government, and in his litigation against BDO, the world's fifth largest accounting firm.|
Mr. Field is a defendant in a federal criminal prosecution against him and others for his marketing of allegedly illegal tax shelters while he was at BDO. He is also involved in litigation against BDO, seeking to require BDO to live up to its obligations to pay his legal fees.
However, the legal turmoil at BDO involves much more: a massive fraud and malpractice suit against former BDO counsel Morgan Lewis & Bockius was filed two months ago on behalf of BDO by DLA Piper; a motion for sanctions was filed against DLA Piper by Morgan Lewis, represented by Gibson Dunn & Crutcher; and a motion filed by Bingham McCutchen, which represents BDO’s former general counsel, seeking to disqualify Gibson Dunn.
In his criminal matter, Field recently filed a motion seeking discovery and a hearing regarding his claim that the IRS and the U.S. Department of Justice unconstitutionally interfered with BDO’s obligation to pay his legal fees. In short, the government is impermissibly interfering with Field's financial ability to mount a defense in the criminal case.
In 2000, at the age of 41, Field became the youngest partner ever elected as Chairman and CEO of BDO, founded 100 years ago. Field previously had served as the head of the firm’s tax practice. His leadership transformed the firm, maximizing its value to clients and driving its earnings to new heights. His success led industry consultant Allan D. Koltin, CEO of PDI Global, to note in contemporaneous press reports that, “Denis Field is such a significant person at [BDO]; he’s the equivalent of Bill Gates at Microsoft.”
In 2002, however, legal trouble brewed at the firm, when the IRS began to investigate various tax shelter transactions designed and facilitated by a number of accounting firms, including BDO and KPMG. After the government’s prosecution of the Arthur Andersen firm in the unrelated Enron scandal, which resulted in Arthur Andersen’s total collapse, the pressure on BDO caused panic among the BDO Board of Directors. This led the Board to distance itself from the executives involved in the tax shelter transactions that the IRS was targeting. Foremost among these executives was Denis Field, whom the government accuses of diverting billions of dollars from tax coffers.
In particular, under threat of criminal charges against the firm, BDO required Field to resign, and later reneged on (a) its agreement to indemnify him and pay the expenses of his defense against charges relating to his work at the firm; (b) a joint defense agreement with him; and (c) a severance compensation agreement worth many millions of dollars. In a preserved voicemail from 2004, which is among the evidence in the current litigation, BDO’s general counsel expressly admitted the obvious, which is that if BDO were to make payments to Field, this would have jeopardized BDO’s standing with the IRS.
The apparent collaboration between the government and BDO has left Field with severely limited financial resources, as he faces a lengthy and complex criminal trial, in a matter in which the government has already produced over 23 million pages of documents. As set forth in Field’s motion, there is well-established legal precedent to the effect that deliberate government pressure, which directly interferes with a company’s advancement of legal fees to a former employee facing criminal charges, implicates the defendant's right to counsel and to due process. Field’s claims mirror those made by former KPMG executives, who were subjected to the same abuses by government officials who pressured KPMG into first limiting and then ceasing to pay the executives' legal fees. The claims of the KPMG executives resulted in the dismissal of the charges against them by the United States District Court for the Southern District of New York. The importance of Field’s current arguments go well beyond his own situation; they may impact other defendants in similar situations who lack the resources to seek redress.
Meanwhile, in order to effectively pursue his constitutional rights, Field is joining the ranks of prominent U.S. clients who have discovered an alternative to surrendering entirely to their inability to fund a full and complete legal defense. He and his U.S. lawyers are fighting for his rights with the help of legal outsourcing in India.
By hiring SDD Global Solutions, an outsourcing provider based in Mysore, three hours from Bangalore, for certain tasks, Field and his team are able to cut his legal costs by a significant percentage, with no sacrifice in quality. Field chose SDD Global because apparently it is the only legal outsourcing provider that focuses almost exclusively on complex and sophisticated work. Document review and coding are important, but serious and thorough legal research and drafting are also important. Field was impressed by SDD Global’s public track record on the research and drafting front.
In particular, Field was influenced by such prominent cases as Doe v. HBO in Los Angeles, a libel suit in which SDD Global handled nearly all of the research and drafting for the defense, leading to a complete victory in a motion for summary judgment, and later on appeal; and NMH v. Bush, in which SDD Global drafted a successful motion to dismiss a suit in Washington D.C. against legal outsourcing. SDD Global’s clients have included major film and television studios, law firms, retail brands, insurance companies, film and television production companies, and publishing houses, as well as prominent individuals, such as Sacha Baron Cohen and Mohamed Al Fayed.
But doesn’t high-end legal outsourcing to India mean a loss of jobs for lawyers in the U.S.? Field does not believe so. For him and his attorneys at the New York law firm of Kostelanetz & Fink, LLP, the most meaningful use of Field’s scarce resources is what matters. It is not an example of shipping jobs overseas, but of assisting in making U.S. litigation financially more feasible. SDD Global will help Field’s attorneys mount a defense that might not otherwise be possible because of the high costs of U.S. litigation and the client’s limited resources. SDD Global has done the same for numerous other U.S. lawyers, including those at SDD Global’s parent law firm (the New York and London-based SmithDehn LLP). Some of the legal papers supporting Field’s motion regarding legal fees can be accessed at http://fieldlegalnotes.com/.