From potatoes to copper, Montana lawyer is hottest courtroom commodity
NEW YORK (Reuters) - As a young boy working on his uncle's potato farm in rural Montana, little did Christopher Lovell know the company whose name was emblazoned across trains crossing the state would one day make him the nation's most revered - or reviled - commodities lawyer.
Years later, as a newly qualified attorney starting out in the cut-throat world of New York litigation in the late 1970s, Lovell led a lawsuit against JR Simplot, a major U.S. agribusiness company which supplied spuds and french fries to McDonald's and other big consumers.
Regulators had accused Simplot of manipulating potato prices - then the premier contract on the New York Mercantile Exchange - after it walked away from its potato futures contracts in the biggest commodities default in history at the time.
Lovell, then just 28, saw the chance to take civil action against the firm, mounting a suit that took him through the U.S. Supreme Court in a six-year battle to victory and kicked off a career as one of the most successful antitrust litigators in the commodities market.
"I was a super peacock and show-off for many years after winning the Simplot trial," Lovell, now 62, told Reuters.
Three of the biggest cases of his 30-plus-year career may lie just ahead.
Earlier this month, Lovell's firm was appointed co-lead counsel against Goldman Sachs, JPMorgan Chase & Co and the London Metal Exchange, which face allegations from aluminum consumers that their warehousing businesses inflated metal prices, the biggest commodities class-action lawsuit in decades.
The banks and the LME say the claims are baseless.
On Friday, a judge will decide whether to give an oil manipulation case for which Lovell is co-lead counsel class-action status.
And, earlier this month, he was first to file suit accusing five banks involved in the London benchmark gold fix of manipulating bullion prices. Deutsche Bank, Societe Generale and Bank of Nova Scotia have dismissed the allegations, while Barclays, and HSBC have declined to comment.
Since the Simplot case, Lovell has secured nearly $1 billion in damages from Italian soybean magnates, natural gas hedge funds, dairy farmers and copper traders in more than a dozen highly complex anti-trust and price-fixing cases.
"Chris has immersed himself in an area of the law and has mastered it in a way you don't come across much," said Fred Isquith, partner at Wolf Haldenstein Adler Freeman & Herz LLP.
Isquith has known of Lovell since the Simplot case, when Isquith was a relatively junior member of the Simplot defense team at New York firm Kaye Scholer, but has since worked on many cases with Lovell's 18-attorney firm, Lovell Stewart Halebian Jacobson.
If commodity manipulation and price fixing litigation were a market, Lovell could be accused of cornering it.
Lovell stands out in commodities litigation because he is often the first to file a class-action suit. Judges also often appoint him lead counsel due to his deep knowledge of complex commodities futures markets and opaque physical trading built over the past 30 years, lawyers say.
Questioning conventional wisdom to explain wild gyrations in prices or market moves is also a key part to unraveling malfeasance, Lovell said.
Even so, antitrust and price-fixing litigation requires a large dose of opportunism, say other lawyers. These kinds of suits are often launched as a result of regulatory inquiry and frequently depend on authorities finding evidence of wrongdoing that plaintiffs can later use in court to extract more compensation.
"People get involved speculatively thinking there is a chance of big bucks. That is opportunistic by both the plaintiff and the lawyers," said a veteran trader whose firm was embroiled in the Hamanaka copper scandal, one of the biggest financial frauds in history, in the 1990s.
Lovell cemented his reputation in the frenzy of litigation that targeted some of the biggest players in the scandal.
Lovell and other plaintiff lawyers in such cases also benefit from the fact that in the United States, the burden is on the defense to disprove the allegations, say legal experts.
They say it is often tough to get a case thrown out early on in the process due to the complex nature of allegations that require a deep understanding of intricate futures deals.
Even so, only a small number of suits go to trial. Defendants often settle to avoid potentially heftier fines if a judge rules against them further down the road. Many also prefer not to air their dirty laundry in the court, experts say.
LOW KEY AND DEVASTATING
His floppy hair, boyish looks and gangly 6.3-foot narrow frame are complemented by a folksy charm that can catch his opponents off guard. Clients and fellow lawyers who have worked alongside him or fought him in court describe him as affable and down to earth.
"In his low-key way, he was devastating," said Howard Sirota, a lawyer who worked with Lovell on a nearly decade-long case against more than 300 initial public offerings during the dotcom boom. The suit settled for almost $600 million.
"He's very competitive, and beneath the nice folksy manner he's a very tough guy," he said.
Lovell says he now has a more humble attitude towards his success, having also suffered some high-profile losses.
A suit over crude oil prices against BP and a years-long complaint over allegations that JPMorgan had tried to suppress silver prices were both dismissed.
Still, Lovell's looming presence is a constant cloud for some of the world's most powerful energy and metal players.
"If you're a commodities trader, you're not going to be very happy to have Chris Lovell accusing you of wrongdoing," said a defense attorney who lost a high-profile energy case against him about four years ago.
THE HUMBLE POTATO
Lovell grew up in a legal family in Missoula, a city which nestles on the Idaho border. His father, Charles C. Lovell, ran a private legal practice and became a federal judge in 1985. Now in his 80s, his father is semi-retired but still hears cases.
Working on his uncle's potato farm as a teenager, he would wait for a lift home at the end of a day and watch Simplot's trains rolling across the plains, carrying everything from potatoes to phosphate to all corners of the country.
When the privately owned firm defaulted on its Maine potato futures contracts in 1976, it was the name from his childhood that struck a chord with Lovell.
"I was motivated to learn about commodities markets and use my knowledge of potato farming to pursue that case," he said.
More than 30 years later, Lovell has not forgotten his farming roots.
"I'd prefer to grow the wheat than buy the bread," he said.
(Reporting by Josephine Mason, editing by Ross Colvin)