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December 10, 2008 7:14 PM

Webb-less in Chicago: Where Was the Star Litigator At Blago's Bond Hearing?

Posted by Brian Baxter

UPDATE: The Wall Street Journal is reporting that Blagojevich has not paid $500,000 in legal bills due Winston & Strawn.

High-powered Winston & Strawn litigators Dan Webb and Bradley Lerman were not at Illinois Gov. Rod Blagojevich's side when he appeared at a bond hearing on Tuesday. Blagojevich instead tapped Sheldon Sorosky, a lawyer from two-partner Chicago litigation shop Kaplan & Sorosky.

Whither Winston & Strawn?

Sources tell The Am Law Daily that fee disputes and a potential conflict might keep the firm on the sidelines in the latest dirty politics scandal.

In the past three years, campaign finance reports show that Blagojevich has paid over $2 million in legal fees to Winston & Strawn. The payments began after law enforcement authorities began closing in on a ring of fundraisers close to the governor, including former Ungaretti & Harris partner and Democratic National Committee finance chairman Joseph Cari, Jr., in September 2005.

That month Cari pled guilty to attempting to extort $850,000 from a private equity firm seeking state pension fund work. Cari's lawyer, Sidley Austin litigation partner Scott Lassar, says that his client has cooperated with prosecutors and testified against Blagojevich in the trial of fellow Democratic fundraiser Antoin "Tony" Rezko. (Rezko was convicted in June on fraud and money laundering charges.)

Lassar, a former U.S. Attorney for the Northern District of Illinois from 1997 to 2001, says he's not sure yet if Cari will be called upon to offer testimony against the governor in the investigation that unfolded yesterday. Cari is named as a government cooperator in the 76-page criminal complaint against Blagojevich and the governor's chief of staff, John Harris, released on Tuesday.

Prosecutors have also requested that Cari's sentencing on the extortion plea be delayed, a likely indicator that he will be called upon to provide future testimony against the governor.

WINSTON'S WINDFALL

The downfall of Cari and Rezko, along with the subsequent legal troubles of Illinois businessman Stuart Levine (a cooperator in the government's case against Rezko) and former Blagojevich chief fundraiser Christopher Kelly (indicted a year ago on tax fraud charges stemming from a gambling debt), led prosecutors to begin looking at Blagojevich. (The governor was known as "Public Official A" in court documents filed by prosecutors in the four proceedings until U.S. district court judge Amy St. Eve revealed his identity in a February ruling in the Rezko case.)

Given the intrusive probes by prosecutors into Blagojevich's  administration, the governor needed a firm adept at handling politically-sensitive investigations. He chose Winston & Strawn, a firm led by former four-time governor of Illinois James Thompson, which represented another former Illinois governor, George Ryan, Sr., who was convicted on corruption charges after a 2006 trial.

In 2006 alone, the firm billed Blagojevich's campaign fund--Friends of Blagojevich--for $887,534 in fees. That was followed by $965,352 in fees for 2007. The payments were disclosed as part of periodic campaign finance reports that Blagojevich filed with the state's Board of Elections.

The expenditures were legal, says Skadden, Arps, Slate, Meagher & Flom campaign finance expert Kenneth Gross, because they related to Blagojevich's duties as an officeholder.

The National Law Journal reported in May that Winston & Strawn's Lerman--a former federal prosecutor who had deferred to Webb on the firm's defense of Ryan--was leading a team from the firm handling Blagojevich's legal affairs. None of the campaign finance reports filed by Blagojevich itemized the type of legal services Winston & Strawn was providing for the governor.

Lerman told the NLJ that the firm had only "a very small team" working for Blagojevich. The paper reports that Webb, who was busy this year with four trials, including the guilty plea of former Detroit mayor Kwame Kilpatrick on obstruction of justice charges in September, did not work on the Blagojevich matter. (Neither Lerman nor Webb responded to requests for comment from The Am Law Daily.)

But that "very small team" seems to have generated enough billables to upset folks in the governor's office. Numerous sources, who asked not to be identified, tell The Am Law Daily that there were serious fee disputes between Winston & Strawn and Blagojevich. In 2007, Blagojevich's campaign fund delayed reporting certain legal expenses that it was disputing.

It comes as little surprise then that neither Webb nor Lerman appeared with Blagojevich at his bond hearing on Tuesday, given this history and the fact that Winston & Strawn's representation of Ryan became a largely de facto pro bono endeavor that is reported to have cost the firm at least $10 million, if not double that amount.

POTENTIAL CONFLICT

Winston & Strawn senior chairman Thompson declined to comment on fee disputes between the firm and Blagojevich when reached by phone on Wednesday afternoon. But Thompson did confirm Webb's representation of longtime Illinois Republican fundraiser William Cellini, which might be the final nail in any coffin for a potential Winston & Strawn defense of Blagojevich.

"Whether [Cellini is] a conflict or not, I have no idea," Thompson says. "And whether [Webb] would ever contemplate representing the governor, I have no idea, so we have no further comment."

One well-connected Windy City lawyer who asked not to be identified by name, says Webb's representation of Cellini is an ironclad conflict precluding any potential retention in the Blagojevich case. (Cellini was indicted on October 30 on federal corruption charges.)

"There's too much history there. Cellini fundraised for Rod, there was testimony about them in the Rezko trial, and [Cellini] could even be a potential witness," the lawyer says. "Even if Rod did retain Webb, I think it would be almost a certainty that [U.S. Attorney Patrick] Fitzgerald would object."

And what of Sorosky?

"He's not a big-time lawyer, and if you're going up against Fitzgerald and the federal government, that's exactly what you're going to need," says another lawyer who requested anonymity. "Every dollar is worth it."

One lawyer rumored to be a candidate for Blagojevich's defense team--Michael Monico of Chicago's Monico, Pavich & Spevack--tells The Am Law Daily that while he has been contacted by representatives of the governor, he's not sure he can take on the case because he represents Kelly, the former Blagojevich fundraiser set to go to trial early next year.

Like his former lieutenants who've fallen prey to federal indictments, Blagojevich's legal options look increasingly limited.

Tomorrow: An analysis on whether Blagojevich will be able to tap into his campaign funds to finance his criminal defense.

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