More on Boies-gate

As discussed here yesterday, David Boies’ family indirectly owned an interest in a document management firm, Amici, which received $5-$10 million for managing documents at Adelphia, where Boies was, until recently, special counsel.  This apparent conflict wasn’t disclosed when Adelphia approved use of the fim. 

Now the W$J reports that several other Boies clients, including Qwest and Tyco, were in the same boat. The story also notes that a former Boies associate, Duker, who headed the firm was sentenced to 33 months in prison in 1997 for “falsely inflating legal bills to the federal government.” (Ironically, the  same person helped Boies sue Mike Milken in 1990.) The current Amici CEO, “when asked if Mr. Duker had a consulting contract or office at the company this year” said "I don't know how to describe that relationship." Wonder if Boies’ clients knew about that when they approved use of Amici.

This story is starting to smell very bad. I would guess that knives will be out for Boies, Al Gore’s lawyer in 2000, as they have been for Bill Lerach. Whatever the politics, Boies-gate seems to deserve some attention, particularly now that non-disclosure of the conflict seems not to be an isolated case.

More generally, the affair should remind us of another reason why litigation is not a panacea for corporate governance – lawyers have agency cost issues too.

Comments

[vnjagvet]

This development seems disappointing. Certainly if the copy costs to TYCO were significantly reduced by this arrangement I would feel much better about it. Perhaps the concept of "fiduciary duty" has not completely penetrated counsel's consciousness yet.