It’s hard to imagine Reid Collins & Tsai LLP name partner P. Jason Collins as anything but a lawyer. His grandfather was an in-house lawyer with an insurer and his father was an in-house labor and employment lawyer at UPS. Growing up outside Atlanta and then in Texas, Collins’ father would come home each evening and, over the dinner table, ask Collins and his two brothers how they would handle an employment or other legal issue that arose in his father’s workday.
From those roots, Collins developed a love of law and business, leading him to earn his CPA, which he used at Arthur Andersen, before attending the University of Texas School of Law. A thoughtful and tireless litigator, Collins was recently selected to the Lawdragon 500 Leading Lawyers in America. He particularly loves getting into the grit of a business failure to find those culpable for dissolutions, bankruptcies or other demise. And word to the wise, this church elder especially loves taking on those who defraud public pensions that are entrusted with the retirement funds of teachers, police officers, firemen and other public servants.
His persistence and dogged pursuit of justice also make him the ideal Managing Partner of the high-flying Reid Collins & Tsai – which has more than made its mark on the legal landscape in record time. From assessing the merits of cases the firm is considering to ensuring the cohesion of its lawyers, Collins is one of the keys to the firm’s success.
Collins joined a litigation boutique out of law school, before forming Reid Collins & Tsai in 2009 with fellow partners Bill Reid and Lisa Tsai.
According to fellow partner Bill Reid, “A good lawyer who is also a good businessperson is a rare animal, and Jason is an extremely uncommon combination – he is a truly first-rate trial lawyer, who is also an excellent businessman.” He added that “Jason’s financial acumen and business abilities coupled with his first-rate legal skills enable him to operate at the very top of the commercial plaintiff’s bar,” and that “on any metric, Jason’s leadership of our firm as Managing Partner has led to spectacular results.”
Lawdragon: Jason, can you describe your background and what led you to specialize in financial litigation, including bankruptcy and whistleblower matters?
P. Jason Collins: My practice is focused at the center of law and finance. And my background as a CPA is very much part of everything I do as a lawyer. I grew up wanting to be a lawyer, my father and grandfather both went to law school and I knew that I wanted to follow suit from an early age and do the same thing that they did. My studies of accounting and finance were borne more out of practical advice from my father than anything else.
He encouraged me to study something that would be useful to my practice as a lawyer – and business certainly qualifies as that, but he may also have been concerned that my legal dreams may not pan out, and he wanted me to have something marketable in terms of a skill. Either way I fell in love with accounting and finance during my undergraduate and graduate school experience so much that I pushed on to become a CPA and work as an auditor for a couple of years prior to going to law school.
LD: What did you fall in love with about accounting and finance?
PJC: Well it made sense to me and intrigued me. Accounting is very much about classification, including properly interpreting and reflecting what has happened. It’s the language of business. I wanted to understand how businesses work, why certain transactions are done in a particular way, and how to create and monitor a profitable enterprise. My study of finance at the graduate level helped me to understand how businesses are valued and why certain investment decisions are made in addition to how the overall economy works from a money and banking perspective. I wanted to figure out how this whole business world works, and studying accounting and finance revealed a lot to me.
Getting to the bottom of how business works and what drives value in a commercial context, is something that I was passionate about doing all through school and then certainly as an auditor, I became fascinated with trying to uncover what was motivating certain transactions, particularly if they appeared to be motivated by a wrongful purpose.
LD: And you developed your interest in law through your father?
PJC: Growing up, we would have dinner table discussions about whatever matters my Dad was working on at the time. So I heard about every type of employment-related scenario you can think of. I enjoyed considering how he should handle a case; whether the employees were in the wrong; and what he as a labor manager and employment lawyer should do about it. Dad has always had a keen sense for justice and a desire to do what is fair in any situation. Interacting with him about labor and employment matters showed me how legal work could be both interesting and meaningfully pursued in a virtuous manner that impacts people’s lives.
He obviously inspired me to continue heading down the legal path, I just had a brief detour into finance and accounting.
LD: At what juncture when you were working as a CPA and auditor did you say “I’m really enjoying this, but now it’s time for law school?”
PJC: I always knew that I wanted to become a lawyer, the question was how long to continue down the accounting path before pulling the plug to go to law school? I needed at least a year of experience to qualify as a CPA, and I certainly wanted that credential, but I stayed longer because the experience was extraordinarily valuable. I had a fantastic boss named Lynn Loden who allowed me to take on as much as I was willing to take on and who explained the nuances of synthetic leases, sale-leasebacks, and securitizations to me. I was working long hours and getting a ton of good experience. I don’t know if you know about the career of a young auditor?
