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By late 2001, International Paper Co. had been battling its insurers for over six years. The issue: Who should pay defense costs for a nationwide class action suit against a former IP subsidiary, Masonite International Corp., which was accused of making defective siding for homes. That fall, IP fought one of those insurers, Employers Insurance Co. of Wausau, in California Superior Court in San Francisco. Stakes were high: $13 million in disputed coverage plus IP’s demand for punitive damages. As the third day of jury deliberations began, the man leading the IP legal team, associate general counsel Peter Lieb, waited in a deserted corridor near the courtroom, talking with his outside counsel Thomas Nolan. Suddenly, Wausau’s lead lawyer strode up, recalls Nolan, a partner with Washington, D.C.-based Howrey Simon Arnold & White’s Los Angeles office. “We don’t know how this jury is going to come down,” Nolan recalls the man saying. Opposing counsel then dangled a settlement offer — which Lieb says would have amounted to close to $20 million. The offer was followed by a curt “take it or leave it.” According to Nolan, Lieb didn’t blink. He and IP’s senior management had already determined that the case was worth far more. “We’ve paid the price of admission,” Nolan recalls Lieb saying, “and we’re going to accept the jury’s verdict.” His gutsy call paid off: An hour later, the jury returned with a $25 million award for IP — the disputed $13 million plus $12 million for attorney fees. A second round of deliberations, on punitive damages, loomed the following day. Again, Lieb spurned a settlement. He was back in Manhattan, eating lunch with IP GC William Lytton, when the call came that the jury had awarded IP $68 million. Lieb and Lytton dropped their forks and rushed back to the office. IP CEO John Dillon was meeting with three executive vice presidents. Figuring that news of the combined $93 million decision for the company — California’s third largest trial verdict in 2001 — was sufficiently important, the two lawyers broke in. “We told them the result, and there was a brief pause, as if they were sort of taking it in,” recalls Lieb. “Then they erupted into applause.” It’s hardly surprising, then, that Lieb, 46, who left an assistant GC job at GTE Service Corp. to join IP in 1997, is now leading the second phase of the Masonite litigation. Twenty insurance company defendants and as much as $640 million in disputed coverage are involved. Lieb may be poised for even bigger things. Lytton — a former litigator who loves a good fight as much as his deputy — is expected to move to the paper and packaging giant’s business side in the next two years, say company insiders. Smart money says that Lieb has an excellent shot at becoming Lytton’s successor.

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