September 22, 2005
A Lion of the Courtroom Hears His Critics Roar
By JONATHAN D. GLATER and ANDREW ROSS SORKIN

LINK

David Boies is a star in the courtroom, but his back-office operations are causing some headaches.

Mr. Boies, who has presented himself as a white knight to troubled companies, has faced criticism in recent weeks over previously undisclosed ties to a document management firm that is partly owned by members of his family.

Lawyers in some cases have assailed that relationship, contending that Mr. Boies's firm faces a conflict of interest when recommending the document management company, Amici, to a client without disclosing the family's financial interest.

Some lawyers further argue that Mr. Boies has used Amici to put opponents at a disadvantage while enriching his family.

And since Mr. Boies's acknowledgment of that tie, lawyers in other cases have mounted attacks on other aspects of his conduct. Lawyers for L. Dennis Kozlowski and Mark H. Swartz, former top executives at Tyco International who now face years of prison time, have accused Mr. Boies, Tyco's lawyer, of engaging in "rank gamesmanship to the defendants' disadvantage" by withholding a million potentially subpoenaed documents from the defense until the trial of the two men was nearly over, and millions more until after their conviction.

Mr. Boies, in an interview yesterday, said one set of issues was worthy of concern - the concerns about the ties to Amici - but dismissed the rest as overzealous advocacy.

"There is a disclosure issue here," Mr. Boies said. "That's a real issue, that's an issue that's worth talking about. But what's happening is a lot of desperate people who are in real trouble are trying to use it as a hook."

This summer, the law firm of Boies, Schiller & Flexner, on behalf of Tyco, released 50 million documents, according to a filing in a New York state appeals court made by lawyers for Mr. Kozlowski and Mr. Swartz late Tuesday. The documents, which could be obtained only from Amici or from Tyco directly, were produced in response to a deadline set in civil court in a lawsuit brought by shareholders against Tyco.

Tyco contends that all the documents requested by lawyers for Mr. Kozlowski and Mr. Swartz - about two million - were provided.

It is not unusual in lawsuits involving vast quantities of documents - and lawyers say that the Tyco case involves more documents than some of the biggest corporate suits filed to date - for lawyers to employ a management company that serves as a repository. The management company, in turn, may charge a fee for access to the documents, and those fees in big cases can add up to millions of dollars.

Lawyers representing Deloitte & Touche, the former auditor at Adelphia Communications, which had an accounting scandal and is another Boies, Schiller client, have asserted that Amici provided thousands of useless documents - including copies of telephone books and cookbooks - and bilked them for the service.

"Using Amici has been a disaster," Max R. Shulman, a lawyer at Cravath, Swaine & Moore, wrote to the presiding judge on Deloitte's behalf this month. He added, "We now find that persons affiliated with Boies Schiller have a substantial ownership interest in Amici - which leads us to the natural question of whether Boies Schiller would have any incentive to correct the problems."

According to court documents, members of Mr. Boies's family have an "indirect economic interest in Amici" through a company called Legal and Scientific Systems, which owns 50 percent of a company that in turn has a 51 percent interest in Amici.

For Mr. Boies, 64, criticism of the connection is, at least in part, an inevitable fallout from his own prominence. In recent years, he has built a reputation as one of the nation's premier trial lawyers and as one of its most trusted corporate advisers on matters of ethics. (He also represented Al Gore during the Florida recount in 2000 and the government in the antitrust case against Microsoft.)

"Most of this stuff would not be particularly newsworthy if it were another law firm," Mr. Boies said. But in light of his frequent role as corporate governance guru, he said, "it makes it legitimate to focus on the anomaly of someone who has been very active speaking on ethical issues being confronted on this issue."

How serious an issue is not clear, said Ronald C. Minkoff, a partner at Frankfurt Kurnit Klein & Selz in New York. "Our ethics rules don't really deal with nepotism," he said. "It affects the representation if it turns out that the referral is to someone who's not competent or who's more expensive than it needs to be."

And playing games with the production of documents in big lawsuits is nothing new, Mr. Minkoff said. "Lawyers producing way more documents than are absolutely necessary, in order to force the other side to spend lots of time going through them, sad to say, is not an uncommon tactic. I see it all the time."

In his letter criticizing Boies, Schiller as well as Amici, Mr. Shulman, the lawyer for Deloitte, also wrote that "we have reason to believe that members of the Boies family also have an ownership interest in Urbach Kahn & Werlin," an accounting firm retained to advise a special committee of Adelphia's board.

There was a connection to the accounting firm, Mr. Boies said, but it was a tenuous one. His son, David Boies III, ran a company that invested alongside Urbach Kahn & Werlin in a third company that also did business with Boies, Schiller. The investment relationship ended in mid-2001, according to Mr. Boies.

