Report: DLA's Tab for Australian Defense Academy Sex Abuse Probe Tops $6 Million

Tom Huddleston Jr.

The American Lawyer

2012-01-20 00:00:00.0

When DLA Piper formally merged with former Australian affiliate DLA Phillips Fox last May, one of the matters the megafirm took over was a government-ordered probe into allegations of rampant sexual abuse at the country's main military academy.

Eight months later, DLA's final report is overdue and, according to local press reports, the firm's fees are rising.

The events that prompted the inquiry began last March with the secret filming and telecast, via Skype, of a female cadet's sexual encounter with a male cadet at the Australian Defence Force Academy, which provides military and academic training to junior officers in Australia's Army, Navy and Air Force.

In the wake of the so-called Skype scandal, other current and former cadets and personnel stepped forward to file more than 1,000 complaints about abusive acts they alleged had occurred at the academy. The government announced in April that it would investigate the claims, and hired DLA Phillips Fox to oversee the inquiry.

At the start of May, as The Am Law Daily has previously reported, 700-lawyer DLA Phillips Fox formally merged with DLA Piper in a tie-up that left the latter with 4,200 lawyers and made it the world's largest law firm. Until that point, the two firms had been operating under a formal alliance since 2006, the year after DLA Piper formed as a combination of Gray Cary Ware & Freidenrich, Piper Rudnick, and DLA.

DLA Piper took control of the defense academy probe once the merger was complete. In October, the firm delivered the first portion of its report to Australia's minister for defense, Stephen Smith. While an Aussie government announcement that month said the remainder of the report would be delivered in November, DLA Piper's website now lists "January 2012" as the expected delivery date.

With the report several months overdue, Melbourne's Herald Sun -- citing documents seen by the Herald Sun under the headline "Lawyers Are the Winners in Million Dollar Defense Probe" -- reported on Jan. 9 that DLA Piper will bill taxpayers more than $6.1 million for its work on the investigation, to which it has committed 69 lawyers. (Lawyers Weekly adds, meanwhile, that DLA was paid roughly $20.4 million by the Australian government for work done during the 2010-11 financial year. According to Lawyers Weekly, the firm is a member of all 15 legal panels relied on by the country's defense department.)

A DLA Piper spokeswoman said the firm would not provide "any comment in relation to the defense review" beyond what is posted on its website.

The Australian Defense Force and DLA have listed Canberra-based special counsel Gary Rumble and Dennis Pearce, as well as partner Melanie McKean -- all of whom were with DLA Phillips Fox prior to the merger -- as leading DLA's team on the matter. One twist: Aussie firm HWL Ebsworth announced last May -- around the time of the merger -- that it would be opening a Canberra office with a group of laterals from DLA Phillips Fox that included McKean, according to a firm announcement. Another HWL Ebsworth press release issued in October noted that Rumble and Pearce would be joining McKean at Ebsworth.

Ebsworth managing partner Juan Martinez confirmed to The Am Law Daily that all three partners are practicing with his firm and continue to lead the defense academy review under a subcontracting arrangement with DLA Piper, and with the defense department's approval.

DLA Piper has also faced questions about perceived conflicts of interest it might have with regard to the inquiry given Pearce's previous role as Commonwealth and Defense Force Ombudsman in Australia. At issue: whether he could have come across matters within the scope of the review during his time in that position. That the country's defense department has relied on either DLA Piper or DLA Phillips Fox on multiple past matters has also caused concern about possible conflicts the firm might have.

The firm has addressed those concerns directly on its website, stating that any matter arising from the inquiry that might present a conflict "would -- with the consent of the person concerned -- be referred to the Office of the Defense Force Ombudsman."

This article first appeared on The Am Law Daily blog on AmericanLawyer.com.