David Boies, the star antitrust lawyer who eviscerated Microsoft on behalf of the federal government, recently prevailed over a mob of competitors to win his next high-profile mission: a chance to act as lead counsel in the massive class-action lawsuit against Christie’s International Holdings Inc. and Sotheby’s Holdings Inc., the New York auction houses that are the target of a lengthy federal antitrust investigation.
It is an extremely high-profile and lucrative gig-so lucrative that some 66 lawyers recently thronged into a New York courtroom to bicker with a judge over the process that later got Mr. Boies the case. Peering over the bench at the anxious lawyers arrayed before him that day, the judge, Lewis Kaplan, grinned and said: “Are the Knicks playing here this afternoon?”
The Knicks were not, but Mr. Boies was. He might as well have been Tiger Woods. He played and he won. On May 26, after that hearing and a subsequent bidding war between 20 top law firms, Judge Kaplan stunned the lawyers by awarding the case to Mr. Boies, who had had virtually no involvement in the case up to that point. And now the shunned lawyers are grumbling that Mr. Boies waltzed in and seized control of a case they had worked on for months.
“With the appointment, Kaplan essentially wrote Boies a big, fat check,” said an attorney familiar with the case.
No one is saying he isn’t qualified for the job. It was Mr. Boies, after all, who recently picked the world’s richest man to pieces during a 20-hour cross-examination. The image of this man in a cheap suit and black sneakers toppling arrogant Microsoft executives like ninepins transformed him from just another brilliant corporate litigator into a media superstar.
What his peers mind is the way he leapfrogged them. His colleagues at the bar are jealous and angry, muttering that he traded on his stardom to win his latest case. And they are furious because he took it over from other lawyers who had spent months building it from scratch-on contingency.
“The case was moving along smoothly,” said Stanley Grossman, a partner at Pomerantz Haudek Block & Grossman who was one of the six interim lead counsels. “I think the class was well represented and we didn’t see any reason to be replaced.”
Many of the other attorneys said that it was highly unorthodox for a judge to choose a new lead counsel this deep into the process. “In March we thought the judge was going to stick with the designated interim counsel,” said Barry Barnett, of Susman Godfrey.
“I’ve never seen a judge decide he wants someone else to be in charge of a case after he has already appointed a committee of lawyers to run the litigation, and after those lawyers have run the litigation for a period of time,” said Melvyn Weiss, at Milberg Weiss Bershad Hynes & Lerach.
Moreover, the lawyers argue, Mr. Boies only won the case because of a highly unusual bidding process set up by Judge Kaplan-who, many of them are quick to point out, is a close and longtime colleague of Mr. Boies. In an unprecedented move, Judge Kaplan allowed a bunch of law firms with little involvement in the case to thrust themselves into a seemingly arbitrary bidding war for lead counsel- making it possible for Mr. Boies to suddenly ascend to the starring role.
“Without the auction process, Boies could not have been appointed lead counsel,” said Stephen Rabin, a partner at Rabin & Peckel who bid unsuccessfully for the case.
The lawyers had been assembling a case for buyers and sellers of art who allege they were overcharged as a result of price-fixing by Christie’s and Sotheby’s in the 1990′s. By February, six top law firms were already deeply involved in the case, representing thousands of people who bought and sold art through the auction houses after 1993. (The lawsuit, which was filed earlier this year, had arisen out of a Justice Department antitrust investigation into an alleged conspiracy between the two houses to fix commissions. It achieved class-action status in April.)
At the same time, however, 19 other powerful firms were angling for a piece of the action. Mr. Boies’ firm, Boies, Schiller & Flexner, was petitioning to take over the case as co–lead counsel with another firm-even though they had not yet been involved in litigating the case.
The Christie’s and Sotheby’s case is a plum-most of all because it appears to be a sure thing. “According to published reports, Christie’s has virtually conceded involvement in unlawful antitrust behavior,” said Mr. Rabin. “It makes the essential question in the case one of damages rather than liability.”
