Wednesday, February 8, 2006

Is Boies Being Investigated?

A Wall Street Journal article (here) with the headline "Judge Orders Probe Into Boies Firm" discusses the Adelphia Communications bankruptcy in which David Boies was accused of failing to disclose a conflict of interest in connection with recommending two document-management companies to assist Adelphia in the case.  The two companies, Amici LLC and Echelon Group LLC, had financial ties to Boies' children and a former partner who served time for fraud, none of which was disclosed to Adelphia or the court.  The creditor's committee and the U.S. Trustee supported the appointment of an examiner to review the conduct of the firm, Boies, Schiller & Flexner, which has sought approval of almost $30 million in fees, but U.S. Bankruptcy Judge Robert Gerber denied the request.  According to a Law.Com story (here), the judge will allow the parties an opportunity to investigate the matter further and then to present their findings to the court.  Boies has denied engaging in any misconduct, and it is not clear whether the bankruptcy judge's decision can be termed a "probe" into the firm.  A sub-headline to the Journal story states that there is an "ethics inquiry," which to me means an investigation by the bar disciplinary authority or even by the court, not permission to a party to continue discovery on a matter.  Anyone, including Adelphia or the U.S. Trustee, could file a complaint with the bar that may result in an investigation of Boies, but there is no indication that such a complaint has been lodged at this point.  While one could view the judge's decision to let the matter continue as indicating a potential problem for Boies Schiller in having its fees authorized, that is by no means the only, or even most likely, outcome of the bankruptcy case. (ph)

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Sometimes, academic ostriches need to get their heads out of the sand. Boies' actions ARE being investigated, by those who are impacted directly by the economic consequences of his actions/omissions, the private parties who have an economic interest in the case, not by bar association bureaucrats or academeic eggheads who really have no dogs in the economic fight for scarce resources in a bankruptcy case. Let us wait and see what the investigation by the true parties in interest reveals before tipping our hands to the outcome we would prefer.

Posted by: Rudy J. Cerone | Feb 9, 2006 8:27:04 AM

I noted the discrepancy in the two stories as well. If the one is accurate, it seems the WSJ is greatly exaggerating what is happening to Boies. I agree with you that an investigation implies the involvement of a third party, which is expressly what the judge would not permit. I find it strange that the WSJ did not even mention the request for an examiner or that it had been denied. It is very misleading.

Posted by: mohan | Feb 9, 2006 4:30:24 PM

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