The Firms

June 14, 2011 7:20 PM

Power Play: Howrey in Middle of New York Utility Feud

Posted by Brian Baxter

Board members of a fledgling public utility in upstate New York are moving to oust their chairman for, among other things, challenging Howrey--whose slide into dissolution is detailed in the June issue of The American Lawyer--over its efforts to retain a multimillion-dollar legal services contract with the agency.

The Am Law Daily reported last month on Howrey's efforts to secure a contract worth up to $15.5 million to do work for the the North Country Power Authority (NCPA), which was formed last year to serve 24 municipalities in St. Lawrence and Franklin counties along New York's border with Canada.

Envisioned as a means of cutting electric rates in one of New York's poorest regions, the NCPA is the product of two decades of work by by a group called the Alliance for Municipal Power (AMP). Howrey has worked with the AMP for the past decade, and many of those involved in the process that resulted in former Gov. David Paterson signing the NCPA legislation last October credit the firm with helping to navigate a thicket of bureaucratic hurdles and resolve disputes with multinational electric and gas utility National Grid.

But as the NCPA has begun to take shape, Howrey's role in the project has became more controversial. After The Am Law Daily reported last month about the defunct firm's efforts to roll over its AMP contract into a potentially more lucrative pact with the NCPA, members of the utility's board began pushing to dump chairman James Monroe, who was appointed to the post by Paterson in December.

The board--which by law is supposed to have nine members--only has four, including Monroe, after a fifth resigned last month. On June 7 Monroe's three fellow board members sent a letter to current New York Gov. Andrew Cuomo, calling on him to replace the chairman because, they said, his decision to leak confidential internal documents has left the NCPA unable to negotiate or carry out its duties.

"Monroe's conduct has resulted in a repeated breach of confidentiality severely compromising our negotiating powers," said the three board members--Cindy Gale, Frederick Morrill, and Marie Regan--in their two-page letter to Cuomo. "His unethical behavior and comments to the Board members directly violates his oath of office. As an example, the chair actually sent to the press a confidential memorandum from our attorney and addressed only to the Board."

The trio also accuse Monroe of "negative and divisive leadership," claiming that he "usurped the power of the Board" and should be removed immediately by the governor, who has the power to appoint NCPA board members. (Morrill did not respond to a request for comment, Regan declined to comment, and someone answering Gale's phone simply hung up when reached; Cuomo's office did not respond to a request for comment.)

A former civil engineer and one-time mayor of Canton, N.Y., Monroe, 78, is a retired State University of New York at Canton physics professor, who also has worked as a Chinese interpreter for the National Security Agency and once served as executive director of the New York State legislature's energy commission. As a longtime proponent of a regional power authority, Monroe was thrilled when the NCPA finally became a reality last year. His excitement has subsided considerably since then.

"I'm an energy guy, and I had all these ideas and programs for rate structuring and helping get power that's cheaper than what we're buying right now," he says. "It would have been great if we could have kept the lawyers' paws out of it. But they all want to be on the payroll."

Monroe acknowledges Howrey's hard work for AMP, which he once chaired, but claims he began to change his view of the firm earlier this year when firm lawyers began to interfere in NCPA business before the nascent utility had even called its first meeting.

Specifically, Monroe cites an exchange he had in late January with Howrey litigation partner Robert Green, Jr., now a member of the firm's dissolution committee, prior to an orientation meeting for all new NCPA board members and AMP's executive committee.

Monroe says the presentation by Green--which came at about the time that Howrey's slide toward dissolution began to accelerate--was aimed at convincing the attendees that they had to stick with Howrey as the AMP faded away and the NCPA began to get rolling. A proposed contract between Howrey and the NCPA, previously obtained by The Am Law Daily, could pay the bankrupt firm between $10.5 million and $15.5 million.

Despite being chairman of the NCPA, Monroe says that he was not asked to speak at the meeting. Howrey subsequently presented a bill for its services on behalf of the AMP from April 2001 through January 2011 that ended up totaling nearly $3.2 million, according to a copy of the firm's billing records.

