Former Qwest Communications CEO Joseph Nacchio is suing Herbert Stern and his New Jersey law firm, Stern & Kilcullen LLC for overbilling and a “negligent” defense. Stern’s partner, Kevin Kilcullen, also was named as a defendant. Nacchio includes the allegations that the lawyers charged him for underwear. Please tell me this is a misunderstanding over the meaning of the term “briefs.”

Stern is a former federal judge of the United States District Court for the District of New Jersey.

If you recall, Nacchio, 62, was convicted of insider trading and given a 70-month prison sentence in 2007 for illegally selling $52 million of stock in Denver-based Qwest in 2001 based on inside information. His sentence was later reduced by a couple of months due to a calculation error. He was also fined $19 million and agreed to forfeit $44.6 million.

The firm billed him more than $25 million to defend against both civil and criminal charges. He alleges that they included charges for staff breakfasts, attorney underwear, and in-room movies during the trial in federal court in Denver. Worse yet, he claims that the firm was “negligent and careless in handling the defense of the criminal action.” according to the complaint,” including such procedural errors as failing to properly call for the appearance of an expert witness (leading to their inability to call the expert testimony of securities law expert — and former University of Chicago dean — Daniel Fischel.

He is seeking both compensatory and punitive damages as well as attorney’s fees.

Nacchio is still in prison serving his sentence. He will have a difficult time in such actions. Notably, he has withdrawn his appeal of his sentence, which is uncommon when you are alleging inadequate counsel and challenging the decision to exclude Fischel. There was a danger that, if the appellate ruled on such issues, it could drive a stake in the heart of the civil lawsuit. For example, the court would likely have ruled that, even if there were an error in exclusion, it was harmless error.

In 2005, Joseph Tacopina and his firm was sued for malpractice in New Jersey for alleged negligence in a criminal case. Alveras v. Tacopina, 399 F. Supp. 2d 567 (D., N.J. 2005). The court barred the action because it was based on the same claims addressed in his appeal:

While the New Jersey Supreme Court has not specifically addressed the issue, this Court is persuaded by the majority of courts which have rejected civil claims for criminal malpractice when claims for ineffective assistance of counsel have been adjudicated, decided and rejected in the underlying criminal proceeding. Here, Alevras petitioned a judge for a reduction in his sentence based on numerous allegations or ineffective assistance of counsel and other allegations that his attorneys had mislead him in accepting his guilty plea. That petition was denied. Alevras has now raised the same set of allegations in asserting his civil claim for legal malpractice.

The standards for such an appeal and the standard for malpractice are linked on some level. As a general matter, legal malpractice requires the former client to show that the attorney’s neglect was the proximate cause of the loss to the client. That can be difficult in a criminal case where he was found guilty based on the totality of the evidence. Many courts require that a criminal sentence be set aside before a viable malpractice claim in a criminal case can be made. I believe that includes New York but I do not believe that there is such a requirement in New Jersey. Nevertheless, courts clearly look for such an overturning of the original sentence for a strong case to be made.

As for the briefs, it is not clear who billed for the garments. However, it is a bad sign when your lawyer tells you in the middle of a trial that he needs a change in underwear. This level of scrutiny over a lawyer’s brief has not occurred since Covington & Burling partner David Remes dropped his pants in front of an entire audience in 2008.

The case is Nacchio v. Stern & Kilcullen, Superior Court of New Jersey (Newark).

Source: Bloomberg

Jonathan Turley