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Environmental, Social & Governance (ESG)

Skadden Partner Who Ran Transperfect Sale Hit With Fee Dispute

Aug. 15, 2019, 6:06 PM

A former partner at Skadden, Arps, Slate, Meagher & Flom was hit with a lawsuit challenging the fees he wants for serving as tiebreaking director of Transperfect Global Inc. and running its forced sale after a controversial court ruling.

A Delaware judge in 2015 appointed Robert B. Pincus custodian of the translation company and ordered it sold at auction, finding that co-founders Liz Elting and Phil Shawe were incapable of running it after breaking off their romantic relationship.

A divided Delaware Supreme Court upheld the appointment in a 2017 ruling, rejecting the argument that the judge exceeded his authority by ordering a profitable company sold based solely on a leadership deadlock. The case attracted widespread attention, both for its tabloid-ready details and for the novel legal issues it raised.

Shawe subsequently bought out Elting at a “modified auction” and moved the company’s headquarters from Delaware to Nevada.

Pincus’s bills for his work in the matter came to between $58,000 and $90,000 each month from May to July this year, according to the partly redacted complaint Transperfect filed in Nevada’s Clark County District Court.

Those bills contained misrepresentations, including a request covering time spent as a witness that’s “not properly chargeable to the custodianship,” Transperfect says.

The judge “unwittingly” granted Pincus’s fee requests without realizing Transperfect hadn’t seen them, the suit says.

Because those reports were filed under seal, Transperfect doesn’t have specific information about what work was done, who did it, how long it took, or what the hourly rate was, the Aug. 12 complaint claims. Absent that information, the company can’t “assess the reasonableness of the amount of fees,” it says.

Skadden has demanded the money from Transperfect rather than taking it from an escrow fund established to pay Pincus’s fees, and has responded to questions by citing sealed court documents Transperfect can’t access, according to the complaint.

Skadden and Pincus didn’t immediately respond to Aug. 15 requests for comment.

Transperfect is represented by Brownstein Hyatt Farber Schreck LLP and Kruzhokov Russo PLLC.

The case is Transperfect Global Inc. v. Pincus, Nev. Dist. Ct., No. A-19-800185-B, complaint filed 8/12/19.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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