Once an outpost of Boies, Schiller & Flexner, four-year-old Stone & Magnanini is making a name for itself as a go-to shop for health care qui tam suits under the False Claims Act. Conflicts with Boies Schiller’s pharmaceutical and health care clients led David Stone and Robert Magnanini to go out on their own in 2009, and last year they reaped the dividends.
Those included a $360 million settlement in July from McKesson Corp., the nation’s largest pharmaceutical wholesaler, in a major case joined by the U.S. Department of Justice. The suit began in 2004 after a pharmacy auditor uncovered evidence the company was manipulating a key price index used to determine the cost of prescription drugs sold to government health care programs.
The Short Hills, N.J., firm also helped GlaxoSmith­Kline PLC sales representative Michael LaFauci join a massive False Claim Act suit against the drug maker over alleged kickbacks and illegal off-label marketing of drugs, including the prescription asthma drug Advair. Although gaining a whistleblower’s share of false-claim recoveries often depends on being the first to bring suit, the firm helped LaFauci join the case even though five other insiders beat him to the courthouse.
Moreover, he managed to keep his job with Glaxo as the suit progressed and to gather additional evidence against his employer. LaFauci’s charges ultimately were subsumed into the Justice Department’s wide-ranging $3 billion criminal and civil settlement with Glaxo.(LaFauci’s share of the settlement amount was not disclosed.)
Beyond false-claims cases, Stone & Magnanini helped a small New York software maker named Bascom Global Internet Services Inc. win an $8 million settlement from AOL Inc. of infringement claims over Bascom’s patented technique for filtering objectionable online content. Yahoo Inc. and Time Warner Inc. had settled similar claims earlier, and the law firm now is helping Bascom oversee a licensing program for additional Internet companies that use Bascom’s filtering method.
Although Stone & Magnanini’s achievements have won it little recognition until recently, Stone cites a quip by former U.S. District Judge Herbert Stern to describe the firm’s approach.
"The best lawyer is the one who comes in and puts a shiv in your back and bleeds you out and you never know he was there," said Stone, managing partner of the nine-lawyer firm. "That’s kind of what I’ve tried to be like my whole life."
The cases you don’t take are more important than the cases you do.
The practice of law is about influencing people as much as it is about making legal arguments.
— David Stone, Stone & Magnanini
Litigation is not about vindication or revenge. It is a tool to obtain practical business results for the client.
— Robert Magnanini, Stone & Magnanini