Still, some lawyers who have faced him or others at his firm say that Mr. Boies's firm plays a special brand of hardball. "They have been getting away with a lot of this stuff," said Aaron Richard Golub, who defended a modeling agency against a suit filed by models who were represented by Boies, Schiller. "They just pay the fine, that's all."

In May, in approving a settlement of the class-action lawsuit by the models, who contended that several model agencies colluded to fix prices, the federal judge in the case reduced legal fees to $3.8 million from the roughly $9 million requested, in part out of concern over the conduct of plaintiff lawyers during the case's evidence-gathering phase.

Mr. Boies said that while mistakes were made in that case, events there had nothing to do with those in other cases, including the more recent disputes with lawyers for Deloitte and lawyers for Mr. Kozlowski and Mr. Swartz.

"The magistrate decided in favor of the plaintiffs and that was affirmed by the district judge," Mr. Boies said, "and the district judge held that we should've produced more documents faster."

But according to an order by Magistrate Judge Henry B. Pitman, lawyers for the plaintiffs did not just move too slowly. They did not comply with court orders instructing them to answer written questions posed by the defendants' legal team, and Judge Pitman imposed a $25,000 penalty on them. In an order issued in June, he summarized the reasons: "Plaintiffs, by their counsel, repeatedly failed to comply with order directing that interrogatories be answered, provided contradictory sets of interrogatory answers with no explanation and provided interrogatory answers that were unquestionably designed to obfuscate rather than illuminate, notwithstanding an earlier order directing the interrogatories be answered."

Boies, Schiller is appealing.

Boies, Schiller & Flexner

Legal Giant David Boies Facing Ethics Hearing

Adelphia, Boies firm part ways Cable company severs ties with firm after learning of connection between Amici and Boies' children.
CNNMONEY, August 30, 2005

LINK

NEW YORK (CNN/Money) - The law firm of prominent attorney David Boies has stepped down as special counsel for Adelphia Communications Corp. after the cable company discovered business ties between his family members and a document processing company working for Adelphia, a news report said Tuesday.

The split from Boies, Schiller & Flexner LLP was sought by fallen cable company Adelphia two weeks ago after it learned of the ties between Boies' four children and a data management company, Amici LLC, the Wall Street Journal reported.

The law firm was responsible for overseeing the cleanup of Adelphia following its declaration of bankruptcy three years ago.

Amici, which was founded in 2002 and has offices in both Albany, N.Y., and New York City, was receiving somewhere between $5 million and $10 million to handle Adelphia's documents, Philip Korologos, a lawyer at the firm, Boies Schiller Flexner LLP, told the paper.

Korologos, the lead Boies Schiller handling the case, told the Journal that he had recommended Amici to Adelphia in 2002, but that he did not have any knowledge of any affiliation between the company and Boies' children at the time.

The affiliation first surfaced in July when a lawyer for Bank of Montreal, one of Adelphia's creditors, wrongly charged Boies in court with having a business connection to Amici.

Korologos told the Journal that no business connection exists between Boies and Amici.

David Boies, who founded the firm in 1997, has become a nationally recognized lawyer working on such high-profile cases as the anti-trust suit against Microsoft when he served as a special counsel to the Justice Department. Boies also served as lead counsel in relation to litigation for former Vice-President Al Gore in the 2000 Florida vote count.

Korologos told the paper that Boies' sons David III, Jonathan and Christopher as well as daughter Caryl each own a stake in a company called Legal & Scientific Systems LLC. Legal & Scientific owns half of a company called Datamine, which possesses 51 percent ownership of Amici.

Calls to Korologos were not immediately returned.

The Greenwood Village, Colo.-based Adelphia declared bankruptcy in 2002 after the controlling Rigas family became embroiled in a financial scandal.

Adelphia Asked Boies Schiller to Resign Over Family Connection to Vendor
Anthony Lin, New York Law Journal
09-13-2005

LINK

Boies, Schiller & Flexner, the law firm of superstar litigator David Boies, has already received a pair of public black eyes over its hiring on clients' behalf a document production company partly owned by Boies' children. But the ultimate cost to the firm of the alleged conflict of interest could be higher still.

Former client Adelphia Communications asked Boies Schiller to resign last month for failing to disclose the family connection to document production company Amici, to which the company had paid several million dollars in fees. Adelphia's action and other details of the matter were first reported in the Wall Street Journal.

Several lawyers who have been following the case said Adelphia's move sets the stage for a claim by the company to recover the millions paid to Amici and, possibly, the much larger sums paid to Boies Schiller as well.

