Good morning. We have breaking news this morning! TransPerfect and CEO Philip Shawe are going on offense, asking Delaware Chancery Court Chancellor Andre Bouchard to sanction Skadden Arps and court-appointed custodian Robert Pincus over a billing dispute that has gone on for two years after the TransPerfect case ended.
See the Law360 story below for all of the details. What’s really happening here, folks, is Bouchard is cleverly being put between a rock and a hard place. He’s being asked to penalize his former law firm and the man, also from that same firm, who he appointed to the TransPerfect case. As I see it, it’s put up or shut up time. Will Bouchard do the right thing? In my opinion, this is the right move for TransPerfect and Bouchard needs to end the billing shenanigans, which have gone on far too long.
TransPerfect and Shawe are saying Skadden and Pincus have gone way too far in concealing information about invoices and that Skadden and Pincus are engaged in an ongoing attempt to hide bills from closer scrutiny, the Law360 story reports.
Bouchard has sealed the record beyond what is reasonable, in my opinion. We should know what’s happening in this case. There’s no need for any secrecy here, folks! I think it sets a dangerous precedent in Delaware.
I’ll keep you updated. The plot has thickened. Get out your popcorn, folks. Delaware just got a bit more interesting. Let me know your thoughts.
TransPerfect Targets Bouchard In Push To Sanction Skadden
By Rose Krebs
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Law360 (February 7, 2020, 9:00 PM EST) — Global translation company TransPerfect Global Inc. and CEO Philip R. Shawe continued to hurl criticisms of Delaware Chancellor Andre G. Bouchard on Friday, this time calling into question whether the jurist will fairly consider their bid for sanctions against his former firm Skadden and a court-appointed custodian over billing disputes.
A day after asking Chancellor Bouchard to issue a contempt order and sanctions against Skadden Arps Slate Meagher & Flom LLP and custodian Robert B. Pincus, a former Skadden partner, in an ongoing dispute over billing, TransPerfect and Shawe cast doubt on the chancellor’s impartiality in considering the request.
“If the playing field was level, Chancellor Bouchard would employ his often cited goose-gander rule and hold the custodian in contempt with a threat of further sanction if he doesn’t comply in the future,” Shawe and TransPerfect attorney Martin P. Russo of Russo PLLC told Law360 on Friday. “But this is Delaware, where Skadden has immense power and unusual sway with the Chancellor, so I expect that we will see an irrational and inconsistent denial of the motion.”
The accusation is just the latest in TransPerfect and Shawe’s escalating criticism of the chancellor in the past few years as they continue to assert they have been overbilled and that Skadden and the custodian are engaged in an ongoing attempt to hide bills from closer scrutiny.
The motion for contempt and sanctions filed Thursday contended that Pincus and Skadden, who is his counsel, have intentionally failed “to file mandatory monthly applications for court approval of fees and expenses” as required by prior court orders.
TransPerfect and Shawe asserted that Pincus and Skadden are “intentionally withholding the required court ordered monthly fee petitions solely for the purpose of obtaining maximum protection of their billing practices (as court-appointed actors) from any scrutiny.”
The motion said bills were not submitted for November and December and, as a sanction, asks that those months’ fees and expenses be forfeited and that TransPerfect and Shawe be awarded legal fees in connection with its motion.
“If not addressed, the custodian and Skadden’s escalating pattern of abuse risks undermining public confidence in the court and its appointees,” the filing said. “Without a finding of contempt and meaningful sanctions, the custodian and Skadden will continue to escalate their violations of court orders in order to obstruct any review or public scrutiny of their billing practices as state actors.”
The billing fight has been ongoing for months now, with Chancellor Bouchard ruling in October that TransPerfect and Shawe would have to pay a $30,000-per-day contempt of court sanction if they didn’t dismiss a suit in Nevada over the custodian’s billings that was filed despite an order establishing the Chancery Court’s exclusive jurisdiction following the forced sale of the company in 2018.
The Chancery Court appointed Pincus in 2015 to serve as a custodian to oversee operations of TransPerfect and manage its sale, after its two co-founders — Shawe and Elizabeth Elting — had a falling-out and could not agree on how to proceed with various company matters, according to court documents.
In May 2018, the Delaware Supreme Court affirmed the Chancery Court’s ruling earlier that year that allowed Shawe to buy Elting’s 50% stake in the company. The lower court had also determined that Pincus’ impartiality wasn’t compromised by the threats of litigation made against him by Elting or by Shawe’s alleged interference in the sale process.
In August, TransPerfect filed the Nevada suit claiming Pincus was billing the translation company without giving the company proper notice or itemizing the work he purportedly has performed.
Pincus fired back with a request for sanctions later in August, saying that Shawe was violating a Delaware court order by bringing suit in Nevada. Shawe, Pincus claimed, has exhibited a “pernicious pattern” of violating court orders in the past and will continue his “pattern of abuse” without sanctions.
After Chancellor Bouchard hit TransPerfect and Shawe with the potential $30,000-per-day contempt fine, the Nevada suit was dropped.
“This motion is frivolous and is simply the latest in TransPerfect and Shawe’s continued efforts to deflect attention from the fact that they have been sanctioned and found in contempt for ‘willfully and intentionally’ defying court orders,” Skadden told Law360 on Friday.
TransPerfect and Shawe continue to hurl assertions that not only have Skadden and Pincus failed to adhere to monthly billing requirements, but they have gone way too far in concealing information about invoices. They have already asked the court to clarify a prior order dealing with billing confidentiality issues.
“TransPerfect has been ordered by Chancellor Bouchard to pay about $14 million to his former law firm, Skadden Arps, yet we have never been permitted to see one itemized bill for the ‘work’ they’ve allegedly performed,” Shawe asserted to Law360 on Friday. That alleged amount relates to bills paid since Pincus was appointed custodian until about mid-2019, a representative for Shawe said.
Chancellor Bouchard served as a corporate litigator for Skadden prior to 1996, when he started as managing partner of a corporate and commercial litigation firm he founded, according to the state court website. He was sworn in as chancellor in 2014.
The Chancery Court declined to comment Friday.
Shawe and TransPerfect are represented by Martin P. Russo of Russo PLLC, Jeremy D. Eicher of Eicher Law LLC, Frank E. Noyes II of Offit Kurman PA and Alan M. Dershowitz.
Pincus is represented by Jennifer C. Voss and Elisa M.C. Klein and of Skadden.
The underlying cases are In re: TransPerfect Global Inc. and Elizabeth Elting v. Philip R. Shawe, et al., case numbers 9700 and 10449, in the Court of Chancery of the State of Delaware.
–Additional reporting by Emma Cueto, Jeff Montgomery, Reenat Sinay, Kevin Penton, and Vince Sullivan. Editing by Abbie Sarfo.