Saturday, April 21, 2007

How Much Is That Lawyer in the Window?

The prosecution of Lord Conrad Black and three other former executives of Hollinger International trudges forward into its fifth week with more testimony from the company's lawyers explaining not only the deals at issue, but their mistakes and fees.  Hollinger had leading firms in Canada (Torys) and the U.S. (Cravath) representing it in the CanWest transaction that is at the heart of the government's corporate looting case.  The jury listened to the videotaped testimony of Elizabeth DeMerchant from Torys, who was the lead lawyer on the transaction that involved an $80 million non-compete payment to Black and others.  When asked about her compensation in 2000, DeMerchant replied, "Is that a fair question?" before conceding it was between $600,000 (Cdn.) and $900,000 (Cdn).  Cravath lawyer John Saunders, who insisted that the non-compete payment be disclosed, could not recall his hourly billing rate, finally saying, "I guess if you have to ask, you can't afford it."  I doubt many lawyers forget their billing rate at the end of the year when trying to collect on their unpaid bills. 

The defense has argued that these expensive lawyers were the ones responsible for structuring the deal, and that Lord Black and the others followed their advice and did not try to hide anything by only doing what was approved by the attorneys.  The fact that they make so much money could blunt some of the prosecution's claims that the defendants enriched themselves when Hollinger's lawyers were not exactly reticent on their fees. Whether any of this is making an impression on the jury is difficult to tell, of course. A Toronto Globe & Mail story (here) discusses the testimony of DeMerchant and Saunders. (ph)

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