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Boies, Schiller & Flexner, the law firm of litigator David Boies, has already received a pair of public black eyes over its hiring on clients’ behalf a document production company partly owned by Boies’ children. But the ultimate cost to the firm of the alleged conflict of interest could be higher still. Former client Adelphia Communications Corp. asked Boies Schiller to resign last month for failing to disclose the family connection to document production company Amici, to which the company had paid several million dollars in fees. Adelphia’s action and other details of the matter were first reported in the Wall Street Journal. The case took another turn in a Sept. 9 letter to U.S. Bankruptcy Judge Robert Gerber of New York from Max Shulman of Cravath, Swaine & Moore, which represents accounting firm Deloitte & Touche in litigation adverse to Adelphia. Shulman described Amici as a “miserable system” filled with “garbage pages” that enrich Boies’ family in overcharges. Setting the stage Several lawyers who have been following the case said that Adelphia’s move sets the stage for a claim by the company to recover the millions paid to Amici and, possibly, the much larger sums paid to Boies Schiller as well. But opinions within the legal community are divided on just how severely the firm’s actions should be viewed. Some lawyers said they actually regarded the Amici conflict as relatively minor and said they suspected that Adelphia was merely using the issue to avoid its high legal bills. Cable TV company Adelphia sought Chapter 11 bankruptcy protection in 2002, soon after disclosing that the company’s founder, John Rigas, and his son, Timothy, had borrowed almost $3 billion from the company for their own use. Boies Schiller conducted an internal investigation at Adelphia and worked alongside other firms on subsequent litigation for the company, which was then facing civil charges from the U.S. Securities and Exchange Commission and the possibility of criminal charges by the U.S. Attorney’s Office for the Southern District of New York. From 2002 to 2004, Boies Schiller, whose representation was led by partner Philip Korologos, received bankruptcy court approval for almost $30 million in legal fees. In the course of its work for Adelphia, Boies Schiller brought in Amici to collect documents for discovery and place them in an electronic database to be used by all of the parties involved in the case. In an affidavit submitted to the bankruptcy court last month, Korologos explained that Amici is partly owned by four of Boies’ children, three of whom are also lawyers at Boies Schiller. The family of another partner at the firm, Nicholas Gravante, also owns an interest. Adelphia declined to comment. Korologos, who did not respond to a call for comment, said in the affidavit that he had not been aware of these ownership interests when he brought Amici into the case. He told the Wall Street Journal that Shulman’s criticisms were unfounded. Both Rule 1.8(a) of the Model Rules of Professional Responsibility and New York’s Disciplinary Rule 5-104 require that lawyers seeking to do nonlegal business with clients must disclose their interest, apprise their client of other alternatives and obtain written consent.

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