With 8 Law Firms and Other Nassar-Related Expenses, Michigan State Faces Soaring Costs
DLA Piper; Latham & Watkins; and Skadden, Arps, Slate, Meagher & Flom are just some of the legal giants that have been hired by Michigan State University to cope with the fallout from the Larry Nassar sex abuse scandal.
April 26, 2018 at 01:57 PM
10 minute read
Even if Michigan State University manages to escape paying huge damages in civil suits brought by victims in the Larry Nassar sex abuse scandal, the school still faces tens of millions of dollars in legal defense fees from at least eight law firms.
MSU said it has no up-to-date accounting of its Nassar-related legal costs so far. But with the help of records obtained through a series of Freedom of Information Act requests, Corporate Counsel assembled a list of law firms and lawyers that the East Lansing, Michigan-based university has hired in the matter, as well as their rates.
According to engagement letters, raking in the highest fees are three large firms whose partners are charging upward of $900 per hour for their services: Skadden, Arps, Slate, Meagher & Flom; Latham & Watkins; and Akin Gump Strauss Hauer & Feld. But both Akin Gump and Latham offered MSU a 10 percent discount in their engagement letters.
The lawyers are tasked with defending the university after two decades of Nassar's sexual abuse of young student athletes under the guise of “treatments.” The sports doctor was fired, eventually convicted and sentenced to several decades in prison.
But the aftermath of his actions is a costly nightmare for MSU. Here are the eight firms, one investigative outfit and a special counsel helping the school deal with the fallout, in chronological order of their hiring:
Skadden, Arps, Slate, Meagher & Flom
Skadden was hired Oct 10, 2016, by MSU's then-general counsel Robert Noto, who resigned four months later under pressure. Litigation partner Albert Hogan III, based in Chicago, signed off on the engagement for Skadden and leads the team defending the school.
The scope of Skadden's duties, according to the documents obtained by Corporate Counsel, is “to assist the university to coordinate its response to the allegations of misconduct concerning Dr. Larry Nassar.”
That includes facilitating cooperation with appropriate law enforcement and regulatory authorities, counseling on any internal reviews conducted and providing advice and assistance on the five civil suits filed by more than 140 Nassar victims in U.S. District Court for the Western District of Michigan. The number of suits keeps growing; three were filed in April, with the latest on April 23.
The letter limits Skadden's representation to the university, and “not its individual officers or employees.” Hogan is joined by Patrick Fitzgerald, a high-profile Skadden partner currently advising former FBI director James Comey, as well as partners Stephen Robinson and Amy Van Gelder, with other Skadden lawyers joining in as needed.
As for billing rates, Skadden charges a “blended rate” of $990 per hour for partners and key counsel, which “represents a significant discount off standard firm rates in recognition of the university's public interest mission,” the letter said. For associates, the firm charges a standard hourly rate ranging from $470 to $920. Skadden reserved the right to discuss a change in hourly billing rates in 2018.
Miller, Canfield, Paddock and Stone
The Detroit-based Am Law 200 firm was hired on Jan. 11, 2017, by then-deputy general counsel (and now acting GC) Kristine Zayko.
The engagement letter, signed by Miller Canfield labor and employment partner Scott Eldridge, said the firm represents university trustees “in connection with litigation and related matters pertaining to Dr. Larry Nassar.” Like Skadden, the firm does not represent individuals.
Eldridge said in the letter that he is principally responsible for managing the engagement at $360 an hour. He is assisted by Miller Canfield partners Megan Norris and Brian Schwartz, who charge $455 and $360 per hour, respectively. Other lawyers may be added as needed.
Clark Hill
Clark Hill, another Am Law 200 firm that has recently made moves to expand beyond its home base in Michigan, was hired by Zayko on March 31, 2017. Labor and employment partner Maria Dwyer signed the engagement letter for the law firm.
Clark Hill represents university sports doctor Jeffrey Kovan, who worked with Nassar and received at least one complaint against the convicted felon, and former gymnastics head coach Kathie Klages, who also received similar complaints. Klages retired after MSU suspended her. Both are defendants in civil suits filed by Nassar abuse victims.
MSU issued conditional indemnification to Klages and Kovan, but not to Dr. William Strampel, the fired dean of the medical college and Nassar's supervisor, who has also been criminally charged with misconduct and pleaded not guilty. Since the engagement letter was signed, other MSU employees have been added as defendants to a civil suit, including assistant general counsel Kristine Moore, who headed an investigation into an abuse complaint against Nassar in 2014 and cleared him of wrongdoing.
Clark Hill said its engagement letter would be supplemented should additional actions be filed and/or should the representation extend to include others, as it has at MSU. As for rates, the firm's letter said Dwyer earns $395 per hour; partner Steven Stapleton bills at $395 per hour; and senior attorney Marshall Grate at $320. “We will also utilize associate attorneys, including Nicole Patterson [at] $275, and paralegals at $195,” the letter added.
