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March 26, 2012 5:47 PM

Court Filings Show Howrey Trustee Weighing Claims Against Former Firm Partners

Posted by Sara Randazzo

Howrey bankruptcy trustee Allan Diamond is taking a hard look at the work performed by a committee of former Howrey partners responsible for winding down the firm's affairs in the wake of its collapse—and he may not like what he sees, according to recent court filings.

Diamond, who was appointed to the trustee's post in the Chapter 11 proceedings about six months ago, is seriously weighing whether to bring adversary claims against the Howrey dissolution committee and its five members, those filings show. 

A fee request filed with the bankruptcy court on March 22 states that attorneys with Diamond's Texas-based firm Diamond McCarthy have conducted an "extensive review" of former dissolution committee member Robert Green's e-mails related to work winding down Howrey "to investigate whether the estate has claims against members of the Dissolution Committee," scoured the committee's invoices, and met several times to discuss initiating litigation.

Diamond McCarthy partner J. Benjamin King, who is among those working on the Howrey case, confirmed Monday that the trustee's team is exploring the possibility of suing dissolution committee members. King characterized discussions on the subject as "very preliminary" and said he "can't really speak to them or say anything" at the moment.

So far, the 72-page fee request (PDF) shows, those discussions have consumed nearly 40 hours of Diamond McCarthy's time at a cost of roughly $12,000.

Martin Cuniff, a former Howrey partner and dissolution committee member who is now with Arent Fox, was unaware that the trustee had discussed filing such claims until The Am Law Daily contacted him Monday.

After reviewing Diamond's filings and speaking with other former committee members, Cuniff said he believes the relevant section of the fee request is connected to the renewal of the committee's directors and officers liability insurance.

"In the decision-making process to renew it, [Diamond] had to figure out what was going on" in terms of whether any claims had been filed in connection with the committee's work, said Cuniff, who added that he believes Diamond ultimately renewed the policy.

The other four members of Howrey's dissolution committee, which disbanded once Diamond took over the day-to-day operations of the bankruptcy proceeding, did not immediately respond to requests for comment. They are: former Howrey chair Robert Ruyak, now at Winston & Strawn; Gary Fischman, also at Winston & Strawn; Gregory Commins, Jr., now at Baker & Hostetler; and Green, who has not yet landed at another firm.

Diamond's March 22 fee filing lists a total of $171,852 in time and expenses for February. During that time, he and his team zeroed in on several key issues related the bankruptcy, including: recovering contingency fees tied to cases that have migrated to other firms; closing a former Howrey data center; auditing the firm's pension plans; firming up the estate's use of Citibank cash collateral; and meeting with appraisers to asses the value of firm art work. 

King also spent a few hours editing a statement by Diamond regarding the estate's position on pursuing so-called Jewel v. Boxer claims against former Howrey attorneys over work they took with them to their new firms. King said the statement referred to in the filings is not public.

Items covered by the $8,503 in expenses included trips by Diamond McCarthy lawyers to San Francisco and Washington, D.C., and a $26 fee incurred in connection with the sale of a Howrey-owned van.

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This sounds like run-of-the-mill stuff. Why the alarm?

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