Brownstein already handles water cases in addition to real estate, lobbying, litigation, corporate law and gaming cases. Jim Lochhead, a Brownstein lawyer who specializes in water, said Thursday that the merger will allow the combined firm to handle cases across the West at all stages, from arguing for water rights in court to securing permits from regulators.

Lochhead said water will become the most important natural resource in the West over the next 20 to 30 years because of climate change and population growth. He thinks utilities and private industry will increasingly be looking for new ways to provide it and willing to go farther to get it, such as recycling water or converting sea water to drinking water.

"Those kinds of projects and that kind of thinking is really going to require a broadbased approach," Lochhead said.

He said the firm would not be able to represent any cases in which California and Colorado water interests are in direct opposition. But increasingly he thinks complicated water disputes will be worked out by negotiating, as happened recently among upper and lower basin states who depend on water from the Colorado River.

Brownstein's current clients include the Denver suburb of Aurora, the Idaho Power Co. and real estate developers in New Mexico and Colorado.

Hatch & Parent represents the San Diego Water Authority, the cities of Fresno and Oxnard and the South Tahoe Public Utility District.

The two conservative justices subjected a lawyer for corporate investors to tough questioning during arguments as the justices try to set boundaries in stockholder lawsuits for securities fraud.

Investors in Charter Communications Inc., one of the country's largest cable TV companies, are suing two suppliers that allegedly schemed with Charter executives to mislead stockholders about the company's revenue growth.

The outcome of the case will determine the fate of a separate suit by Enron shareholders who are seeking over $30 billion from banks accused of colluding with the energy company to hide its debts.

If the court rules against investors, "it will mean the end of the case" for Enron shareholders and the banks that were primarily liable, attorney Patrick Coughlin, representing Enron stockholders, said outside the Supreme Court after the arguments.

In the case before the court, suppliers Scientific-Atlanta Inc. and Motorola Inc. "were not passive bystanders facilitating a fraud by Charter," said investor attorney Stanley Grossman. "Their deceptive conduct was integral to the scheme to create fictitious advertising revenues for Charter to report to investors."

Why shouldn't the court be guided by its 1994 ruling that sharply restricted liability by saying investors cannot sue for aiding and abetting a securities fraud? the chief justice asked. "You're asking us to extend that liability."

Outside the courthouse later, Grossman said, "We are not asking for an expansion. The other side is asking for a cutback."

Earlier this year, Roberts and Justice Stephen Breyer did not participate when the court decided to hear the case. On Tuesday, Roberts was back, but Breyer was still out. As of last year, both owned stock in Cisco Systems Inc., which now owns Scientific-Atlanta.

Though the absence of Breyer means the case could end up deadlocked 4-4, the hour of arguments Tuesday seemed to weigh against investors.

Scalia suggested that the court might "sensibly limit" the right to sue so that schemes can be attacked by the Securities and Exchange Commission, but not by investors' lawsuits. That is how aiding and abetting violations are handled.

"What distinguishes the liability that you propose from aider and abettor liability?" asked Scalia.

Stephen Shapiro, the attorney representing Scientific-Atlanta and Motorola, said the lawsuit cannot proceed against the two suppliers unless they made misstatements to Charter's investors, prompting an objection from Justice Ruth Bader Ginsburg.

Under the theory of Scientific-Atlanta and Motorola, "they are home free because they didn't themselves make any statement," said Ginsburg. "But they set up Charter to make those statements, to swell its revenues — revenues that it in fact didn't have."

Charter persuaded the two suppliers to buy advertising that was bankrolled with money from Charter, which paid a $20 premium on each of hundreds of thousands of cable TV set-top boxes, for a total of $17 million. The amount of the overpayments equaled the amount the two suppliers paid for the advertising.

Charter reported the advertising payments as revenue, a step that helped Charter paint a rosy financial picture for the fourth quarter of 2000, a move designed to artificially inflate the price of the stock.

Characterized by some as the "Roe vs. Wade for the securities industry" and others as "the most important securities case in a generation," the eventual decision will have a significant impact on whether investors in companies that commit securities fraud should be able to sue investment banks, accountants, lawyers and others who were direct "participants" in that deception. Current shareholders' rights for going after third parties that aid or abet corporate fraud are not as clearly defined as one would think.

First, a quick synopsis of the StoneRidge vs. Scientific Atlanta case: In 2000 to 2001, technology companies Motorola and Scientific Atlanta (now owned by Cisco Systems) allegedly agreed to supply cable TV provider Charter Communications with equipment at a $20 premium over the traditional cost with the knowledge that Charter intended to account for the transactions improperly as advertising revenues (the vendors used the extra funds to buy advertising space).