But opinions within the legal community are divided on just how severely the firm's actions should be viewed. Some lawyers said they actually regarded the Amici conflict as relatively minor and said they suspected Adelphia was merely using the issue to avoid its high legal bills. Cable TV company Adelphia sought Chapter 11 bankruptcy protection in 2002, soon after disclosing that the company's founder, John Rigas, and his son, Timothy, had borrowed almost $3 billion from the company for their own use.

Boies Schiller conducted an internal investigation at Adelphia and worked alongside other firms on subsequent litigation for the company, which was then facing civil charges from the U.S. Securities and Exchange Commission and the possibility of criminal charges by the U.S. Attorney's Office for the Southern District of New York. From 2002 to 2004, Boies Schiller, whose representation was led by partner Philip Korologos, received bankruptcy court approval for almost $30 million in legal fees. Adelphia and the Rigases settled with the government in April for $715 million, a lower figure than the $1 billion the government originally requested.

In the course of its work for Adelphia, Boies Schiller brought in Amici to collect documents for discovery and place them in an electronic database to be used by all of the parties involved in the case. In an affidavit submitted to the Bankruptcy Court last month, Korologos explained that Amici is partly owned by four of Boies' children, three of whom are also lawyers at Boies Schiller. The family of another partner at the firm, Nicholas Gravante, also owns an interest.

Korologos, who did not respond to a call for comment, said in the affidavit that he had not been aware of these ownership interests when he brought Amici into the case. An Adelphia spokesman declined comment.

Both Rule 1.8(a) of the Model Rules of Professional Responsibility and New York's DR 5-104 require that lawyers seeking to do non-legal business with clients must disclose their interest, apprise their client of other alternatives and obtain written consent. Lawyers in bankruptcy proceedings must also submit statements attesting to their non-interest.

In the worst-case scenario, a lawyer or firm that fails to disclose a conflict forfeits all fees after the non-disclosure and may be further subject to disciplinary action. But Lawrence Fox, a partner at Philadelphia's Drinker, Biddle & Reath and former chair of the American Bar Association's legal ethics committee, said the worst cases were clear, with lawyers receiving kickbacks for referrals to other professionals.

Other instances were considerably less egregious though.

"If a lawyer has client copies made at Kinko's and he also owns shares in the company, I don't think that's a big deal," said Fox.

COMMODITY SERVICE

The Boies Schiller situation, he said, fell somewhere in between the extremes, though he said he did not have enough information to say exactly where. The main issue, he said, was whether the service provided by Amici was a commodity service, the cost and performance of which would not have varied greatly with another provider.

A legal ethics professor who asked to remain unnamed because he had been in contact with parties involved in the matter, said he thought the whole dispute was "dopey."

Though Boies Schiller lawyers' interests in Amici could be imputed to the firm, he said it was nonetheless noteworthy that none of the lawyers directly involved in representing Adelphia had any direct interest in Amici. The professor also said his impression was that Amici provided an essentially commodity service.

But a recent exchange of letters between a lawyer at Cravath, Swaine & Moore and Korologos may complicate that view of Amici. In a Sept. 6 letter to Southern District Bankruptcy Judge Robert Gerber, Cravath partner Max Shulman said his firm, which is representing accounting firm Deloitte & Touche in litigation adverse to Adelphia, found Amici "substandard" and said his client, which, like other Amici users, is paying a monthly $.06 per page storage charge, had been "vastly overcharged."

Shulman said the database was filled with extraneous, irrelevant materials. In a Sept. 9 follow-up letter to the judge, he described Amici as a "miserable system" and said users had been charged "for millions of pages of garbage -- and the fee for each of those garbage pages enriches the family of David Boies." He said the disclosure of the family interests "would have caused us to reject Amici in a heartbeat."

Korologos told the Wall Street Journal Monday he believes Shulman's criticisms of Amici were tactical and that Amici's performance and pricing were similar to other service providers. That issues surrounding the mundane provision of document services have so dogged a firm of Boies Schiller's stature has surprised some lawyers, who said they would have expected the client and firm to work out their differences more amicably.

One lawyer who was opposite the Boies Schiller lawyers during the settlement negotiations said his impression was that Adelphia CEO William Schleyer was very happy with the firm's work as well as the April settlement.

"Those guys, Korologos and [George] Carpinello, they were very aggressive," the lawyer said. "I thought they did a great job for Adelphia."

The lawyer said he thought the company was now trying to avoid paying its bills for services with which it was otherwise pleased. He said the dispute indicated the decline in the attorney-client relationship in recent years.

"This wouldn't have happened 10 years ago," he said.

But it is not clear how much credit Boies Schiller actually deserves for delivering the settlement, especially relative to the large fees it collected.

In his May decision approving the settlement, Judge Gerber suggested that other lawyers retained by Adelphia -- Alan Vinegrad of Covington & Burling, a former Eastern District U.S. Attorney, and Gregory S. Bruch of Foley & Lardner, a former assistant director of the SEC's enforcement division -- deserved most of the kudos for the successful negotiation.

