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A state Supreme Court jury in Manhattan returned a legal malpractice verdict Sept. 18 against LeBoeuf, Lamb, Green & MacRae in favor of its former client, Sheraton Corp., which claims the award could total as much as $21 million. While Sheraton brought a broad-based complaint asserting mishandling of the underlying case by a senior associate at LeBoeuf who was lead counsel, the trial judge, Justice Ira Gammerman, issued a directed verdict, limiting the case to a single issue, according to a statement issued by LeBoeuf. But on that issue — relating to the way the firm defended against a claim for punitive damages — the jury agreed with Sheraton and ruled that the hotel chain could recover the punitive component of the award. The jury in the underlying case, which charged Sheraton with improperly profiting from a volume purchasing plan used for the network of hotels it managed, had returned a $50 million verdict in 1999 against Sheraton, of which $37.5 million was for punitive damages. An appeal of the verdict, which was subsequently reduced by the trial judge to $30 million, is pending before the 3rd U.S. Circuit Court of Appeals. Approximately $17 million of the $30 million was allocated to punitive damages. The plaintiff in the underlying case was the owner of a Washington, D.C., hotel that had contracted with Sheraton to run it. Sheraton apparently claims that damages may total $21 million based on a combination of the $17 million punitive award plus interest since 1999. A spokesman for Starwood Hotels & Resorts Worldwide, which now owns Sheraton, did not return a request for comment. According to a statement from LeBoeuf, Gammerman has asked for briefing on the jury’s finding that the firm committed malpractice by withdrawing a reliance-on-counsel defense to the punitive claim. The 720-lawyer firm expressed confidence in its statement that it would succeed in setting aside the jury’s verdict in Sheraton Corp. v. LeBoeuf Lamb Greene & MacRae, 605688/01. 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 statement released Tuesday, Starwood’s 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.” As initially framed 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 in Delaware. Judge 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. Gleason, who was chief policy analyst for U.S. Senator Hillary Rodham Clinton’s 2000 campaign and issues director for former Bronx Borough President Fernando Ferrer’s 2001 campaign for the Democratic mayoral nomination, said that his leaving LeBoeuf had nothing to do with the malpractice lawsuit.

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