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Back in February, as word spread that Justice Department antitrust chief Gail Slater was being pushed out, a few state A.G. offices—New York, Tennessee, and D.C. in particular—saw the writing on the wall. The D.O.J. was preparing to cut a lobbyist-fueled deal in the Live Nation case and leave the states holding the bag just weeks before a trial many hoped would culminate in a long-sought breakup of Ticketmaster. The states weren’t equipped to lead a monopolization trial of this magnitude on their own. So they went looking for outside help—and got it from Jeffrey Kessler of Winston & Strawn (now Winston Taylor), one of the country’s premier antitrust trial lawyers.

But what exactly did it cost to bring him in? And how much in fees might Kessler ultimately collect following the jury’s April verdict that Live Nation illegally maintained monopoly power? Thanks to public-records requests, I can now answer both those questions.

The fee arrangement the states negotiated with Kessler was anything but conventional. The Winston firm agreed to a 10 percent discount and to collect only half of its fees as the case progressed—effectively receiving just 45 percent of its normal rates. Kessler’s standard billable hour was $2,250, but the states would pay only about $1,013 of that amount as the litigation unfolded. The remaining 55 percent would be carried by the firm as an at-risk investment.

If the states lost, Winston would eat those deferred fees—perhaps as much as $15 million, given the trial’s duration and the number of partners and associates working on the case. If the states obtained damages or penalties, however, Winston would receive a success fee equal to 15 percent of the recovery, capped at twice the value of its unpaid fees. (In other words, if Winston had invested $15 million in deferred fees, it could earn a success fee worth as much as $30 million, bringing its total compensation to $42.3 million.) And if the states obtained injunctive relief (i.e., a Ticketmaster breakup)—even without monetary damages—the firm was guaranteed at least 120 percent of its full fees. Meaning that Winston wasn’t merely representing the states; it was wagering millions on its ability to deliver a win.

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It was a major risk, but Kessler was confident from the start. He sent his first proposal detailing a contingent relationship on February 13, just one day after Slater’s departure became official. The state A.G.s didn’t balk at the concept of a success fee, though they did push back on some of the economics, eventually insisting that any such payment come from a recovery rather than state-appropriated funds. As negotiations intensified, so did the urgency. “Would your team consider a quick, upfront retainer with a cap that would enable you to get up to speed now, regardless of what happens down the line?” New York Antitrust Bureau chief Elinor Hoffmann asked Kessler in one email. “This would be an ‘insurance policy’ should circumstances change in the middle of trial.” Kessler quickly agreed to a $400,000 cap.

That proved prescient. At the end of the trial’s first week, federal prosecutors announced a settlement. U.S. District Judge Arun Subramanian appeared furious, calling the surprise development “mind-boggling.” Nevertheless, he ordered the case to continue. Fortunately for the states, Kessler was already lined up, though the engagement letter would not be formally signed until March 6, a Friday. The insurance policy had paid off. Kessler took over at trial that Monday.

It will be a while before any of these contingent fees are realized. The Live Nation case has just concluded its liability phase, and the judge must decide whether to approve the feds’ settlement and Live Nation’s motion for a do-over of the trial. Only then, after further briefing and more oral arguments, will he decide on a remedy. The states have recently delivered a list of proposed remedies—including, of course, divestment of Ticketmaster.

One consequence of Washington becoming more hesitant (or more politically constrained) on antitrust enforcement is that private law firms like Winston Taylor are beginning to step into the vacuum as deputized bounty hunters of sorts. For years, the most lucrative antitrust work was defending corporations or bringing private class actions. That may no longer be the case.

Part of the reason is economic. When the Justice Department brings an antitrust case, there is no damages pot. The work is prestigious enough that the government has traditionally been able to attract talented lawyers, but it could never offer the kind of upside available in private litigation. State competition laws are different. Many authorize monetary recoveries in the form of penalties, restitution, and damages, creating room for compensation structures that look far more like those used by the plaintiffs’ bar.

To be sure, states have long hired private lawyers in areas such as tobacco and opioid litigation, environmental enforcement, and consumer protection. Antitrust, however, has largely remained the province of government lawyers. That is what makes the Kessler arrangement so notable. The question now becomes whether introducing outside lawyers with a direct financial stake in the outcome changes the shape of these cases, influencing everything from settlement dynamics to trial strategy.

Kessler’s deal may offer a glimpse of what’s ahead. California Attorney General Rob Bonta has already enlisted Simonsen Sussman—the firm founded last year by former F.T.C. officials Catherine Simonsen, Shaoul Sussman, and Nicolas Stebinger—to help him fight the Nexstar–Tegna merger. Meanwhile, The Hollywood Reporter reported this week that Bonta has also been in discussions with superstar trial lawyer Robert Van Nest about representing California in a challenge to the Paramount–Warner Bros. Discovery deal. Hiring a lawyer of Van Nest’s stature would not come cheap. A go-to litigator for Google, Qualcomm, and OpenAI, he commands rates comparable to Kessler’s. That said, if states can build contingency or hybrid-success arrangements into these engagements, they may suddenly find themselves able to recruit the most-desirable antitrust trial lawyers in the country.

Kessler declined to discuss his fee arrangement. But I did interview him a few weeks ago about defending the Paramount–WBD merger against court challenges—including, potentially, some of the very state A.G.s he represented in the Live Nation case, a possibility he anticipated early enough to insist on a conflict waiver. Something he said at the time caught my attention.

In discussing a possible preliminary injunction, Kessler pointed to the roughly $700 million quarterly “ticking fee” that Paramount would owe WBD shareholders if the deal failed to close on schedule. I was struck by how he had transformed what was originally a signal of confidence—a carrot offered to WBD shareholders who had once entertained a rival bid from Netflix—into a reason that a judge should hesitate before delaying the merger.

But the more I thought about it, the more it occurred to me that the ticking fee could serve another purpose. Every quarter of delay now carries a measurable cost. What if David Ellison promised his lawyers a bonus for helping avoid those fees? What if merger defense, like merger challenges, starts to incorporate success-based economics?

To be clear, I don’t know if that’s Kessler’s arrangement here. But the Live Nation documents establish that he’s certainly comfortable getting creative. And given the stakes involved in the Paramount deal, it is hard to imagine that a lawyer of his stature signed on under entirely ordinary terms.

Whatever the answer, it’s clear the economics of antitrust are changing—not just for those challenging mergers, but also for those defending them. If state A.G.s are building a private antitrust bar on the enforcement side, it may be a matter of time before dealmakers respond in kind. The next antitrust arms race may not be over legal theories, but compensation.

Thanks, Eriq. What I’m Hearing will be back tomorrow.

Matt

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