Ediscovery providers' obligation to disclose potential conflicts

LINK

This is probably a good time to remind you that I am employed by Fios as Technology Counsel, and that the opinions expressed here are my own and not those of Fios, Inc.

The news is full of Amici's undisclosed connection to Boies Schiller around the Aldelphia case, surrounding the attorneys' duty to disclose a conflict. According to Law.com, Amici is partly owned by four of Boies' children, three of whom are also lawyers at Boies Schiller. The family of another partner at the firm, Nicholas Gravante, also owns an interest....Both Rule 1.8(a) of the Model Rules of Professional Responsibility and New York's DR 5-104 require that lawyers seeking to do non-legal business with clients must disclose their interest, apprise their client of other alternatives and obtain written consent. Lawyers in bankruptcy proceedings must also submit statements attesting to their non-interest.

The Rocky Mountain News details the complicated relationship between the Boies family and Amici:

The Amici connection was raised in court July 26 by an attorney for the Bank of Montreal, an Adelphia creditor. In an Aug. 11 affidavit, Korologos said that Boies' son David Boies III has an investment in Legal and Scientific Systems LLC, which in turn owns half of Datamine LLC, which owns a 51 percent stake in Albany, N.Y.-based Amici. David III is not a member of the Boies Schiller firm.

Boies' children Christopher, Caryl and Jonathan Boies, who also have ownership interests in Legal and Scientific Systems, are lawyers at Boies Schiller, Korologos said in the filing.

In the ediscovery world, conflicts are handled differently from provider to provider and there are no clear standards except what is demanded by a particular client. In this case, Amici was being used as what is commonly described as a "neutral third party repository". Both the requesting parties and the producing parties needed a level of trust that their work product and strategies would not be compromised.

I believe that there should be conflicts standards for ediscovery providers and that Amici had a responsibility to disclose its connection to Boies Schiller.

In my experience, some potential clients will request a conflicts check for a particular matter, others will ask for all named parties no matter what the matter and others will not even ask for a conflicts check.

Fios (where I am employed) proactively requests conflicts information early in the sales process so that we nor our potential client waste time or incur risk.

The details necessary to scope a potential assignment could put the potential client at a disadvantage should we be engaged by the other side first. In addition, if we have helped scope the data universe for a client, we do not want to find ourselves on the other side in another matter without being aware, making an informed judgement about whether to pursue an opportunity. The pursuit would include making the proper personnel precautions and client communications. This policy has cost us some short term business, but we find that our clients appreciate our bringing potential conflicts to them with our broad interpretation of what constitutes a conflict.

There are arguments to be made that electronic discovery is a commodity service:

A legal ethics professor who asked to remain unnamed because he had been in contact with parties involved in the matter, said he thought the whole dispute was "dopey."

Though Boies Schiller lawyers' interests in Amici could be imputed to the firm, he said it was nonetheless noteworthy that none of the lawyers directly involved in representing Adelphia had any direct interest in Amici. The professor also said his impression was that Amici provided an essentially commodity service.

However, even if the only service provided was to provide a platform for review, in my experience, there will be training for the review administrator which will include some strategic consulting. Should there be a document by document review? Should there be keyword searching? What search terms are used? Which documents are considered "hot docs"? Which documents will be introduced into evidence?

With Boies Schiller attorneys, related to the name partner, as owners of an ediscovery firm, I agree with Cravath that there should have been disclosure.

In a Sept. 6 letter to Southern District Bankruptcy Judge Robert Gerber, Cravath partner Max Shulman said his firm, which is representing accounting firm Deloitte & Touche in litigation adverse to Adelphia, found Amici "substandard" and said his client, which, like other Amici users, is paying a monthly $.06 per page storage charge, had been "vastly overcharged."

Shulman said the database was filled with extraneous, irrelevant materials. In a Sept. 9 follow-up letter to the judge, he described Amici as a "miserable system" and said users had been charged "for millions of pages of garbage -- and the fee for each of those garbage pages enriches the family of David Boies." He said the disclosure of the family interests "would have caused us to reject Amici in a heartbeat."

Pricing, performance and evidence content aside, in my opinion, the attorneys on the other side had the right to know the connection between the firm and Amici. Adelphia and the Trustee had the right to know as well. To say nothing of the other partners at Boies Schiller.

Last interesting note, the Boies Schiller website (under lawyer profiles) states that in May 1997 David Boies resigned his partnership at Cravath and founded the predecessor of Boies, Schiller & Flexner.

Cravath Protests Tactics of Firm Partially Owned by Boies Family

Palm Beach Lawn Care Firms at War

Trial Practice Tips Courtesy of David Boies