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June 26, 2008 4:53 PM

NBA Wants Disgraced Former Ref to Pay Legal Fees

Posted by Brian Baxter

UPDATE: In light of the Timothy Donaghy scandal, the NBA has appointed a retired U.S. Army general to oversee its referee operations.

Wachtell, Lipton, Rosen & Katz litigation partner Lawrence Pedowitz bills $875 an hour.

That figure came to light in a filing with U.S. district court judge Carol Amon in Brooklyn late last week. The National Basketball Association is seeking restitution of $1,395,104.89 in legal expenses from  former referee Timothy Donaghy, who is set to be sentenced in July on felony fraud charges.

NBA commissioner David Stern hired Pedowitz last summer to conduct an internal investigation of the league's referee program after Donaghy was discovered to have engaged in illicit gambling. In a five-page letter to Judge Amon, league lawyer Paul Shechtman of New York litigation boutique Stillman, Friedman & Shechtman wrote that the Donaghy case "has been an unwelcome study in crisis management for the NBA." The league argued that the former ref, who pled guilty to fraud, should have to bear the cost of the Wachtell investigation.

But at a hearing on Wednesday, Judge Amon said Donaghy would likely not have to reimburse the NBA. Donaghy's lawyer, John Lauro of the Lauro Law Firm, told The Am Law Daily that Judge Amon did ask the NBA to provide additional information about its legal bills, specifically with regard to the time league lawyers spent responding to the government's criminal investigation of Donaghy.

The league itemized the following legal expenses as part of the restitution request filed with Judge Amon:

Wachtell Lipton: $764,237, of which $516,971.25 was for interviews that Wachtell lawyers conducted with 57 referees as part of the internal investigation. In addition to Pedowitz's $875 hourly rate, the NBA's submission cited a $750 hourly fee for litigation partner David Anders and a $700 an hour rate for litigation partner Jonathan Moses. Wachtell litigation associates Adir Waldman, Won Shin, Joshua Naftalis, and Jonathan Goldin billed hourly rates ranging from $380 to $580. Wachtell paralegals billed at an hourly rate of $175. Even if the NBA isn't reimbursed for the cost of Wachtell's internal investigation, Judge Amon could authorize restitution for the $247,265.75 the NBA paid the firm for representing the league in the government's investigation of Donaghy.

Arkin Kaplan Rice: The NBA paid the New York general practice firm $36,805 to represent the league in the federal criminal probe of Donaghy's illicit gambling activities. Arkin Kaplan worked with Wachtell in "collecting, reviewing, and producing documents to the government; preparing NBA employees for interviews with the government; accompanying employees to those interviews; and attending court proceedings." Founding partner Stanley Arkin billed the league at an hourly rate of $800. Arkin Kaplan partner Sean O'Brien billed $550 an hour, litigation counsel Joseph DiBlasi $525 an hour, and associate Douglas Schneider $225 an hour. Arkin Kaplan paralegals billed at $150 per hour.

In his letter to Judge Amon, NBA lawyer Shechtman wrote that the NBA was being conservative in its restitution request. The "total costs and expenses to the NBA that were directly caused by Donaghy's crimes," were not included in the filing, Shechtman says. The league did not include attorneys' fees and expenses to Stern's former firm, Proskauer Rose, which advised the NBA on employment and labor issues related to Donaghy's criminal actions. (Shechtman also cited costs related to public relations consulting and crisis management strategies implemented by the league as a result of Donaghy's misconduct.)

Also not included in the NBA's filing were fees paid to Gregory Magarity, a solo practitioner in Philadelphia and former chief of the criminal division in the Philadelphia U.S. attorney's office. Magarity represented members of the National Basketball Referees Association in interviews with Wachtell lawyers.

"We scheduled a number of interviews a day over several weeks starting last September," says Magarity, reached by phone in his Philadelphia office. "I'm not surprised by the fees, all the lawyers involved did a terrific job." (Magarity declined to disclose his fee, which is being paid by the league.)

The league's filing also requested reimbursement for $577,312.89 in salary and expenses paid to Donaghy over the past several seasons, as well as $16,750 paid to two NBA employees who spent hours reviewing tapes of games in which Donaghy was one of the referees. But Judge Amon expressed doubt at Wednesday's hearing about whether such costs were even recoverable. (According to Shechtman's submission, Donaghy earned $358,431.62 in his last year officiating games for the league, and the recently divorced former referee's troubles began when he tried to extricate himself from substantial gambling debts.)

A call to Shechtman was not returned by the time of this posting; there was no mention of his fees in the documents filed with the court. The league held its annual draft on Thursday night at Madison Square Garden in New York.

Download the NBA's restitution request and attached billing records for Wachtell Lipton and Arkin Kaplan Rice.

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