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GARDNER, CARTON HIT WITH $17 MILLION VERDICT A jury in Prince George’s County, Md., has slapped Gardner, Carton & Douglas with a $17.2 million verdict for malpractice, breach of fiduciary duty, and interference with a contract in a case growing out of a dispute between two partners in a failed communications satellite company. In the late 1990s, Lanham, Md.-based Final Analysis Inc. (FAI) was poised to launch several so-called low-Earth-orbit satellites for use in data transmission. It had lined up investments from companies like General Dynamics, and it was preparing for a $150 million bond offering from Lehman Brothers. But the privately held company, which was founded by business partners Nader Modanlo and Michael Ahan, ran into difficulties when Modanlo and Ahan had disagreements about the future of the business. At first, the partners agreed to resolve the problems by splitting FAI in half, with Ahan running a company that would provide engineering services to an operating company run by Modanlo. George Grammas, a D.C. partner in Chicago-based Gardner, Carton, was brought in as outside counsel to prepare new bylaws for the company and to document the division of responsibility. Ahan soon concluded that Grammas was acting in Modanlo’s interests rather than in the interests of Ahan or the company, and he sued Grammas and the law firm in Maryland state court. Grammas’ efforts did not succeed in saving the satellite outfit. FAI’s outside funding collapsed, and the company went into bankruptcy. On Aug. 5, a six-member P.G. County jury returned a verdict against Grammas and the firm on all three counts — attorney malpractice, breach of fiduciary duty, and interference with a contract. “We argued to the jury that Gardner, Carton worked behind the scenes to disenfranchise our client,” says Creighton Magid, Ahan’s lead counsel. Magid, the head of the D.C. trial practice group for Dorsey & Whitney, says Grammas “drafted the bylaws to give Modanlo full control of both companies” if there was a stalemate between him and Ahan. “That was the plan all along, while the firm was holding itself out as an independent neutral,” Magid says. The jury verdict “reflects the fact that an attorney who represents an entity composed of two equal shareholders has an equal responsibility to each of those shareholders,” Magid says. At trial, Gardner, Carton was represented by Robert Salerno, a partner in the D.C. office of Piper Rudnick. Grammas declines comment. A spokesman for Gardner, Carton says, “We are filing post-trial motions on [Aug. 16], and prior to the court’s decision on those, we can’t comment.” — Jonathan Groner PRESS GANG As the investigation into the identity of the official who leaked the name of CIA agent Valerie Plame moves to journalists who may have received the information, media outlets have tapped a few prominent lawyers for help. Floyd Abrams, a partner at New York’s Cahill Gordon & Reindel, represents Time Inc. and Time reporter Matthew Cooper, who has been held in contempt for refusing to testify before the grand jury investigating the leak. The Washington Post, where reporter Walter Pincus faces a grand jury subpoena and reporter Glenn Kessler has already been interviewed by investigators, has turned to Wilmer Cutler Pickering Hale and Dorr partner Seth Waxman. Longtime Post lawyer and Williams & Connolly partner Kevin Baine says he was unable to represent the paper due to a conflict. Conservative columnist Robert Novak, who first printed Plame’s name, is represented by James Hamilton, a partner at D.C.’s Swidler Berlin Shereff Friedman who is also an informal adviser to the campaign of Democratic presidential candidate John Kerry. NBC turned to well-known media lawyer Lee Levine to represent “Meet the Press” host Tim Russert. Russert fought a grand jury subpoena, but agreed to an interview with special prosecutor Patrick Fitzgerald. — Vanessa Blum FIRE FALLOUT Repairs are ongoing at D.C.’s federal courthouse after an Aug. 1 fire destroyed the chambers of one federal appellate judge and caused water and other damage to parts of the courthouse. Sheldon Snook, administrative assistant to Chief Judge Thomas Hogan of the U.S. District Court for the District of Columbia, says most of the damage was limited to the chambers of Senior Judge Laurence Silberman of the U.S. Court of Appeals for the D.C. Circuit. There was some damage to computer cables in nearby offices, but that problem has since been fixed, Snook says. The fire started while workers were doing routine maintenance to Silberman’s office. — Tom Schoenberg TOUCH AND GO With worries mounting about whether Florida’s controversial touch-screen voting systems could unhinge the upcoming presidential election, those seeking manual recounts if the election is close suffered a major setback Aug. 6 at the hands of a Florida appeals court. The 4th District Court of Appeal unanimously affirmed a Palm Beach County judge’s February dismissal of a suit filed by Rep. Robert Wexler (D-Fla.). Wexler had sought an injunction requiring election officials to install printers in order to create backup records of individual voters’ ballots, so that a manual recount could be performed in elections decided by 0.25 percent or less of the vote. Despite the setback, Wexler and others are pushing ahead with suits to mandate a recount in a close race. The ability to perform a recount could be crucial in the presidential election. More than 50 percent of Florida voters live in the 15 counties using touch-screen machines, including populous