LD: Not at all. Tell me about it.
PJC: Young auditors at big accounting firms work very long hours and they get absolutely wonderful experience in terms of understanding the language of business and how transactions work. It was fascinating to me, and I was learning so much. I was in a group that specialized in auditing sophisticated financial transactions.
From project to project, I would be working in relation to a different client who had engaged in some complicated transaction that our audit team was supposed to evaluate and determine whether the client was accounting for it properly – and whether or not based on the underlying economics and the legal structure, the financial statements were fairly stated. Often, the projects involved prospective transactions where the client wanted to know if we would approve of a given accounting treatment for a transaction while it was still being negotiated. That gave me experience working directly with the lawyers who were involved in structuring the transaction, who were often trying to convince us that the proposed accounting treatment was accurate despite our suspicions otherwise. That led to a lot of back and forth and even negotiations regarding additional ways in which the structure of the transaction needed to change for us to be comfortable with the accounting treatment. In those situations, I was able to play a role at a very young age in the structuring of transactions involving tens of millions of dollars, including everything from the financing of huge off-shore drilling ships and airplanes to the securitization of commercial lease receivables and stadium seat licenses.
That experience was very educational and helpful because I knew at the time that I would eventually pursue a legal career, but learning about these transactions helped me see the potential in a legal practice focused on issues arising out of sophisticated financial transactions. At Andersen, I learned how such deals are put together and even how they can be manipulated for wrongful purposes.
LD: So even before law school, you were getting a first-hand look at the kind of work you do now?
PJC: Absolutely. As an auditor, my job was to look at transactions from a skeptical vantage point. My team had to evaluate whether or not a transaction, as structured by the lawyers and advocated by the client, actually met the requirements that it had to meet from a financial accounting perspective. It’s very similar to the perspective that I need to have as a commercial plaintiff’s attorney. I scrutinize business dealings to determine how and why the parties did what they did, and determine whether or not they engaged in any wrongful conduct.
The most important thing that this background has provided me is the ability to understand the underlying transactions that give rise to a given dispute. I don’t have to necessarily rely upon what any particular witness is telling me about a deal. I have a sufficient educational background and experience to analyze the deal on my own.
LD: How did you choose The University of Texas Law School? And did it offer any special business coursework to build on your auditing experience?
PJC: I was working as an auditor in Houston, and I was madly in love with my now wife Lisa, who was still in school at Texas A&M University where we met. We both wanted to stay in Texas and The University of Texas School of Law is a world-class law school. I considered myself blessed that they were gracious enough to accept me as a law student.
In addition to the regular curriculum they have at the law school – which includes classes on such things as business associations and trial advocacy that are related to what I do today – they also allow you to take at least two courses at other graduate schools within the overall university. I used that opportunity to take a corporate governance class over at the McCombs School of Business, as well as something that’s even more relevant, which was a graduate level course on Fraud Examinations. As a CPA who wanted to work on financial fraud cases, that course was highly relevant to my career and proved to be very helpful.
LD: What does Reid Collins & Tsai bring to the table for your clients and for the attorneys that join you that has made it successful?
PJC: One thing is that we have a focused practice. We’re not trying to be all things to all people. We’ve really focused on what we believe that we’re good at and what we know that we have a lot of experience doing well, which is the pursuit of claims arising out of financial fraud. Given that we do so much of this work, we know an awful lot about how to successfully pursue cases arising out of financial fraud and company collapses that our competitors who dabble in this area simply can’t bring to the table.
The other thing is that we are innovative in our approach. We don’t handle cases or even bring the types of cases that other people do in a standard sort of way. That gives us the flexibility to evaluate cases from different angles and to pursue them, even sometimes in non-legal business ways, that I don’t think institutional firms can entertain. And we certainly have the flexibility to handle cases on fee terms that other firms would simply never consider.
We do most of our work on some form of a contingent or success-fee basis. We generally only get paid if we add value by making recoveries for our clients. So at each step of the way – and this is what I personally spend a great deal of my time doing – we’re evaluating claims and making determinations on the front end about how we predict potential claims are going to turn out. We do an abnormal amount of due diligence before we even agree to pursue a case. In many ways we’re investing in our cases. We’re investing with our time and oftentimes our money to pursue claims to the exclusion of other opportunities. So, it is critical for our firm’s success for us to make wise decisions regarding the cases that we agree to take on. Historically, we have made very good decisions and done great work for our clients. That has been the key to our success.
LD: It’s rare for a law firm to have such an intense focus on case intake – the acute realization that that’s where you are going to make money or lose in many cases.
