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Anthony Falisi faced a bleak job market after graduating from New York Law School in 1993, so he took some advice from his father, a life insurance underwriter, and did some networking at an insurance trade convention. At that convention, Falisi says he ran into a guy whose father owned Examination Management Services Inc., which was at that time a $60 million Texas company without a general counsel. Falisi says he met his new friend’s father, John Utley, and Utley ended up offering a job to the wet-behind-the-ears lawyer. The pay was $30,000 a year, which even in 1993 was a lot less than Falisi had dreamed he would earn as a lawyer. But Falisi, a Staten Island native who also never expected he would live in Texas and like it, accepted Utley’s job offer. “Here I am, right out of law school, and I get a GC gig,” Falisi recalls. “I was scared. I was so green.” A dozen years later, despite some executive-suite turnover at EMSI, Falisi is still its general counsel, and his responsibilities have expanded significantly to also include, for instance, human resources. Utley, now retired in Plano, says Falisi proved in short order that he was capable, despite his youth and inexperience as a lawyer. Utley says Falisi progressed tremendously fast and is very smart. Prior to hiring Falisi, Utley says, he personally wrote a lot of EMSI’s contracts, and used outside lawyers for other work as infrequently as possible because of the expense. Utley says he wanted to hire a GC mostly to help him out with the contracts. Falisi says he continues to negotiate a lot of contracts — no fewer than 500 a year — but he also manages a wide range of litigation and deals, and completed a financial restructuring of the privately held company earlier this year. Falisi says he has worked on so many deals at EMSI that, he is proud to note, he had the skill to single-handedly negotiate EMSI’s recent acquisition of the Merrill Group, a claims investigation firm in Jacksonville, Fla. “I’ve been involved in a lot of deals with outside counsel for tens of millions of dollars, so one for a couple of million was a little more rudimentary for me,” says Falisi of the acquisition, which was announced in July. Irving-based EMSI started in 1974 doing mobile exams for insurance companies. Today, Falisi says, the company still does nondiagnostic collection of urine and blood samples for clients, but has expanded into several other areas. The company monitors drug testing for clinical trials; obtains records, such as medical records, motor vehicle records and criminal records, for insurance companies; and has a network of private investigators in 50 states who look into suspected fraudulent insurance claims, he says. “It’s disability claimants out mowing lawns, people who fake their deaths,” Falisi says. LOTS OF CONTRACTS Since Falisi, 36, joined EMSI right out of law school, his career path was directly in-house. During law school, he clerked for the Office of the Monmouth County Prosecutor in New Jersey, and interned with the New York Stock Exchange Arbitration in New York. He graduated from Rutgers College in New Jersey before graduating from law school. Falisi has worked through a lot of change and some upheaval at EMSI since 1993. The company has experienced considerable growth — Falisi says annual revenues totaled about $60 million in 1993, but are more than $200 million today. (Because the company is private, it does not have to file financial information with the U.S. Securities and Exchange Commission.) Much of the growth is attributable to acquisitions and business arrangements with contractors throughout the nation, Falisi says. There also has been change in the executive ranks. In 1999, sole shareholder Utley retired and the company recapitalized by selling a majority of its stock to an equity fund in New York, Carl Marks & Co. Inc., Falisi says. Keith Adkins, who had been the chief financial officer, became EMSI’s president. Adkins left in 2002. The current CEO, Mark Davis, has been with EMSI since November 2003. “I’m pretty much the only person who lasted,” Falisi says of the turnover. “I’m the only lawyer. I pretty much stayed out of the competitive environment.” In January, the company completed a voluntary out-of-court debt restructuring, and EMSI has new lending arrangements with some of its insurance company clients directly, Falisi says. He says Davis and some other executives own a minority of the stock. Falisi says he owns some preferred stock. Falisi writes a wide range of contracts. “The real contract work comes up in the customer contracts I negotiate. Then there are the agreements I negotiate with our vendors — software licenses — various agreements with competitors to sometimes jointly provide a service, and the mergers and acquisitions-related work,” he says. The company’s clients include insurance companies, companies in a regulated industry, such as utilities, airlines and railroads that would have a contract for EMSI to do drug or alcohol testing, and some government agencies. “Or it’s a bread-and-butter employer, say a law firm [that] has a drug-testing policy,” Falisi says. In addition to the contract work, Falisi says he manages a considerable amount of litigation. Some is routine, such as suits filed by individuals who allege they were injured during a blood draw or claim invasion of privacy in connection with an insurance investigation. But some is more serious to the company’s future. In 2004, the company filed a suit in state court in Dallas against former CEO Adkins, alleging in its petition that he violated a term of the employment agreement he signed in 1999 by soliciting EMSI employees in 2004 to join a new company he had formed, Nationwide Claims Investigations, in Richardson. In EMSI Holding Co., et al. v. Keith Adkins, et al., EMSI brought breach of contract and tortious interference causes of action against Adkins and Nationwide Claims Investigations, and sought a temporary restraining order to prevent the alleged solicitation. Falisi and EMSI’s attorney on the suit, Richard