Miami-Dade, Broward, and Palm Beach counties. The touch-screen systems lack paper records that would make a manual recount possible. — Margery Gordon, Miami Daily Business Review CAR WARS Barbara Leigh Mitchell needs her car. Not only does she rely on it to get to her doctor, but she sleeps in it at night. So when Mitchell’s car insurance company didn’t renew her policy because she lacked a ZIP code, she needed help. Mitchell says the company found out she was homeless after she was in an accident, and a short time later, she received a letter telling her that the company required a zip code to valuate her rate. Mitchell provided them with the address of the local Wal-Mart parking lot where she slept. But the company asked for a bill or a lease to prove residency, and Mitchell was informed that her policy would not be renewed. Two Pillsbury Winthrop associates, Bonnie Van Der Weide and Kara Brewer, found out about Mitchell’s plight through a homeless organization, took the case pro bono, and were able to successfully appeal the decision to the Virginia Commissioner of Insurance despite the fact that the 15-day appeal period had expired. In addition to renewing the insurance, the company agreed to repay Mitchell for the premium she paid on a new policy. “There was just a lot of bureaucracy and red tape,” Van Der Weide says. “A lot of it was bringing to their attention the fact that there are homeless people out there that still need coverage.” — Bethany Broida BACK TO SCHOOL Reed Smith, in partnership with the University of Pennsylvania’s Wharton School, has recently created Reed Smith University, a professional development program for all of its employees — from management to the secretarial staff. The firm claims it is the first time a law firm has embarked upon an elaborate continuing education project, and it is the first time Wharton has designed an education plan for a law firm. The program is made up of five schools: leadership, technology, business development, professional support, and law. The year-round curriculum stemmed from a desire to improve management training for the firm’s leaders, who oversee 16 offices and more than 2,000 employees, says partner John Smith, the program’s first chancellor. “We thought we had to do something different to educate and train our personnel,” he says. Classes begin in October at the leadership school, where about 30 firm managers will take a week-long course. Typically, classes will be conducted on Wharton’s campus or by video conferencing. Smith says the program costs “in the six figures” for 2004 alone, but adds, “We’re making the judgment that if we invest heavily in our individuals, the firm as a whole will succeed.” — Christine Hines CHASING CHINA China’s growing financial market has attracted the attention of Cadwalader, Wickersham & Taft. The firm has rehired its former associate Charlie Wang to help improve its access to businesses in China. Wang recently left Wiley Rein & Fielding, where he was of counsel, and rejoined Cadwalader as a partner in its D.C. office. Wang, a former judge and law professor in China, will focus on structured finance and securitization as part of the firm’s capital markets practice. “My concentration will be building a successful practice for the firm . . . starting with China,” says Wang, who is general counsel to the Association of Global Chinese Enterprises, a trade association representing Chinese companies. “The combination of [Wang's] legal background and contacts in the Chinese legal community . . . will enable Cadwalader to offer unprecedented service for clients with business interests in China,” firm chairman Robert Link Jr. said in a statement. — Christine Hines OUT OF PRACTICE The D.C. Court of Appeals has disbarred Lewis Rivlin for misappropriating client funds. Rivlin, who was a Justice Department official in the 1950s and 1960s, made headlines more recently for his involvement in so-called risk-free investments that a federal judge found in 2001 amounted to civil fraud. On Aug. 5, the D.C. Court of Appeals approved a recommendation of the Board on Professional Responsibility that Rivlin be disbarred. Among the findings: that Rivlin — the ex-husband of former Office of Management and Budget Director Alice Rivlin — wrote checks for personal purposes out of his client trust account and that he took $48,000 from a client and refused to give the client an accounting for the money because he had spent it. Rivlin can only be reinstated, the court said, if he pays back the misappropriated funds with interest. Rivlin could not be reached for comment. — Jonathan Groner FRAUD FAILURE In the latest round of litigation involving Enron and WorldCom, a New York federal judge last week dismissed a class action against Citigroup alleging that the financial giant failed to adhere to its risk management policies. The suit, one of several cases over Citigroup’s financial relationship with Enron and WorldCom, was brought by Milberg Weiss Bershad & Schulman on behalf of Citigroup’s investors. Its central allegation rested on Citigroup’s risk management policies. The plaintiffs claimed Citigroup failed to live up to the policies to an extent constituting fraud. Yet the judge, Linda Swain of the Southern District of New York, saw nothing more than potential mismanagement in the accusations. An allegation of fraud, she held, required references to specific misconduct. Because the plaintiffs failed to deliver ample specifics, she dismissed the action. — Michael Bobelian, New York Law Journal

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