PJC: That’s one of my favorite aspects of the job. In many ways it’s like running a private equity fund that is making investment decisions. If you choose to deploy your people on a case that – had you done sufficient homework on the front end you would have known to be a losing proposition – you’ve got a real problem. And, apart from whether or not it makes for a good business decision for the firm, it’s critical to ensuring that you provide good advice to a client regarding whether to pursue or not pursue a given case.
Clients want to know where their case is headed on day one. They always ask that question, and we’re in a position where we’re financially incentivized to make sure that we’re doing our very best to get that answer right. We have zero reason to try to incentivize a client to pursue a case that has a low likelihood of success.
LD: Is that true whether the potential client is a whistleblower or a trustee or a liquidator? Are there various permutations that you spend time looking at?
PJC: The decision-making regarding whether or not a claim has a high or low likelihood of success, is the same no matter which type of client you’re dealing with. It’s either a good claim or it’s not, and the answer to that question means the same thing to a trustee or receiver as it does to a whistleblower or governmental entity. We’re not going to – and our whistleblower clients do not want to – invest a significant amount of time or energy pursuing a claim that has a low likelihood of success.
LD: Does the firm’s fee structure vary depending on the nature of the claim?
PJC: We have all different types of fee structures. The key factors include the size of the case, the strength of the evidence, the legal framework, and the defendant’s ability to pay if you are successful. Our clients are generally very sophisticated parties. They are not going to pay the same percentage fee on a recovery in a case where there’s very little risk, as that client can or should be willing to pay you in a case where there’s more risk in relation to any one of those factors.
What you find is that the more complicated and risky a case may be in terms of timing and recovery, the higher the percentage of the recovery that we negotiate and build into our arrangements. The easier the case, and hence in some ways the less interesting the case in my view, the lower the potential fee will be because we are not bringing the same level of value to the table. We also structure fee arrangements differently in terms of whether we are able to make a pre-suit recovery as opposed to a recovery following three or four years of hard-fought litigation.
I believe the reason we have so much repeat business is that our clients view us as being value-oriented in our billing and they are able to see the value that we bring to any particular case.
LD: Let’s talk about some of your cases that are particularly meaningful to you.
PJC: One case that just wrapped up with our client being very happy is what we refer to as the pallet case, which involved a failed start-up company that was involved in the pallet business. These are the typical pallets that are used to move goods around with forklifts at every major big box store. This particular company had come up with a way to create what it regarded as a better pallet, made of different material and with a specific chip where the pallets would not be broken or lost early on as we alleged in our complaint. They ran into trouble early on because the pallets were both breaking and getting lost.
What was really interesting to me, and why I really enjoyed the case, is because it provided this textbook example of the way that financial fraud works, because financial fraud has been around for a very, very long time and in so many instances that we see it, it’s the same old story, it’s just different names. And this was a textbook example of how a company and its operators get themselves in a position whereby the entire organization collapses and it starts with just a failure to perform in small way.
What happens is that people are unwilling or unable to own up to the fact that they haven’t been able to reach the metrics or success hurdles that they originally set out for themselves and advertised to others, so they ignore or even cover up early failures. No one likes to admit failure. And what starts as a small misstep can quickly turn into a massive business failure. In this particular context, the company’s managers ignored early signs that the business model was flawed. Instead of halting additional investment and operations when the writing was first appearing on the wall, they allowed the situation to spiral out of control to the point that the company lost hundreds of millions of dollars in investor money in one of the largest start-up failures in history.
It was a textbook case for analyzing the overall psychology associated with corporate failure. It usually starts very small and is often related to someone refusing to own up to a mistake. Then, what was initially a small oversight or even cover-up sets the stage for a spectacular collapse that leaves investors and creditors with massive losses.
LD: That seems like a lesson that you probably learned from your dad over dinner.
PJC: Both of my parents taught me what can happen when you don’t own up to mistakes. But it’s true that the same issues that lead to the corporate and fund failures that I investigate are central to the labor and employment issues that we discussed at the dinner table. People lie, cheat, and steal. The consequences can grow considerably when they don’t own up to their mistakes early and often.
LD: Any other cases come to mind?
PJC: I currently represent the State of Tennessee’s Consolidated Retirement System in a case against the major investment banks arising out of the collapse of the residential mortgage-backed securities market. The case deals with the securities that were at the center of the major financial crisis of our time. I’m absolutely fascinated with the case because of the way that the investment banks knowingly structured and sold securities based on blatant misrepresentations, causing a tragic loss for so many people around the world, particularly the state pension funds.
My work for Tennessee follows similar work that I have had the privilege to do for other state pension funds. I’ve really enjoyed this work because of what it reveals about the nature of the fraud that adversely affected so many people.
