a professor of corporate and securities law at the University of Michigan Law School.

Pritchard co-authored a 2011 paper that found that when state officials who had influence over their pension funds — like comptrollers — took campaign contributions from the law firms that they selected as lead counsel, they were “less vigorous in negotiating attorney fees.” That is, they allowed the firms they hired to take a larger cut of settlements or judgments.

“The largest of these cases result in settlements in the hundreds of millions of dollars, and the attorneys take home between 10 and 30 percent of the amount they recover from the class,” Pritchard said. “That leads to competition to be the lead counsel. … That’s why these law firms cultivate relationships with pension funds.”

In 2007, the New York City pension funds hired the law firm Labaton Sucharow LLP as lead counsel in a class action lawsuit against Countrywide Financial Corporation over its involvement in subprime mortgage lending.

The case settled four years later for $624 million — and the court awarded Labaton Sucharow $46.5 million in attorneys’ fees, plus $8 million in expenses. Meanwhile, its contract with the city was officially worth $1, and was renewed in 2012 — recorded at a value of $0.

Employees of the firm donated a total of more than $61,000 to comptroller candidates in the 2005, 2009, 2013, and 2017 city elections.

Labaton Sucharow did not respond to a request for comment.

Pomerantz was awarded a contract to represent the city pension funds in 2006, their first recorded contract in the city database; it was re-awarded in 2012 and again in 2018. In 2023, the contract was renewed for an additional year.

The city has recently retained Pomerantz as the lead counsel for city pension funds in at least two lawsuits.

In 2022, shareholders of the major Asian e-commerce company Coupang filed a class action lawsuit linked to the company’s IPO the previous year. The New York City pension funds asked the court to make the pensions the lead plaintiff in the lawsuit and to assign Pomerantz as lead counsel. The judge ultimately appointed Pomerantz to the case.

The following year, the New York City pension funds appointed Pomerantz as the lead counsel on another class action lawsuit, against AT&T.

Neither case has been settled yet.