DeKalb County Schools can retain its Atlanta-based law firm in its $100 million lawsuit against a construction management company after a judge on Wednesday ruled against the builder's attempt to have the legal counsel removed.
DeKalb Superior Court Judge Clarence Seeliger withdrew a motion to disqualify King & Spalding from the school district's suit against Heery International, concluding it would be too costly and time-consuming to replace the firm after nearly five years on the case.
“It is necessary for King & Spalding to continue, because the cost of replacing them is prohibitive,” Seeliger said in his final ruling.
Citing a conflict of interest, Heery had contended that King & Spalding attorneys had prior knowledge of criminal activities conducted by former DeKalb Superintendent Crawford Lewis and former Chief Operating Officer Patricia Reid, directly influencing the civil case.
On Wednesday, Heery's attorneys alleged that Lewis in November 2008 told the district attorney that Reid was conducting a criminal enterprise, and that information was shared with King & Spalding.
Mark Grantham, an attorney for Heery, said the law firm and the district were “aware of misconduct by Pat, but Heery was never informed about what was going on,” in the criminal investigation.
Reid and Lewis were indicted last year on charges of racketeering, theft and bribery, related to construction deals, but have not gone to trial.
“As a direct result of their own conduct, they were material witnesses in the criminal trial and the civil trial,” Grantham said of King & Spalding. “Their dual role as advocate and witness would violate Georgia rules of professional conduct.”
Joe Loveland, a King & Spalding attorney, called it a “scurrilous accusation,” suggesting that the attorneys representing the district had lied.
“Heery committed $100 million worth of fraud between 2003 and 2007,” Loveland said, referring to the pending lawsuit allegations. “They filed this to try to get away with it.”
DeKalb launched a $100 million fraud lawsuit against Heery, which was a major builder of projects throughout the district. The suit alleges that Heery moved money between projects, changed time sheets and billed the system for work that had not been done.
The school system already has paid King & Spalding $17 million in legal fees. An additional $19 million in billing has been accrued by the firm, which will be paid only if the case is won.
Grantham argued the contingency deal gives King & Spalding a financial stake in the outcome of the case.
Seeliger agreed with Grantham’s argument, but the judge said it was DeKalb’s issue to deal with, not Heery’s.
“The allegation they made is quite right; it is not a fair contract,” Seeliger said. “But they negotiated it."
Thomas E. Bowen, DeKalb School Board chairman, said he was satisfied with the ruling.
“We are relieved that we didn’t have to deal with the issue of restarting this case after so many years of investment,” Bowen said.
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