With a long-awaited $158.6 million dairy class action settlement finally agreed upon, and a bankruptcy judge in California certifying a class of former employees seeking to pursue claims against Howrey, a trustee for the defunct Am Law 100 firm’s estate is now seeking information on an assignment that Howrey sought to pursue after its 2011 dissolution.
Last week Howrey bankruptcy trustee Allan Diamond of Diamond McCarthy filed papers with U.S. Bankruptcy Judge Dennis Montali in San Francisco seeking information from James Monroe and Robert Best Jr., both of whom were key local political players that signed a legal services contract with Howrey worth up to $15.5 million if the firm was successful in creating a municipal power grid in upstate New York.
The Am Law Daily reported in May 2011 on Howrey’s effort to continue its work representing the Alliance for Municipal Power (AMP), an organization that pushed for the creation of the North Country Power Authority (NCPA), a public utility system for 24 municipalities in Franklin and St. Lawrence counties adjoining New York’s northern border with Canada.
Howrey, which had formally dissolved in March 2011, found two of its most senior lawyers caught in the middle of a power play between competing interests seeking to either scrap the contract with the firm or keep it intact while moving forward with the formation of the NCPA, according to our previous reports. Howrey, which had just began bankruptcy proceedings at the time, claimed that it could proceed with the work necessary to bring about the NCPA, citing in part the increased legal costs the municipalities might face if they sought to retain another firm.
But last year The Am Law Daily reported that the lights finally went out on the NCPA, seemingly ending efforts by the Howrey estate to score a payday for its work on the scuttled power plant project. A potential fee claim might now be revived based on the ex parte application filed by Diamond last week seeking documents from Best and Monroe related to Howrey’s work on behalf of AMP and the NCPA.
“The Trustee believes that Howrey may have a substantial claim for fees from either one or both of these entities, their constituents, or their successors for the extensive legal work [the firm] performed relating to the creation of a municipal power authority in northern New York,” writes Diamond in the filing.
Diamond, who served as litigation counsel to Diamond McCarthy partner Sheila Gowan in her role as trustee in the bankruptcy of now defunct Dreier LLP, was chosen as trustee for the Howrey case in October 2011. Diamond, whose firm has offices in Denver, New York, and Texas, noted at the time of his appointment that the Howrey bankruptcy would get litigious.
Diamond was out of the office Wednesday and unavailable for immediate comment about how much he might seek for Howrey’s work for AMP and the NCPA, which began in 2007.
However, in an interview with The Am Law Daily last week about the Howrey estate’s get-tough effort to recover tens of millions of dollars from former partners, Diamond reiterated his plans to monetize the former firm’s contingency fee cases to the extent that he still can. (An interim report filed this month by Diamond lists Howrey’s contingency fee cases and other potential recoveries for creditors.)
The filing made last week by Diamond seeking information from Monroe and Best, which has already been approved by the bankruptcy court, notes that Howrey would be paid a contingency fee as part of the costs included in the bond that would have eventually been issued to fund the construction of the power plants. Diamond claims that Howrey could also “demand reimbursement from AMP for fees and expenses actually incurred by Howrey in the event” that the NCPA did not move forward. The filing further states that by January 2011, Howrey’s fees and expenses invested in the matter totaled $3.2 million.
Monroe, a past president of AMP and former chairman of the NCPA, did not immediately respond to a request for comment. Nor did Best, an NCPA board member who also once chaired AMP.
Former Howrey litigation partner Robert Green Jr., who is now retired after serving as a member of the firm’s dissolution committee, says that the “fee agreement will determine whether [the counties] have any obligations” to pay the bankrupt estate. Green, who is based in Washington, D.C., adds that he last spoke about the matter with representatives for Howrey’s trustee in October 2011. He notes that it wouldn’t be appropriate for him to comment publicly on what he thinks the municipalities should pay.
A phone call to former Howrey of counsel Kenneth Anderson, who along with Green took the lead on the firm’s NCPA work, was not immediately returned. Anderson, who is semiretired in the Baltimore area, has not joined a new firm.
Diamond McCarthy litigation partners Jon Beatty, Andrea Kim, Stephen Loden, and Andrew Ryan are working with bankruptcy partners Eric Madden, Howard Ressler, and Jason Rudd in representing Diamond in his role as trustee in Howrey’s bankruptcy case. Local counsel is being provided by Eric Nyberg and Chris Kuhner, name partners at Oakland-based bankruptcy boutique Kornfield, Nyberg, Bendes & Kuhner.
Montali, the judge overseeing the firm’s Chapter 11 case, certified a class of former Howrey employees last week and appointed Blum Collins to serve as class counsel on behalf of lead plaintiffs Gail Adams and Rami Dalal, according to sibling publication The Recorder. Blum Collins beat out New York’s Outten & Golden—which filed the first employment suit against Howrey in 2011—for the role. The Los Angeles–based firm has previously served as lead class counsel in class actions against defunct firms like Heller Ehrman and Thelen.
While it remains uncertain how much former employees might recover from bankrupt Howrey, the resolution this week of an ongoing antitrust suit against milk and dairy producer Dean Foods and several other defendants could bring millions more into the estate’s coffers for potential payments to creditors, according to a report this week by The Am Law Litigation Daily.
Last week Howrey was also named in a report released by Paul, Weiss, Rifkind, Wharton & Garrison that examined some of the legal ties between the firm and the leadership of the National Basketball Players Association.
Additional reporting by Sara Randazzo.