Krumholz, a partner in Fulbright & Jaworski in Dallas, say the suit settled prior to the TRO hearing. Falisi says the settlement will allow Adkins to solicit and hire at a point in the future. Adkins’ attorney in the suit, Stuart Johnston, a partner in Vinson & Elkins in Dallas, did not return two telephone calls seeking comment before press time on Aug. 31. A telephone listing for Adkins in New Mexico was not in service. Krumholz, who says he has handled litigation for EMSI for about five years, believes Falisi is a skilled litigation strategist. “He is not a client who goes in blind,” Krumholz says. “That’s unusual. Most times, there’s a heated issue and the company sues and figures it out later and doesn’t want to figure it out on the front end.” Falisi’s strategic insight was helpful in one major suit pending against the company, Krumholz says. In 2003, Falisi and Krumholz say, the company was in a dispute with a contractor in Michigan. Thinking the contractor might sue EMSI in state court in Michigan, Falisi decided to file a declaratory judgment suit in federal court in Dallas in an effort to keep any court battle in Texas, but not immediately serve the defendants. The contractor did file suit in Michigan, but because EMSI had earlier filed Examination Management Services Inc. v. Partners for Insurance, LLC, et al., in the Northern District of Texas, the suit will be tried in Texas. “We filed it just days before the Michigan case, and as a result, we convinced the court the Texas suit should go forward,” Krumholz says. “Now [we're] fighting in our back yard.” In the Plaintiff’s Original Complaint in the suit, EMSI alleges breach of contract and alleges that the 2001 independent contractor agreement EMSI has with the defendants should apply to any disputes. In the Defendants’ Original Answer and Affirmative Defenses, the defendants deny EMSI’s allegations, and allege the independent contractor agreement is a franchise agreement according to “the Michigan Franchise Investment Law.” The defense lawyer for Partners for Insurance, Marty Brimmage, a partner in Haynes and Boone in Dallas, declines comment. Falisi says the issue at stake is vitally important because EMSI does not grant franchises to its independent contractors. He says it’s more efficient for EMSI to negotiate independent contractor arrangements because then the company doesn’t need to worry about regulating its independent contractors or collecting a fee to market for them. “If we like you, like the way you do business, we let you use our name,” Falisi says. He also notes that many of the company’s independent contractors in small towns do work for its competitors as well, so franchise arrangements wouldn’t work in that situation. Falisi says the company has about 1,500 employees, including call-center workers and private investigators, and about 7,500 independent contractors providing coverage in 50 states. HANDS-ON GC John Browning, another outside lawyer for EMSI, says Falisi’s foresight several years ago saved the company from the problems of tort litigation filed by plaintiffs who alleged they were harmed by the diet-drug combination fen-phen. “To Anthony’s credit, they could have found themselves embroiled in some major litigation a few years back … Anthony got indemnity agreements drafted,” Browning says. Falisi says the indemnity agreements were with Jenny Craig Inc. in connection with paramedical work the company provided at Jenny Craig Weight Loss Centers at a time when doctors were prescribing fen-phen to people for assistance in losing weight. As a result of the indemnification agreements, Falisi and Browning say, EMSI was not liable and did not have to defend itself in the fen-phen multidistrict litigation suit in federal court in Philadelphia. “It worked well for us,” Falisi says. Browning, who says he has represented EMSI in various suits ranging from personal-injury suits filed over alleged negligent blood draws, to contract disputes with technology companies, to breach of contract suits filed against vendors, says Falisi is involved in the progress of the litigation. “Anthony is very hands-on, participating in everything from formulating discovery requests to the opposing side to discussing trial strategy,” Browning says. “A lot of his value to the company is managing litigation; it’s also keeping an eye on the bottom line, the costs.” Keith Lieberman, chief executive officer at EMSI, says Falisi is effective as a GC because he thinks like a businessman and gives practical answers. Lieberman says he’s also impressed that Falisi can efficiently process “a lot of little nuisance claims” as well as manage important litigation. Each day, Lieberman says, he and Falisi talk about many issues, and he likes the fact that Falisi is a quick study who figures out the best way to protect the company while getting a deal done. “We crank out a lot of contracts. Pardon my French [but] I’ve never had the ‘oh, shit, what the hell were you thinking of Tony?’ reaction,” Lieberman says. Lieberman also says that Falisi keeps the company’s outside counsel costs down, and usually calls outside lawyers with a “rifle-shot question” when he doesn’t know the answer himself. “Instead of a massive legal bill, we get a very specific response to an area of the law he doesn’t know,” Lieberman says. Falisi, who is divorced, says he sometimes works a regular 9-to-5 day, but occasionally — like last fall when he was negotiating the financial restructuring — works 80-hour weeks. In his spare time, his passion is rock concerts. Working at a private company has its advantages, Falisi says. He’s thankful he doesn’t have to worry about the requirements of the Sarbanes-Oxley Act of 2002, or SEC filings. And from a public relations standpoint, he says, “You can get away with not answering questions.” He says his audience is the lenders, the insurance companies and the board of directors. “For me, it’s just a handful of people to make happy,” he says. “In a public scenario, you’ve got a lot of problems on your hands.”

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