These "sham" transactions inflated Charter's revenue by $17 million. When the revenue inflation came to light in 2002, Charter's stock crashed from $26.31 to 76 cents, a $7 billion loss in market cap. StoneRidge, an institutional investor in Charter, accused the two vendors of participating in a "scheme to defraud" investors and now wants the right to sue them for remediation.

StoneRidge's ability to go after the tech companies remains thwarted, however, by the outcome of a 1994 Supreme Court case known as Central Bank vs. First Interstate. The Court held that while all "primary actors"--those who were directly part of a scheme (the emphasis is mine) to defraud investors--can be sued for federal securities fraud, the "secondary actors" who aided and abetted the fraud cannot be sued. This case once again raises this all-important issue of third-party liability in securities cases, settling it once and for all.

As an advocate for individual investors, it's not surprising, I'm sure, to hear me contend that all participants who directly engage in activities to deliberately defraud investors be held liable for their actions. Whether the Court will agree with me depends on their definition of the word "scheme" under the federal securities statute.

If you look it up in the dictionary, one definition for the word has it as a synonym for an underhand plot or conspiracy. Since it generally takes two or more to plot and conspire, it could be reasonably argued that the use of the word "scheme" in the statute should allow for more than just one party (such as the investment banks, accountants and lawyers) to be labeled the "participants" in the fraud and hence be held accountable.

If the Court's strict constructionists are to be intellectually honest in their interpretation of the meaning of "scheme" liability in StoneRidge next week, it would prove a revolutionary milestone in the saga of investor rights. Shareholders would be granted a much more level playing field to target for recourse those who had targeted them for fraud.

Sadly, smart money is probably better waged on the Court reaffirming the Central Bank decision from 13 years ago, thereby remaining consistent with its general pro-business stance and previous decisions that limit lawsuits against public companies. While such a toe-the-line decision would generate sighs of relief in the boardrooms of otherwise culpable investment banks, accounting firms and law firms, it is the groans of disappointment at the kitchen tables of victimized shareholders that should ultimately resonate more loudly.

The corporate scandals of recent years may have faded from the headlines, but they are still fresh in the minds of American investors. Their confidence in Wall Street already badly shaken, shareholders need more than empty "we've changed" promises from a mostly self-regulating Wall Street to restore their trust in the system. What they need is for the Court to hold all participants in a fraudulent "scheme" just as responsible as those considered the primary actors.

A side effect of those decisions has been confusion over how much discretion trial judges have to vary sentences beyond the U.S. Sentencing Guidelines, adopted in the 1980s to bring uniformity to prison time and counteract race, wealth and other biases. Judges found that the guidelines sometimes prevented them from dealing fairly with individual circumstances.

The Supreme Court ruled in 2005 that the guidelines should be considered advisory, not mandatory. Now the question is how appeals courts should determine whether a sentence outside the guidelines was "reasonable."

Brian Gall was convicted in Iowa of conspiracy to sell the drug Ecstasy. He was given probation rather than the guidelines' range of 30-37 months behind bars. The judge noted that Gall walked away from the conspiracy at age 21, finished college and started a business. He turned himself in when he was later indicted.

Derrick Kimbrough was convicted in Virginia of selling crack and powder cocaine and sentenced to 15 years in prison rather than 19-22 years under the guidelines. The judge cited Kimbrough's military service, along with the controversy over the disparity in punishments for crack and powder cocaine crimes.

Sentences for dealing crack cocaine are far harsher than those for powder: 1 gram of crack cocaine triggers the same sentence as 100 grams of powder. The Sentencing Commission, which recommended that Congress narrow the 100:1 ratio, says the stiff crack sentence falls disproportionately on black offenders and low-level dealers.

In the Gall and Kimbrough disputes, appeals courts said the judges lacked the latitude to give the lower sentences. The defendants appealed.

Justice Samuel Alito, who spent 15 years as an appellate judge before being appointed to the high court, was an active questioner Tuesday. He challenged Gall's lawyer, Jeffrey Green, on the notion that a judge could show leniency based on a defendant's youth, calling that "a policy question."

To Kimbrough's lawyer, Michael Nachmanoff, Alito suggested judicial latitude on cocaine sentences could pose a dilemma for appellate judges. "What if (an appeals court) sees a number of absolutely identical cases?" he asked. If one sentencing judge used a 1:1 ratio, the next one used 20:1 and the next 50:1, "what is it to do under 'reasonableness' review?" Nachmanoff said that if the judges in those cases had sufficient reasons, the sentences should be upheld.

