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BEHIND THE NEWS: Legal conflict alleged in Emmis CFO lawsuit

January 22, 2007

Ice Miller is a legal powerhouse and lands plum assignments all the time. So few were surprised when Emmis Communications Corp. last month hired the firm to lead its legal assault on industry heavyweight CBS Radio.

But Walter Berger-the man at the center of the legal tangle-sure was. Berger had been Emmis' chief financial officer before he took the same post a year ago at New York-based CBS Radio. The departure rankled Emmis, and over the summer it sued CBS, charging tortious interference with his contract.

Why the surprise? Because Ice Miller is the same law firm that represented Berger when he negotiated his Emmis contract. The latest version, negotiated in February 2005, was to have extended his employment into 2009.

Three days after Christmas, court records show, Berger, 50, dashed off a letter to Ice Miller demanding that it withdraw from the assignment.

"The contract was the subject of extensive negotiation, and I shared numerous confidences with your firm during the course of negotiations," Berger said in the letter.

"It is inconceivable to me that your firm now has chosen to represent Emmis in litigation involving this very contract. Your representation constitutes a conflict of interest, and I am concerned that my rights may well have been violated."

As you'd expect, Ice Miller and Emmis have an entirely different take.

"Emmis did a full assessment of a potential conflict before engaging Ice Miller," said Kate Snedeker, an Emmis spokeswoman. "We're confident Ice Miller's representation of Emmis is appropriate."

Ice Miller argues, among other things, that there's no conflict because the sole defendant is CBS Radio, not Berger himself.

Further, according to Ice Miller, that Berger breached his contract is a "given." It suggests the crux of the suit is whether Emmis waived its right to enforce the pact-CBS says it did, asserting that Emmis CEO Jeff Smulyan gave his OK for Berger to take the job. Ice Miller says such questions have no bearing on negotiation of his contract.

"If there is no real relationship between the issues, one can hardly figure any scenario where there's a real problem," Ice Miller partner G. Daniel Kelley Jr. told IBJ.

Even so, in a Jan. 3 letter to Berger, Ice Miller said, "We have gone the extra mile and done the unnecessary-we created a 'screen' around Marty Klaper [the partner who represented Berger] and anyone else with whom you consulted with respect to the contract negotiations."

CBS, represented by Locke Reynolds, scoffs at that move and is pursuing the matter further. On Jan. 11, it filed a motion asking Judge Larry McKinney to disqualify Ice Miller, asserting its representation of Berger violates the Rules of Professional Conduct adopted by the

Indiana Supreme Court.

The matters aren't unrelated, Locke Reynolds says in a filing, because Emmis must prove breach of contract to prevail in its suit.

"In the likely event [Klaper] is deposed or called as a witness, he would be in the untenable position of facing questions from his own partners about his representation of Berger. Similarly, Berger faces the disconcerting uncertainty of being examined by his former law firm about the very agreement that it negotiated on his behalf."

Legal observers say it's difficult to assess how the judge might rule, though generally courts are reluctant to disqualify attorneys. In court papers, Ice Miller casts the brouhaha as an intimidation tactic CBS is using in an attempt to gain an advantage in the lawsuit.

CBS, on the other hand, says Ice Miller is overlooking a clear conflict because it wants to cozy up to Emmis, a potentially lucrative client.

"Recognizing that the chance for further legal work from [Berger] is nil, Ice Miller understandably, but improperly, desires to represent the large local concern from which it hopes to receive future business," a filing said.

Simon stock soars

The incredible run of Simon Property Group Inc. stock has continued into 2007.

Simon shares on Jan. 18 reached an all-time high of $109.58. They're already up 7.9 percent in 2007. That's on top of a 29-percent increase last year. Since the start of 2000, the company's shares are up 337 percent. Including reinvested dividends, the gain jumps to 556 percent.

Analysts say the company is benefiting from strong consumer spending, which translates into booming demand for space at the company's malls. That, in turn, gives Simon leverage to boost rents when leases expire.
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