[KS] And now for something completely different....
John Ohnesorge
ohnesorg at law.harvard.edu
Thu Jan 13 10:03:30 EST 2000
I ran across this today, and thought list members might find it interesting.
John Ohnesorge
>
> Sam Loewenberg
> Legal Times
> January 11, 2000
>
>
>
>
> A contentious two-year dispute between one of the
> District of Columbia's most prominent law firms
> and one of its top public affairs outfits has landed
> in court, offering a rare glimpse into the inner
> workings of a major public-influence campaign
> normally shrouded in secrecy.
>
> APCO Associates has sued Akin, Gump, Strauss,
> Hauer & Feld for $1.3 million over allegations of
> fraud and breach of contract.
>
> The suit, filed Jan. 7 in D.C. Superior Court,
> alleges that Akin, Gump failed to pay APCO for
> eight months of work it had subcontracted to the
> public affairs firm in 1997 on behalf of the Korea
> International Trade Association (KITA), which
> represents about 80,000 South Korean
> businesses. Akin, Gump denies the allegations.
>
> APCO's job was to design a grass-roots lobbying
> program to generate support for South Korea in the
> United States.
>
> APCO's complaint alleges that Akin, Gump, which
> employs 278 lawyers in the District and generated
> revenues of $120.5 million in 1998, breached its
> $35,000 per month, one-year contract. APCO,
> which had gross 1999 revenue of $36 million, is
> asking for $280,000 in unpaid fees plus $25,000 in
> travel expenses.
>
> Containing eight other counts, the complaint seeks
> treble damages based on APCO's contention that
> Akin, Gump either misled APCO or was negligent
> in allowing the public affairs firm to continue
> working -- even as the law firm knew, or should
> have known, that APCO would not be paid.
>
> But Sukhan Kim, Akin, Gump's lead partner on the
> KITA matter, says it is APCO that failed to live up
> to its end of the bargain. An Akin, Gump internal
> investigation of the firm's dealings with APCO
> concluded that payment was withheld because of
> unsatisfactory work.
>
> "Their work was very, very poor," says Kim, who
> has represented KITA for 13 years. "It didn't meet
> minimum standards."
>
> KITA is also a named defendant in the suit, but it
> is not the primary target because it appears to
> have acted in good faith, says Margery Kraus,
> APCO's president and chief executive officer. She
> maintains that KITA was happy with her firm's work
> product, and that Akin, Gump, which brought in
> APCO, never informed the public affairs company
> of serious problems and was simply trying to save
> a few bucks by not paying.
>
> Yet Sang Lee, former head of KITA's Washington
> office, says KITA officials in Korea found APCO's
> work to be below par. (KITA has since closed its
> Washington office.)
>
> "That's news to me," says Kraus. In the
> discussions APCO had with KITA, she says,
> "there was never any dissatisfaction expressed."
>
> APCO was paid $287,000, plus $20,000 for travel
> expenses, according to APCO's complaint. Akin,
> Gump will likely try to recover these fees in a
> countersuit alleging that APCO failed to provide the
> services it had promised, says Akin, Gump's
> outside attorney, David Tobin of D.C.'s Tobin,
> O'Connor & Ewing.
>
> APCO is being represented by Jonathan Hill of
> D.C.'s Dow, Lohnes & Albertson.
>
>
> OUT OF THE SHADOWS
> Internal documents provided by APCO shed light
> on the usually secretive methods used by a PR
> shop in a grass-roots campaign -- especially one
> involving a foreign entity.
>
> One of APCO's specialties is generating popular
> support for companies and countries that might not
> otherwise enjoy it. Past clients include countries
> with poor human rights records, such as Nigeria
> and Romania. The firm has also done extensive
> work for major corporate interests, including the
> American Tort Reform Association.
>
> A key part of APCO's work for the South Korean
> business group was "to develop a comprehensive
> network of U.S. interests that are sympathetic to
> Korea and would be willing to support Korea's
> position on issues that arise between it and the
> United States," according to a June 11, 1997,
> memorandum to KITA from Akin, Gump and
> APCO.
>
> APCO would do this by developing "a
> computerized database of potential U.S. allies
> containing detailed information about each
> potential ally's business interests, political ties,
> and willingness to support a Korean coalition." The
> allies were to include Congress members,
> business leaders, and the media, who were to
> receive targeted lobbying materials. (The document
> did not name specific legislators or companies.)
>
> The database and outreach program, while never
> completed, was used at least once. The memo
> detailed an effort to reach possible allies to
> persuade them to back Korea in its quest to be
> taken off the Office of the U.S. Trade
> Representative's list of the countries with the worst
> records for the protection of intellectual property.
> (Korea was subsequently removed from the list,
> known as "Special 301," although this was not
> likely a result of the APCO program, according to
> the memo.)
>
> APCO also provided software to KITA that tracks
> media coverage of Korea, broken down by a variety
> of factors, including congressional district,
> geography, and industrial sector.
>
> Trouble between APCO and Akin, Gump began in
> May 1997, when the law firm ceased payment in
> APCO's sixth month of work. APCO worked for
> another seven months at the urging of Akin, Gump
> attorneys, according to APCO's complaint. Kraus
> said they did that to curry favor with the powerful
> law firm, since at that time her company was much
> smaller than it is now.
>
> Mark MacDougall, an Akin, Gump partner
> speaking for the firm, says payments were stopped
> because software APCO provided to KITA did not
> work properly and contained faulty data. He
> rebutted APCO's argument that it did not know of
> any problems, citing a May 28, 1997,
> memorandum to APCO from KITA listing 13
> glitches with the software and data provided by
> APCO.
>
> Kraus says she viewed that KITA memo as the
> standard give-and-take that occurs during a
> complicated public affairs project. She says a June
> 11 memo responding to KITA, written jointly by
> APCO and Akin, Gump personnel, shows that
> Akin, Gump was working with APCO to solve the
> problems.
>
> Kraus also says that Akin, Gump did not allege
> that KITA was dissatisfied until nearly a year after
> the dispute began. APCO then sent one of its
> members, a former senior U.S. government official,
> to Korea to talk with KITA. Kraus would not name
> this person, but a likely possibility is former
> Reagan administration National Security Adviser
> Richard Allen, who has long done business with
> the Korean government and is now a member of
> APCO. Allen did not return a telephone call
> seeking comment.
>
> Kraus says KITA told her colleague that they were
> satisfied with APCO's work, and she says that
> KITA had even attempted to hire her firm directly,
> without going through Akin, Gump.
>
> Akin, Gump's Kim says APCO's decision to send
> a former official to talk to KITA was not only "a
> desperate measure" but also "inappropriate"
> because KITA was Akin, Gump's client. But Kraus
> says she dispatched an APCO representative to
> speak with KITA directly because Akin, Gump was
> not responding to her firm's payment demands, nor
> was it offering any explanation for the holdout.
>
> "I think the stonewalling was because they thought
> they were Akin, Gump and we were APCO, and we
> would go away," she says. "I am bewildered by the
> arrogance."
>
> MacDougall insists the firm responds promptly to
> all complaints.
>
> Kraus says she suspects that the real reason for
> the nonpayment was the sudden devaluation the
> Korean currency suffered in November 1997. She
> speculates that since Akin, Gump received
> reduced fees as a result, perhaps the firm tried to
> cut out APCO entirely.
>
> MacDougall says this explanation is merely "legal
> posturing."
>
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