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A scandal of his own to handle
By Al Lewis, Business Columnist
Denver Post
Friday, February 10, 2006

Renowned litigator David Boies is a corporate cleanup artist who has helped scandalized companies including Denver's Qwest and Greenwood Village's Adelphia Communications.

Amid high-profile cases, Boies has become a visible champion of corporate ethics.  But lately, this white knight has been under an ethics investigation himself.

Adelphia asked Boies to resign in August when it learned that two document-management companies that his firm recommended -- Amici and Echelon Group -- are partly owned by Boies' children.

Adelphia said it also was surprised to learn that one of the firms, Amici, was founded by William Duker, a lawyer and former Boies associate.  In 1997, Duker served 33 months in prison after admitting he fraudulently overbilled the federal government for legal services.  Then he went on to run a company that bills clients by the page.

Boies' Armonk, N.Y.-based law firm, Boies Schiller & Flexner, never disclosed its ties to these companies, which Adelphia used for three years, racking up more than $7 million in bills.

That's a hefty tab for Adelphia, a company that was so mismanaged and looted by its previous management that it was forced to file for bankruptcy in 2002.  Even heftier is the $31.7 million Boies' firm has billed Adelphia over the past three years.

This week, U.S. Bankruptcy Judge Robert E. Gerber of Manhattan ruled that an ethics investigation into the matter could proceed.  The judge stopped short of naming an examiner.  But given the size of these bills, it's a safe bet Adelphia and its creditors will investigate on their own.  An Adelphia spokesman declined to comment Thursday.

For his part, Boies has admitted that his firm should have disclosed its ties as a matter of good business practice, but he denies violating laws or codes of ethics.

Boies will remain under the microscope largely because of who he is.  He represented presidential candidate Al Gore in the dispute over the 2000 Florida election results.  He defended IBM in its fight against antitrust charges.  And he represented the U.S. government in its antitrust case against Microsoft.

More recently, his firm has represented Tyco International, which was looted by its former corporate officers, and it has defended Maurice "Hank" Greenberg, the former chief executive of insurance giant American International Group Inc.

Boies has marshaled ethics experts who've said he did not violate any specific ethics rules in the Adelphia case.  But The Wall Street Journal, in its long coverage of the dispute, has quoted experts who say his firm, if nothing else, failed to avoid the appearance of impropriety.

"I don't think Mr. Boies' firm has a sign on the door that says, 'We do only the minimum that's required. ... We're the minimally ethical firm,"' Gregory Taxin, CEO of San Francisco-based Glass Lewis & Co., told me.  "This is rightly an embarrassment to an otherwise reputable and well-regarded firm."

John Holcomb, a business ethics professor at the University of Denver's Daniels College of Business, agrees.

"To me, anything that smacks of nepotism, without disclosing that fact, raises questions," he said.  "Nepotism alone triggers the duty of disclosure."

Adelphia has complained that Amici's bills are too high.  And in October, attorneys representing Adelphia's former auditor said Amici buried them in useless documents, such as copies of telephone books and cookbooks.

"Using Amici has been a disaster," wrote attorney Max Shulman on behalf of client Deloitte & Touche.

Also in October, lawyers suing Tyco on behalf of investors complained that Tyco shipped them 77 million irrelevant documents "compounded by the previously undisclosed ownership relationship between the family of David Boies ... and Amici."

Anyone who has been involved in complex litigation is familiar with the old document dump.  Lawyers bill not only by the hour but by the page.

Boies may argue that these alleged conflicts arise from a gray area.  But before this dispute, Boies frequently championed the idea of operating in the white.

Said Holcomb:  "It's kind of a joke among law firms that the great David Boies has stumbled."

Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Lewis at denverpostbloghouse.com/lewis, 303-820-1967, or alewis@denverpost.com.

http://www.denverpost.com/business/ci_3493085