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Is Skadden, Arps, Slate, Meagher & Flom about to get into the newspaper business? That is the intriguing possibility raised by the powerhouse law firm‘s long-running fee dispute with the owner and publisher of the Pulitzer Prize-winning San Juan Star, Puerto Rico’s largest English-language newspaper. Manhattan Supreme Court Justice Shirley Kornreich granted Skadden summary judgment in 2003 on its claim that publisher Gerard Angulo owed it $1.24 million in unpaid legal fees. In January 2005, she ordered Angulo to turn over all his shares in the companies that control the newspaper to satisfy the judgment. Her order has been upheld by successive state courts, and the U.S. Supreme Court denied Angulo’s petition for writ of certiorari in January. In March, Kornreich held Angulo in contempt for his failure to comply with her order to hand over his stock, fining him an additional $575. The New York County Sheriff has no authority to seize assets in San Juan, so the resolution of the case still awaits the outcome of enforcement proceedings in Puerto Rico. But, assuming all goes its way, would Skadden have any interest in taking on the publisher’s role? When asked about the possibility, Robert Sheehan, the executive partner of the 1,800-lawyer firm, laughed. “That’s an idea,” he says, his tone clearly indicating it is not. “I hadn’t even thought about running a newspaper.” Sheehan, who says he has not been following the matter closely, expressed doubt that the fees at issue were sufficient to buy a controlling stake in a newspaper. But it was Skadden’s prior representation of Angulo in a dispute with former partner Hassan Namazee that led to Angulo’s being able to buy sole ownership of the Star for $1 million above existing debt in 1997. The two had a falling out shortly after buying the paper, which won a 1961 Pulitzer for editorial writing, from the Scripps-Howard chain in 1993. Namazee had claimed in the ensuing litigation in Manhattan federal court that his stake was worth almost $14 million. In addition to the right to buy out his partner, Angulo also won almost $1 million in consulting fees in the dispute. In its original suit for fees, Skadden claimed Angulo, who paid more than $1 million in fees while the case was ongoing, slowed payments after his result was upheld by the U.S. Court of Appeals for the 2nd Circuit in 1998. Though Angulo sent Skadden 15 postdated checks for $50,000 each, he stopped payment on 12 of them. Angulo, represented by Eric Berry of Manhattan, has vociferously contested Skadden’s claims as well as Kornreich’s award of summary judgment. In a motion to reargue, he claimed the judge should recuse herself because of her involvement with a charity group, Judges and Lawyers Breast Cancer Alert, which held occasional meetings at Skadden’s offices and whose former president, Sheila Birnbaum, was a Skadden partner. The judge declined to recuse herself. The publisher also filed a legal malpractice suit against Skadden in Manhattan federal court in 2004, charging he was fraudulently overbilled by the firm. He claimed it provided minimal documentation in its bills and never actually performed some of the work billed for. That suit was dismissed in February 2005 for lack of federal jurisdiction. In an interview, Angulo repeated the allegations against Kornreich and Skadden at length. He also insists there was no order that he turn over his shares and says he is confident the laws of Puerto Rico will provide him with justice. He says he is still hoping to seek discovery from Skadden showing the firm defrauded him. In court documents, Angulo has stated that his shares in the San Juan Star have long been pledged to an unnamed lender to secure a loan for the newspaper. He says that lender actually has possession of the stock certificates and he is thus both “legally and physically incapable” of turning over the shares to anyone. Stuart Krause of Zeichner Ellman & Krause, Skadden’s lawyer in the New York leg of the matter, says Angulo had never presented any evidence he pledged the shares to the unnamed lender. But Krause says the publisher had no doubt taken steps that would complicate enforcement of Kornreich’s order. The most likely outcome if the order is enforced, says Krause, would be a public sale of Angulo’s assets, with the proceeds going to Skadden. He says he cannot imagine the firm, the nation’s highest-grossing in 2004 with almost $1.5 billion in revenue, wanting to run the San Juan newspaper. Says Sheehan: “It’s enough work running a law firm.”
Anthony Lin is a reporter with the New York Law Journal , the ALM publication where this article first appeared.

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