It’s easy for us to understand that something horrible went wrong to cause the global financial crisis, but what I enjoy the most is digging into the specific transactions that occurred and understanding why it is that they led to such a tragic failure, and why the representations that were associated with those securities were false, and how we can show that the people who made the representations knew that they were false at the time.
LD: Can you walk us through where you start to piece together the bigger picture on these cases?
PJC: I work on these cases with a truly top-notch consulting firm named Integra REC, which has a team of data scientists. We look into the specific securities that the client suffered significant losses on and analyze whether the representations that were made about those securities by the underwriters were false. This requires significant work to review and analyze the securities, including the mortgage loans that were pooled in order to form those securities.
Our allegations in these cases are that the investment bankers who served as underwriters to describe the securities to investors knew that the securities were far riskier than they were representing them to be in the relevant offering documents. We are seeking to prove that the underwriter banks knew that the statistics that they published about the underlying mortgage loans were false at the time that they published them.
Representing and doing work on behalf of governmental entities is particularly satisfying because fraud against the government is fraud against us all. It particularly gets me fired up when the fraudsters are taking advantage of our teachers, policemen, firemen, and other public servants by ripping off their pension funds. The various state versions of the False Claims Act, which is how the Tennessee case originated, is a law that allows private citizens to file suit to address these frauds on behalf of the government. It’s a much needed and critical tool to fight fraud because the government truly needs our help to bring these frauds to light. There are simply not enough government regulators and agents to prosecute and police fraud on the scale that occurs in the context of our massive government budgets. Nor do we want there to be that many government agents and regulators walking around. At the end of the day, the act allows everyday citizens to perform what is ultimately a vital public service in bringing fraud to light and limiting its impact on the government.
LD: It sounds like that’s particularly satisfying to you, and I know to the other partners at Reid Collins & Tsai.
PJC: That’s why we really enjoy what we’re doing. We all have a passion for justice and the rule of law. We recognize that we’re just a very small part of the overall machine of pursuing justice and ensuring that we have rule of law, but we love playing that small role particularly with respect to fraud in the context of private hedge funds and government pension funds.
There is a lack of significant regulatory oversight when it comes to hedge funds. I view our work in the context of pursuing cases arising out of failed hedge-funds as playing a vital role in establishing rule of law in that sector of the economy. Investors and creditors need to be able to seek recoveries when they are defrauded to continue to invest and lend. Our ability to investigate and recover money on their behalf when funds fail for improper reasons helps to keep capital flowing.
And when it comes to the pension funds, we’re passionate about the work that we do there because of the nature of the victims that we’re talking about. The size of these funds are very large and they need to invest a significant amount of money on a recurring basis. So, the people who cook up all sorts of financial schemes obviously view these funds as a lucrative target.
I appreciate being able to use my background and skills to help these types of victims.
LD: What do you like most about being a lawyer?
PJC: I like the ability to face new problems and situations each day that are very much like a puzzle. I continue to love the opportunity that we have to try to understand why people have done certain things and structured transactions in certain ways, and why it is that particular companies have failed in a spectacular fashion. But most of all, it’s the opportunity that I have as a lawyer to pursue justice and fairness for investors and creditors who have been defrauded. That’s what makes this job a true joy as opposed to just another way to make money.
LD: What do you enjoy doing outside of law practice?
PJC: I am happily married 17 years this year. Spending time with my wife is obviously at the top of the list and she is an amazing woman. We have five children. We have a large family and so I spend a lot of my time hopefully mentoring in a good way, young people who will be the next generation of financial fraud litigators. Honestly, my wife and I probably spend too much of our time doing middle school algebra at the moment.
I’m also a Christian who’s heavily involved in my local church community here in Austin, Texas, and in the context of that church community, I do a lot of work in helping people in the community with conflict resolution.
LD: Would you mind telling us the name of your church and a little bit more about your efforts there?
PJC: Sure. I’m one of the elders at Providence Church. And the conflicts I try to help people work through involve everything from business conflict, marital conflict, and difficult personal issues. It really spans a wide spectrum of subject matters, but as we were talking about earlier, it doesn’t really matter what scale it is, whether it’s something that leads to a billion-dollar loss and the collapse of a company or something that’s an interpersonal dispute between two people over something seemingly small, they all tend to originate and escalate in the same manner. The difference is that I believe far more can be done in the church context than just a return of money. I often get to see people experience a much fuller version of reconciliation. They admit their failures, apologize, and truly seek to work through the issues with each other in the context of our shared faith and church community. I have yet to see one of my corporate litigation defendants make a formal apology and show genuine concern for a victim.