BEHIND THE NEWS: Lawyers in big-biz cases get scolding from judges Taking stock of Lilly

Two big businessrelated cases are advancing toward trial, and the lawyers involved are getting nasty.

At least that’s how it seems to the judges handling the cases, and they’re tired of it.

In a Jan. 31 filing, federal Magistrate Judge V. Sue Shields gave a verbal spanking to attorneys for both Paul Harris Stores Inc. and the accounting firm PricewaterhouseCoopers.

“All counsel are admonished that the court expects them to behave in a civil manner toward one another and to refrain from including gratuitous comments and inflammatory language in their briefs,” Shields wrote.

Attorneys for the defunct retail chain sued the accounting giant two years ago, charging it with “gross negligence” for failing to uncover severe bookkeeping problems. It said the 11thhour discovery of those problems in 2001 unraveled negotiations in bankruptcy court that might have kept open 166 of its 266 locations.

Money recovered in the suit would go to creditors of the Indianapolis company, which ultimately liquidated, selling the company name to a former executive who now runs four stores. The case may go to trial late this year.

Attorneys for the two sides have brawled for months, largely in sealed court filings, over a range of discoveryrelated issues. Representing Paul Harris are attorneys with the Indianapolis firms Rubin & Levin and Sommer Barnard. Representing the accounting firm are attorneys from the Indianapolis firm McTurnan & Turner and the Chicago firm Kirkland & Ellis.

In her Jan. 31 filing, Shields wrote: “The magistrate judge, having spent 40 years as a judge in this state, recalls a time when law was practiced with civility and grace; a time when simple disputes were resolved by a telephone call and agreements between counsel were sealed with a handshake. … As [this] dispute so clearly demonstrates, that time is no more.”

Boone Circuit Judge Steve David feels her pain. David is overseeing Conseco Inc.’s debt-collection suit against former Chief Financial Officer Rollin Dick. In the case, which is scheduled for trial in April, the company is trying to collect $27 million in interest it says Dick owes on loans he took out in the 1990s to buy company stock that ended up worthless.

Representing Conseco are attorneys with Kirkland & Ellis and the Indianapolis firm Riley Bennett & Egloff. They’ve squabbled regularly with attorneys for Dick and his wife from the Indianapolis firms Bingham McHale, Dann Pecar Newman & Kleiman and Sommer Barnard.

Last August, during a particularly contentious phase of pretrial maneuvering, Judge David made this entry in the case docket: “The court is not impressed with the sarcasm, innuendos and disparaging comments of counsel. They are significantly detracting from the merits of the respective positions.”

How do the attorneys involved feel about the judges’ pointed words? Perhaps the way a grade-school student feels after receiving a scolding from his teacher: It’s best to ooze politeness.

Edward Harris III, a Sommer Barnard attorney for Paul Harris, said: “I agree with the judge’s comments,” but declined to elaborate. For his part, Lee McTurnan, a McTurnan & Turner attorney representing PricewaterhouseCoopers, said: “I believe we did not say anything in our motions or briefs that was uncivil or discourteous, and we try hard to avoid that.”

Reed Oslan, a Kirkland & Ellis attorney representing Conseco, said: “We fully endorse Judge David’s viewpoint. We have and will continue to strive to put on our case in the most professional manner possible.”

The Dick legal team noted that lead counsel Daniel Byron of Bingham McHale was named in October as the inaugural winner of the Indiana State Bar Association’s Civility/Professionalism Award.

“From working with Dan in the Conseco litigation and in many other cases, I can confirm that Dan is the personification of the principles of civility that all lawyers should adhere to,” said Phil Fowler, a Bingham McHale attorney on the Dick team.

Eli Lilly and Co. shares are down 3.7 percent for the year and that’s disappointing. They’re down 50 percent from their all-time high. That’s downright scary.

Lilly shares, which were trading late last week for $54.65, hit their high of $108.54 on Aug. 8, 2000. The next day, a federal appeals court found Prozac’s patent protection invalid, sending shares down more than $31 in a single afternoon.

Analysts say the shares are slumping because sales of Lilly’s latest blockbuster, the anti-psychotic Zyprexa, are slowing. Adding to the angst: a federal court ruling expected any day in a suit challenging Zyprexa’s patent protection.

The bottom line, says First Albany Capital’s Adam Greene in a report: Lilly stock “offers more risk than reward.” First Albany has a “neutral” rating on the shares, which it says might rise to $56 by year-end.

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