Friday, February 24, 2006

Follow the Bouncing Ball for This Potential Conflict

The prosecution of former Illinois Governor George Ryan may take an interesting turn that raises issues of legal ethics related to his defense counsel from large firm Winston & Strawn and a defense witness who, at this point in time, is the Acting United States Attorney for the Southern District of Illinois.  This one is a bit hard to follow, so follow the bouncing ball here (for fans of "Sing Along with Mitch" and other outstanding early 1960s entertainment).  Edward McNally was Ryan's attorney in 2001, and he testified at trial about meetings with prosecutors in 2001 about the case.  At the time, McNally was a partner at Altheimer & Gray, which went into bankruptcy in 2003 and owes, among others, LaSalle Bank approximatley $28 million on a defaulted loan.  Here's where it gets a bit convoluted.  Winston & Strawn is counsel to the creditors in the Altheimer & Gray bankruptcy, and in that proceeding five former partners opted not to participate in a bankruptcy court plan for paying the firm's debts, and one of those partners is McNally.  Since then, Winston & Strawn has sued four of those partners to recover for their liability on the loan, but the one partner not sued is -- you guessed it -- McNally.  Based on his ownership interest in the partnership, McNally is potentially liable for more than $500,000 of the bank loan.

According to a Chicago Sun-Times article (here), prosecutors are raising a ruckus that Winston & Strawn, which is representing Ryan pro bono, has gone easy on McNally to ensure his cooperation, and the failure to disclose the conflict means that the government could not impeach his testimony with all relevant information.  Winston & Strawn has said that it was not aware of any potential conflict, and that may well be the case with a firm that large and the different departments (probably on different floors) handling the cases.  Whether the information is particularly damning for McNally, it does raise an interesting question related to Winston & Strawn: did the firm view McNally, now in a very important government position, as a person who it would be better not to sue, and if so, was that in its client's interest or a desire to cull favor?  The dots are pretty far apart to see a far-reaching plan to shield McNally to preserve his cooperation in the Ryan case, except for those addicted to conspiracy theories.  But, the relationship raises questions about Winton & Strawn's internal conflicts mechanism, and whether the issue should have been flagged before McNally testified.  Better to reveal before the fact than try to explain something after its revelation. (ph)

Corruption, Legal Ethics, Prosecutions | Permalink

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