Former Qwest chief executive Joe Nacchio sued his attorneys Wednesday for negligence and overbilling, including charges for lawyers' underwear purchases.
The lawsuit alleges that attorney Herbert Stern and his New Jersey law firm of Stern & Kilkullen charged unreasonable and inappropriate fees, and were "negligent and careless" in the defense of Nacchio, who was charged with 42 counts of insider trading in December 2005 and convicted on 19 counts in April 2007 after a 21-day trial.
The lawsuit says Stern's firm billed Nacchio more than $25 million for representation in criminal and civil issues. Qwest has covered a portion of Nacchio's legal fees.
The suit, filed in New Jersey Superior Court, claims Stern's firm inappropriately billed Nacchio "tens of thousands of dollars for staff breakfasts, the cost of attorney underwear and in-room (hotel) movies."
"This billing was outrageous," said attorney Bruce Nagel, whose Roseland, N.J., firm is representing Nacchio in the lawsuit.
The suit also alleges that Stern's firm was "negligent and careless in handling the defense of the criminal action. Among other things, they were barred by the trial court from calling a critical expert witness by virtue of their blatant failure to comply with basic litigation procedures."
Stern could not be reached for comment Wednesday. His law-firm partner, Kevin Kil kullen, who also was named a defendant in the complaint, said Wednesday afternoon that he was unaware of the lawsuit.
"We know nothing about it," Kilkullen said. "No one served it on us." He wouldn't comment further on allegations in the suit.
Stern came into the Nacchio defense with a reputation as a high-powered criminal defense attorney. Earlier in his career, he was a federal judge who presided over an aircraft hijacking case and later wrote the book "Judgment in Berlin," which was made into a movie with the Stern role played by Martin Sheen.
Stern received mixed reviews from legal analysts for his representation of Nacchio in the 2007 criminal trial.
When Nacchio, who is serving a 70-month prison sentence, appealed the conviction to the 10th U.S. Circuit Court of Appeals, one appellate judge wrote in an opinion that "the defense counsel behaved inexplicably, which is to say they performed below the level expected of competent counsel."
However, Denver attorney Anthony Accetta, a former federal prosecutor who observed the Nacchio case, said Stern's work was sound.
"Herb Stern came as close to getting a guilty man acquitted as any lawyer I've ever seen," he said. "To accuse him of negligence is typical of what guilty people do — they always blame someone else."
Accetta said he has no knowledge of Stern's billing practices but said routine travel expenses are appropriate. At times during the trial, as many as seven attorneys represented Nacchio in the courtroom.
"These were out-of-town lawyers who came to Denver to defend him. They were going back and forth from New Jersey," he said. "Billing for meals and an occasional change of clothes is not inappropriate. But I personally would never bill hotel movies to a client."
Nagel said he would offer no detail "at this time" on what kind of underwear purchases were made, which hotel movies were viewed, or any other specifics about the billing.
The seven-page complaint gives no billing breakdown but does say that Nacchio gave the firm a nonrefundable $5 million retainer in November 2005. It also says that after Nacchio's conviction, the firm billed him more than $2 million for work on an appeal, even though a different firm was taking the lead on that effort.
Attorney Rick Kornfeld, another former federal prosecutor who followed the case, said Nacchio's current legal team will be challenged to prove negligence on Stern's part.
Nacchio reported to a federal prison camp in Schuylkill County, Pa., in April 2009. His projected release date is May 2014. He withdrew his final appeal in February.
By Steve Raabe, The Denver Post
Source: The Denver Post