Vilnius/Lithuania Feb. 22, 2019 Cognizant Logo. Photo: Karolis Kavolelis/Shutterstock

Cognizant Technology Solutions Corp. has paid $15 million in legal fees for its former chief legal officer, Steven Schwartz, who is facing federal charges in a foreign bribery case. But Schwartz is now suing the global tech services company because it cut off payment to one of the three law firms that represent him. 

Schwartz alleges in his lawsuit that Cognizant stopped paying advancements to the New York-based Bohrer law firm shortly before Thanksgiving, after having previously paid the firm's invoices from June 2018 through September 2019. Cognizant disclosed in a court filing that it advanced $8.36 million in fees to Bohrer before stopping payment in November.

Schwartz and Cognizant ex-president Gordon Coburn face criminal charges for allegedly authorizing a building contractor to pay more than $3.6 million in bribes to a government official in India and attempting to hide the illicit payments.

Cognizant agreed in February to pay a $25 million civil penalty to settle allegations that it violated the Foreign Corrupt Practices Act. The company's ex-chief operating officer, Sridhar Thiruvengadam, later agreed to pay a $50,000 civil penalty and cooperate with investigators as part of a settlement offer.

As the bribery case unfolds, Cognizant continues to pay the other two firms that represent Schwartz: Paul, Weiss, Rifkind, Wharton & Garrison and Gibbons. The New Jersey-based Fortune 200 company also is covering Coburn's legal costs and says it has advanced $20 million in legal fees for the two former executives during the past 18 months. 

Schwartz, who sued Cognizant on Dec. 16 in Delaware's Court of Chancery, argues that the company is required under an indemnification agreement to pay advance fees for his defense, while Cognizant contends that Bohrer's bills are "abusive" and unreasonable.

According to Cognizant, Bohrer "has only four attorneys, none of whom had any prior experience in criminal defense; and its lead attorney has a corporate background and no litigation experience at all.

"Despite this, Bohrer PLLC has sought (thus far) payment of more than $10 million in fees—double the amount billed by Paul Weiss. Bohrer PLLC also has billed roughly twice as much as the attorneys at another national firm who represent Mr. Schwartz's co-defendant (another former Cognizant official whose fees Cognizant has advanced in full)," the company states.

"After having advanced Bohrer PLLC's fees of approximately $8.36 million, and then receiving its September 2019 invoice of approximately $1.7 million, Cognizant advised Mr. Schwartz that it would no longer advance fees billed by Bohrer PLLC," Cognizant adds.

In his reply to Cognizant, Schwartz argues that his legal expenses are reasonable and that he "is an expert in identifying and selecting consulting services needed for a crisis and an expert at managing outside spend."

He adds, "Indeed, that was one of the reasons that Cognizant expanded his role elevating him to Executive Vice President, Chief Legal and Corporate Affairs Officer. If anyone is well-positioned to assemble and monitor his defense team, it is Schwartz, who is intimately familiar with the work that Bohrer PLLC has engaged in."

Schwartz goes on to note that Cognizant has hired at least four law firms, including Goodwin Procter, DLA Piper, Latham & Watkins, and Ross Aronstam & Moritz, and has spent more than $100 million on its defense.

A spokesman for Schwartz and his legal counsel, Steven Goldberg of Sard Verbinnen & Co., said in a statement that "Cognizant's latest attempt to deny Mr. Schwartz his contractual right to advancement relies on a blatant mischaracterization of Bohrer PLLC and the role the firm plays in Mr. Schwartz's defense.

"As an experienced attorney and former chief legal officer, Mr. Schwartz is uniquely positioned to select the team he believes is best qualified to defend himself against the government's case, which never should have been brought," he added. "Bohrer, along with other members of Mr. Schwartz's legal team, deploys creative legal approaches that Mr. Schwartz believes are critical to his defense."

Meanwhile, Cognizant spokesman Rick Lacroix stated that the company "has advanced legal fees to Mr. Schwartz for more than two years and has had no billing disputes with two of his law firms. As this billing dispute with Bohrer PLLC has moved into court, we look forward to vigorously defending ourselves in court."

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