Monroe says that he initially had no problem with that bill. At the same time, he says he also wanted to discuss the possibility of having the NCPA seek new bids for its legal work rather than simply being locked into a contract struck between the AMP and Howrey. (The NCPA needs outside counsel in order to complete a required environmental study and help the entity obtain the $100 million in financing necessary for it to become a fully functional utility and to help negotiate to acquire equipment.)

Monroe says that he believes the NCPA is independent of the AMP, and thus has no obligation to continue using Howrey. He claims that other NCPA board members opposed his idea seeking requests for proposal from other firms to handle the utility's legal work, as did the board's lead local counsel, Peter Lekki of Lekki Hill Duprey & Bhatt. Lekki is owed $250,000 under a contract he has with the AMP, according to Monroe, who adds that Lekki has advised the NCPA's board that they must sign a contract with Howrey or the firm could sue. (Lekki did not respond to a request for comment.)

"Howrey had an existing relationship with the AMP organization, which was the predecessor to the NCPA," says Robert Poyer, an associate at Syracuse's Hancock Estabrook, which is on retainer as secondary counsel to the NCPA through the Lekki Hill firm. Poyer, who declined to comment on the NCPA's board battle, says that Howrey "more or less" expected to continue its work as the NCPA took shape.

Monroe also accuses other NCPA and AMP board members of having conflicts of interest, citing a draft resolution by Howrey that would have replaced him as CEO of the NCPA. The AMP's current chairman Robert Best, Jr., a longtime friend of Monroe's turned recent critic, would become deputy CEO of the NCPA under that resolution.

On June 6, Best, who did not respond to a request for comment, announced that the board had passed a nonbinding resolution seeking Monroe's ouster, according to the Watertown Daily Times. Best told the paper that Monroe had been overruled on the Howrey contract for the NCPA. "Law firms dissolve all the time," he said. "They've informed us that they would be able to pull off this deal."

So far, Howrey has yet to be paid for its work on behalf of the AMP, and the uncertain status of the NCPA's board has prevented a new contract from being signed. Monroe intends to do everything in his power to prevent that from happening.

"This whole thing is so incestuous and it's stunk from day one," Monroe says. "I've done everything to try and straighten it out. I have no motive and I'm not in any way going to be reimbursed. This is a voluntary job, it doesn't pay anything, and the only thing I want to do is uphold my fiduciary duty."

Some municipalities in St. Lawrence and Franklin counties fear they could end up owing millions to Howrey in a possible breach-of-contract suit, according to the Daily Courier-Observer. Other local leaders are considering pulling their support for the NCPA project because of "chaos" among the board and dissension over the deal with Howrey, the Watertown Daily Times reported this week.

Best and other AMP and NCPA board members pushing for Monroe's removal claim that he breached his duty to the NCPA by providing documents to the press. While Monroe's status at the NCPA is now at risk, New York's independent public information watchdog says he has the law on his side.

"Whether it is good or wise or ethical to disclose, is often separate and distinct from whether it is contrary to the law to do so," says Robert Freeman, executive director of the New York State committee on open government. "It may not be in the best interest of the authority, but there is no statutory prohibition regarding disclosure."

Howrey's Green did not respond to requests for comment, nor did of counsel Kenneth Anderson, who is also handling NCPA-related work for the firm. Wiley Rein restructuring chair H. Jason Gold, who is advising Howrey on its recently converted voluntary Chapter 11 case, declined to comment on specific client matters while the firm is in bankruptcy. (Former Howrey managing partner and CEO Robert Ruyak recently filed a declaration in the case outlining the firm's financial situation.)

Helping Monroe in his battle to stay in control at the NCPA are members of his own family. Four of his seven children are attorneys, one of whom is an associate at Boies, Schiller & Flexner in Albany. All are advising their father in their personal capacity, not on behalf of their employers.

"I'm not a flight person, I'm a fight person," Monroe says. "And I'll fight these people until I lose."

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