Thursday, September 1, 2005
The Wall Street Journal reports (here) that a document-management company, Amici LLC, that did work on behalf of Tyco and Qwest Communications is owned in part by members of the family of lawyer David Boies, whose firm (Boies, Schiller & Flexner) is counsel to the companies. The firm resigned earlier this week as special counsel to Adelphia Communications because Boies did not disclose his family's ownership interest in Amici, which Adelphia used in its bankruptcy to manage the documents needed in various law suits and investigations. Adelphia paid Amici between $5 and $10 million to store and manage documents on behalf of the company.
Boies disclosed that Amici has done work for six to eight other clients of Boies Schiller, and acknowledged that he should have disclosed the connection between his family, including his children, and the company doing business for his clients. To make matters worse, at least from an appearance point of view, is that one of the founders of Amici is William Duker, a lawyer who pled guilty in 1997 for inflating legal bills submitted to the FDIC and Resolution Trust Corp. as part of litigation against Michael Milken for which the lead counsel was -- you probably guess it already -- David Boies (who was not implicated in Duker's misconduct).
Paul McGreal on the Corporate Compliance Prof blog has an interesting post (here) noting the different professional rules Boies (and his firm) may have violated in this matter. Another interesting aspect is that Boies testified at the retrial of former Tyco CEO Dennis Kozlowski and CFO Mark Swartz about his conversations with them. The prosecution of Kozlowski and Swartz centered on their inadequate disclosure of the large sums they received as compensation from the company, and the jury convicted them of grand larceny based, at least in small part, on Boies' testimony. How does a champion of corporate governance and full disclosure (leaving aside his representation of former AIG CEO Maurice Greenberg) miss such an obvious potential conflict of interest when recommending Amici's services to Tyco? (ph)
UPDATE: Check out this post by Bruce MacEwen on the Adam Smith, Esq. blog (here), who concludes much more eloquently than I:
Simply another example of "What was he thinking?" That, to be sure, but I recount this for another reason. Boies' choice not to disclose—and anyone of his intellect and rigor made, at some point, that conscious choice—reveals a hubris that those at the top of their game can fall victim to. At the very least, he acted with "vast carelessness," in F. Scott Fitzgerald's felicitous phrase (referring to the very rich).