Latham & Watkins
Noto, MSU's now former GC, hired Latham on April 11, 2017. The firm's engagement letter, signed by Chicago-based partner Bradley Kotler, said simply that its job involved “certain insurance coverage matters.”
Insurance issues proved to be important in another big university sex abuse case—Penn State University had a lengthy court fight with its insurer over coverage for the sex scandal involving former assistant football coach Jerry Sandusky. The school finally settled that case in September 2016, though terms of the agreement were confidential.
Latham's rates include $990 per hour for partners in the 2017 calendar year. The firm reserved the right to discuss new rates in 2018, but it is not known if those rates have been raised. The Latham letter said that associates, paralegals and other professionals will be billed at 2017 base rates.
DLA Piper I
John Engler became interim president of MSU on Jan. 31. One of his first hires, on Feb. 1, was DLA Piper partner James Blanchard, who, like Engler, is both an MSU alumnus and a former governor of Michigan. Blanchard signed on the line for DLA Piper.
The engagement is for legal services involving “executive branch government affairs,” according to the letter. “We would represent MSU before the federal executive branch and its departments and agencies,” it read. “We would also be available to serve as advisers to you with respect to litigation, compliance, and policies of a general nature affecting MSU.”
MSU is under at least two executive branch investigations, both by the U.S. Department of Education. One concerns the school's compliance with the federal Clery Act, which requires colleges and universities to maintain and disclose campus crime statistics and security information. The other probe is into MSU's compliance with Title IX, which requires universities to investigate allegations of sexual assault and harassment.
DLA Piper's contract runs for one year, to Jan. 31, 2019, and charges a fixed fee of $25,000 per month for 12 months. There is also an hourly fee for work on any formal investigation, or appearance before any executive branch office or panel.
DLA Piper II
In a separate contract signed on the same day, Engler also hired Blanchard and DLA Piper for legal services involving congressional affairs.
“We would represent MSU before the U.S. Congress and its committees,” the letter said.
MSU is subject to three ongoing investigations by committees or subcommittees in Congress, one in the Senate and two in the House of Representatives, looking at its involvement in the Nassar scandal.
Terms of the second contract mirror the first: $25,000 a month for one year, plus separate hourly billing for any work on a formal investigation, or any appearance at a congressional hearing.
Carol Viventi
While not a law firm, Carol Viventi was still a key hire for MSU in its efforts to deal with litigation and investigations. Engler hired her on Feb. 5 as a vice president and special counsel to the president.
According to the offer letter she signed, Viventi is set to receive $250,000 per year, with full benefits and 48 days vacation over two years for her work with MSU. She will also be getting a university-leased vehicle or annual car allowance of $8,400.
Akin Gump Strauss Hauer & Feld
On Feb. 7, Noto hired Akin Gump, acting on the behalf of the MSU board of trustees. Steven Ross, a partner in the firm's Washington, D.C., office, signed its engagement letter.
Akin Gump's duties are “to serve as legal adviser to the board with respect to its obligations and fiduciary duties as the board of trustees,” the letter said. Akin Gump also will coordinate with counsel to the university including existing outside counsel.
As for billables, Akin Gump said it would cap all rates at $990 per hour for Ross and fellow partner and firm general counsel Douglass Maynard, a former counsel at the New York City Police Department who returned to the firm in 2014.
Other lawyers at the firm will be charged at rates between $445 to $990 per hour. The Akin Gump letter said rates for paralegals range from $175 to $380; while partner Estela Diaz and senior counsel Stanley Brand will charge $835 and $755 per hour, respectively.
Kroll LLC
One of Viventi's first hires was not a law firm, but an investigative and business risk analysis company, New York-based Kroll.
According to an engagement letter signed by Kroll managing director Nicole Lamb-Hale on Feb. 13, the company's role is “to conduct investigations into complaints filed by MSU students under MSU's Title IX policies and procedures.” The duties include reviewing evidence and interviewing involved parties.
Kroll said it charges a blended hourly rate for all professionals of $550 per hour.
Dickinson Wright
Another Engler hire was Dickinson Wright and his old friend Robert Young, whom Engler had appointed to the Michigan Supreme Court in 1999. Young, of counsel in Dickinson Wright's Lansing office, signed the engagement letter for the Detroit-based Am Law 200 firm.
Dickinson Wright's job is to “assist you in coordinating the various investigations concerning Dr. Nassar's activities, directing and monitoring litigation and the performance and fees of outside counsel defending the university as well as such other matters you assign,” states the letter.
The hire was announced Feb. 20, along with the departure of then general counsel Noto.
Young wrote that his normal rate is $640 an hour, and he was offering the school a 10 percent discount, as had Akin Gump and Latham. Dickinson Wright said other members/partners earn $245 to $725 per hour; associates between $210 to $370; and paralegals $100 to $250.
This story has been updated to clarify details around Engler's appointment of Young to the Michigan Supreme Court.
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