The case, therefore, all but guarantees the victorious firm millions of dollars in spoils, which is, to those who practice law, about the only thing that trumps a nice run of publicity. What’s more, it is one of those rarest of class-action lawsuits: one with rich clients. These people aren’t suing because there was lead in their tenement pipes.
In many ways Mr. Boies was right to see himself as a natural for the case. A cordial Illinois native whose preference for Sears suits sets him apart from his natty, preening colleagues, he had hit the trustbuster sweepstakes with his trouncing of Microsoft just as he was building his own firm. He had founded Boies & Schiller in 1997, after quitting Cravath, Swaine & Moore when the firm tried to make him drop George Steinbrenner as a client during a dispute between the Yankee principal owner and Major League Baseball. Since then, Boies & Schiller, based in Armonk, N.Y., has thrived, representing lucrative clients like the comic Garry Shandling and New York developer Howard Milstein.
To hear the lawyers who were already working on the auction house case tell it, they had made great strides, even engaging in settlement talks with attorneys for Christie’s and Sotheby’s. But in April, Judge Kaplan shocked and angered many of those lawyers by initiating a highly unusual auction process to select lead counsel. Attorneys would submit to the court sealed bids that estimated a dollar figure for damages they would obtain for the class. Any money obtained in excess of that would comprise the lawyers’ fees. Judge Kaplan’s idea was simple: He wanted to make the court, in his words, “more like a marketplace.” The judge reserved the right not to use the bids in selecting lead counsel.
Anxious lawyers-worried about being cut out of the case-urged the judge to abandon his plan. One lawyer, Christopher Lovell, was particularly annoyed. He had a natural claim to be lead counsel; he had some trophies on the wall himself. (Two years ago, he won a $1.03 billion settlement against Wall Street brokerage houses for alleged price fixing in the Nasdaq Stock Market.) He had also done reams of work on this case. He convinced the judge to allow the class-action lawsuit in the first place and represented the most aggrieved plaintiff in the case, Canadian scrap metal millionaire Herbert Black. Mr. Lovell’s affidavit opposing the auction process assailed Mr. Kaplan’s innovation as “a step down … for justice.”
But Judge Kaplan was unmoved. The process remained intact, and on May 26, after a mere 24 hours reviewing the bids, he awarded the case to Mr. Boies.
What remains particularly galling for the other lawyers is the apparent close relationship between Messrs. Kaplan and Boies. That association is typified, they say, by what happened just after Mr. Boies won the case. Judge Kaplan placed a personal call to Mr. Boies, they say, telling him he had won. Meanwhile, he left it up to Mr. Boies to fax the other attorneys. Some of those lawyers, many of whom had committed months of labor and tens of thousands of dollars to the case, learned they had been cut out only when they read about it in newspapers.
Judge Kaplan declined to comment on the case or on his relationship with Mr. Boies. He relayed a message to The Observer through his clerk, saying he “does not do interviews” but adding that he will be filing an opinion addressing his auction later this summer. For now, the bids are sealed, so his reasons for picking Mr. Boies are unclear. Mr. Boies, for his part, referred all comments to his partner, Richard Drubel, whose assistant told The Observer that he couldn’t comment because of a gag order from the court about the auction process.
Despite the anger of spurned lawyers, the auction process has its defenders. “You have a nearly perfect market,” said Stephen Gillers, a law professor at New York University. “The lawyers are all bidding against each other at the same time. You are likely to get a combination of high-quality lawyers at the lowest price, which is what [the clients] need.”
But others dismissed the auction as little more than a gussied-up patronage system, an old boys’ club in disguise. “Persons with relationships or other means of access to the courts can obtain [cases] they might not otherwise get,” said one top litigator. “Making the court the buyer of legal services virtually reduces the client to a point of irrelevance.”
It also takes power and money away from the lawyers.
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