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Don’t get mad, get even” seems to be the new marketing pitch at Boies, Schiller & Flexner. The Armonk, New York-based law firm has set itself up in a unique speciality: helping defrauded companies go after miscreant former executives. Last year Boies, Schiller was retained by Tyco International Ltd. and Adelphia Communications Corporation, both of which subsequently filed suit against departed officials. Qwest Communications International Inc. also tapped the firm for an internal investigation, but hasn’t headed to court yet [see "Mystery Qwest," page 16, and "In-House Cleaners," page 18]. The suits are a striking change from the past, when corporations would quietly show disgraced officials the door. But Boies, Schiller attorneys maintain that the fraud was so egregious at their clients that the companies are well justified in going to court. That’s even though litigation can’t undo the damage–neither Tyco nor Adelphia will be able to recover enough to make up for the collapse in value caused by their executives’ alleged misdeeds. “I think it’s important for a company like Tyco that is changing its corporate governance…to not simply get rid of the problem people, but to take steps to recover the money,” says Boies, Schiller partner David Shapiro. A former interim U.S. attorney for the Northern District of California, he is essentially working as a prosecutor for Tyco. Shapiro, who joined Boies, Schiller last September, is based in the firm’s Oakland offices but spends most of his time on the East Coast as he works on the Tyco suit. He has three execs in his sights: former CEO L. Dennis Kozlowski, former GC Mark Belnick [see "Losing It All," page 66], and former director Frank Walsh. A fourth executive, former CFO Mark Swartz, is in arbitration with the company. Collectively, the four are accused of pilfering more than $100 million by using the company as a personal piggy bank. (In December, Walsh pled guilty to felony charges and agreed to return a disputed $20 million payment to the company.) Adelphia’s accusations are on a far bigger scale-the company maintains that former executives diverted $3 billion during their tenure. The Pennsylvania-based cable television operator has also alleged a Racketeer Influenced and Corrupt Organizations charge, which, if it sticks, will enable the company to ask for treble damages. Philip Korologos, the lead Boies, Schiller partner for Adelphia, maintains, “What [the executives] did was so clearly wrong–plus the magnitude was so large–that this is not a case where you just ‘close that door and hope he doesn’t knock again.’” There’s one potential problem in going after former executives–as a company alleges past mismanagement, it may expose itself to shareholder suits. But Shapiro minimizes the risk, adding, “Plaintiffs lawyers manage to find something to sue on, no matter what is said.” This danger is reduced at Adelphia, since it filed for bankruptcy last June and enjoys court protection. “In bankruptcy, you basically can tell the world things are very bad, and go up from there,” Korologos says. Adelphia sued former auditor Deloitte & Touche in November, and Korologos suggests that more actions may be on the way. Though Boies, Schiller is the current leader in helping clients sue former executives, the firm didn’t create the specialty. San Francisco solo practitioner Michael Eagan has been doing the same thing for more than a decade, starting with the Technical Equities case in the late 1980s, one of the largest investment broker scandals in U.S. history. After Technical Equities filed for bankruptcy, Eagan filed suit on behalf of the company’s creditors against its auditor, securities broker, bank, and former executives. “When we did this ten or 11 years ago, everybody thought we were crazy,” Eagan says. But he’s always felt that suits against wayward officials are the right thing to do: “If the executives at Tyco walked into a safe and walked off with $1 billion, there’s no question you sue the executives.”

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