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New York-A jury in state court in Manhattan has returned a legal malpractice verdict against LeBoeuf, Lamb, Greene & MacRae in favor of its former client, Sheraton Corp., which claims the award could total as much as $21 million. Sheraton brought a broad-based malpractice suit against the firm asserting mishandling of the underlying case by a senior associate at LeBoeuf, who was lead counsel. The trial judge, Justice Ira Gammerman, limited the jury’s deliberations to a single area relating to an award of punitive damages in the underlying case. Sheraton Corp. v. LeBoeuf, Lamb, Greene & MacRae, No. 605688/01. Answering a series of seven questions submitted to it by Gammerman, the jury ruled on Sept. 18 for Sheraton and concluded that LeBoeuf had been negligent in its defense of a claim for punitive damages. By limiting the scope of deliberations, however, Gammerman precluded the jury from holding LeBoeuf responsible for any compensatory damages its client-the owner of a Washington hotel that had contracted with Sheraton to run its property-had incurred in a 1999 trial. The jury in the case in which LeBoeuf had represented Sheraton returned a $50 million verdict in 1999 against Sheraton, of which $37.5 million was for punitive damages. Sheraton was found liable for improperly profiting from a volume purchasing plan used for the network of hotels it managed. An appeal of the verdict, which was subsequently reduced by the trial judge to $30 million, is pending before the 3d U.S. Circuit Court of Appeals. Approximately $17 million of the $30 million was allocated to punitive damages. Sheraton’s lawyer, Charles A. Gilman of New York’s Cahill Gordon & Reindel, estimated that the total verdict will amount to $21 million. That figure, Gilman said, includes the jury’s award of $17.4 million and $3.3 million that Sheraton, which is now a part of Starwood Hotels and Resorts Inc., paid to LeBoeuf for legal work, plus interest. LeBoeuf’s lawyer, Stephen Fishbein of New York’s Shearman & Sterling, said LeBoeuf will contest any award of legal fees in its post-trial brief. Standing behind the work At the end of the trial, Gammerman ordered the parties to submit post-trial motions. In a statement issued after the verdict, the 720-lawyer LeBoeuf expressed confidence that Gammerman would vacate the jury’s award. Sheraton’s lawyer, Gilman, expressed equal confidence that the verdict will stand. He added, however, that Sheraton intends to appeal the judge’s ruling limiting the jury’s deliberations to LeBoeuf’s defense of the punitive damages claim. The LeBoeuf statement also stood behind its lawyers for having performed “well above professional standards.” The adverse verdict, the statement continued, was a product of “the merits of the client’s case and not the performance of the LeBoeuf lawyers.” In a written statement, Starwood General Counsel Kenneth Siegel asserted precisely the opposite. He said the underlying verdict was “the result of bad lawyering, not bad behavior on the part of Sheraton.” In the malpractice suit, Sheraton claimed that LeBoeuf had assigned a senior associate to act as lead counsel, while the partner in charge of the case was essentially only an observer at the trial in the U.S. District Court for the District of Delaware. Gammerman rejected claims that the LeBoeuf partner, John S. Kinzey, and the senior associate, Scot C. Gleason, who has since left the firm, committed malpractice by failing to introduce testimony from an industry expert to counter the plaintiff’s three experts, neglecting to object at key moments and conducting ineffectual cross-examinations. But on the key issue for punitive damages, the jury agreed with Sheraton that the failure to present documents in support of the reliance-on-counsel defense constituted malpractice. Sheraton had claimed that, although the documents exist, LeBoeuf had withdrawn the defense in order to avoid sanctions for its previous failure to produce them. Gleason, who has served as a high-level paid political consultant in several campaigns since leaving LeBoeuf in 2000, said that Sheraton’s claims regarding the counsel defense were “clearly wrong” and would likely be set aside by Gammerman.

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