Justice Department lawyer Michael Dreeben, seeking to win longer sentences for the two men, urged an approach used by many appeals courts. It demands that a sentence varying significantly from the guidelines be justified by a rationale that is equally weighty.

Justice John Paul Stevens wondered if that test was too vague: "How do you measure the strength of the justifications?" Dreeben noted that the differing cocaine penalties stemmed from Congress' view in its 1986 law that crack-dealing spawned more violence. "For a judge to say Congress is crazy," Dreeben said, "is a sort of textbook example of an unreasonable sentencing factor."

Legal experts are watching this term to see the future direction of the highest U.S. court that has been closely divided, with a 5-4 conservative majority bolstered by President George W. Bush's two appointees -- Chief Justice John Roberts and Justice Samuel Alito.

The court will rule on whether the hundreds of detainees at the U.S. military prison in Guantanamo Bay in Cuba can use American courts to challenge their indefinite confinement and on the current lethal injection method of execution.

The term that ended in June was marked by a sharp shift to the right on divisive social issues like abortion and civil rights law. Legal experts are divided on whether the trend will continue this term, an issue already being discussed in the November 2008 presidential race.

ROMNEY WOULD NAME STRICT CONSTRUCTIONISTS

In Boston, Republican candidate Mitt Romney said cases this term could dramatically affect the "lives of all Americans" and he vowed to name justices "in the strict constructionist mold" of Roberts, Alito and their fellow conservatives, Antonin Scalia and Clarence Thomas.

Though smaller firms may have a party leaning and plaintiffs' firms usually back Democrats, large firms typically are happy to have their partners meddle in mainstream politics and run for office, no matter the party.

"It's totally encouraged," said Pat Mizell, a former state district judge and Republican activist who is a partner at Vinson & Elkins. "We've been at it a long time here, we've had John Connally, Howard Baker in D.C. and Congressman Mike Andrews." Connally was Texas governor, Baker a U.S. senator from Tennessee and Andrews is from Houston.

That's not even to mention political power broker and former partner Joe B. Allen, 2006 Democratic U.S. Senate nominee Barbara Radnofsky, and former U.S. Attorney General Alberto Gonzales.

Part of the synergy is the logical link between lawyers and lawmaking. But it has as much to do with the connections made in politics boosting the bottom line for law firms.

"It's better to know a lot of people as a lawyer. The more contacts you have, the better you can serve your clients," Mizell said.

Individual idealism can be involved, as well. Those ideals may vary within a large firm.

At Bracewell & Giuliani, managing partner Pat Oxford is heavily involved in the Giuliani presidential campaign and has been a Bush family crony for years. But partner Carrin Patman ran for Congress as a Democrat while at the firm a few years back.

Patman said political activity is a part of "the fabric of the firm." Founder Searcy Bracewell was a state legislator himself, she noted. "The firm likes to be represented on both sides," said Patman, who is raising funds for Democratic presidential candidate Hillary Rodham Clinton.

Chris Bell, a former city councilman, mayoral candidate, congressman and last year's Democratic nominee for Texas governor, now works for Patton Boggs, a Washington, D.C.-based law firm known for lobbying — a profession that requires political activity and savvy.

"Not all professions lend themselves to public service from a scheduling standpoint like the law does," Bell said. He was at Houston firm Beirne, Maynard & Parsons while on the City Council and while running for mayor and Congress. The same firm is now home to former Republican state Rep. Joe Nixon.

A cursory view last week of 2007 federal elections filings for folks who listed their Houston law firms showed a wide variety of contributions within big firms.

As you'd expect, at Bracewell & Giuliani there were a lot of contributions for the name partner. But a few lawyers also gave to the campaigns of Democrats Clinton, Sen. Barak Obama, New Mexico Gov. Bill Richardson, and former U.S. Sen. John Edwards, and on the GOP side, former Massachusetts Gov. Mitt Romney.

Fulbright & Jaworski's two biggest presidential contribution beneficiaries as of last week were Obama and Giuliani. At Vinson & Elkins it was Clinton, Giuliani and Obama. And at Baker Botts, the favorites were Romney, Obama and Republican U.S. Sen. John McCain of Arizona.

Frank Harmon, a small-firm lawyer and local Republican activist, said one of the places law firms and politics interact the most is in judicial races.

"Right now, every day I receive at least one, and as many as three, invitations to a judicial fundraiser. Nobody could write a check to all these guys," said Harmon.