Archive for Saturday, October 8, 2005

Westar sues former executives

Company may get stuck with legal bill

October 8, 2005


— Westar Energy Inc. says it shouldn't have to pay millions of dollars in legal fees for two former executives convicted last month of looting the company.

Following a two-month trial, a Kansas City, Kan., federal jury on Sept. 12 found David Wittig, former chief executive officer, and Douglas Lake, former chief strategy officer, guilty of conspiracy, wire fraud, money laundering and circumvention of internal controls. Sentencing is scheduled for Jan. 9.

As part of the men's employment agreements with Westar, the Topeka-based utility is obligated to pay all legal expenses "reasonably incurred" as a result of their jobs at the company.

Wittig and Lake have asked for a total of more than $12 million in legal fees.

Westar filed suit Wednesday, asking the court to determine which expenses are truly reasonable and whether the company should have to pay them.

"The legal fees ... are unreasonable, extraordinary, unnecessary and excessive," the company wrote in the suits.

So far, Westar has paid Wittig's attorneys $3.7 million of the $4.36 million they're seeking, which includes fees for the most recent trial, an earlier trial that ended in December in a mistrial and various appeals.

The company has paid Lake's attorneys $4.7 million of the $8.5 million they're requesting, amounts that cover the most recent trial, the mistrial and various appeals. Lake's total is greater because his legal team took the lead on many court filings in the case and is more expensive, being based in New York. Wittig's legal team is based in Washington, D.C.

Company officials have said the legal fees do not come from ratepayers.

U.S. District Judge Julie Robinson froze advancement of the fees shortly before the second trial started this summer, bowing to claims by prosecutors that the payments were part of the men's plot to unfairly extract money from Westar. Now that the trial is over, the freeze is lifted, which led Westar to file the lawsuits this week.

Attorneys for the two men dismissed the lawsuits as hypocritical.

"We look forward to defending this complaint and to comparing our fees, incurred in Mr. Wittig's defense, with those of the legions of Westar's law firms from New York and elsewhere ... where senior partners bill as high as $1,000 an hour," said Wittig's chief attorney, Adam Hoffinger.

Lake's lead attorney, Edward Little, also ridiculed Westar's action.

"It's ironic that Westar needs advice from a court on what reasonable fees are, given the fact that they've spent multiples of the fees being legitimately requested in this case on a number of law firms in all the different actions that they themselves have provoked," he said.

The company spent $9 million for the New York firm of Debevoise & Plimpton LLP to conduct an internal investigation of Wittig and Lake's actions while at Westar. The report's findings were a foundation for later indictments against the men.


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