Lawyers targeted for allegedly unethical actions.

Lawyers targeted for allegedly unethical actions. Maybe the tide is beginning to turn and lawyers will no longer be invulnerable

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LAWYERS IN LINE OF FIRE AT DELAWARE COURTS First investment banks came under fire for the roles they played in billion-dollar buyouts, and now there is a case that could extend liability to the lawyers in buyouts, Steven Davidoff Solomon writes in Deal Professor.

The complaint arose from the $2.2 billion buyout of the ExamWorks Group, which contends that lawyers at Paul Hastings, a law firm in Los Angeles, were in cahoots with management and the investment banks to sell the company at a below-market price. ExamWorks, a medical examination company, vigorously denies this.

Daytona Beach Police and Fire Pension Fund, a shareholder of ExamWorks, is suing the company's directors, as well as the private equity firm leading the buyout, Leonard Green & Partners. It says Paul Hastings failed to run the process appropriately.

Management and directors were participating in the buyout. Companies usually establish a committee of independent directors to guide the process from the beginning, but ExamWorks was slow to do this.

The board still included management in the buyout discussions and even after the founders were excluded from the special committee, they appear to have regularly participated in meetings.

At the same time, Reinaldo Pascual, a partner at Paul Hastings, continued to represent the board while representing management in negotiating the buyout arrangements. He also represented the special committee and the company itself.

The lawsuit contends that the special committee failed to bargain effectively, negotiating an increase of 5 cents from the top of the firm's indicated range, and no competing bids emerged during the short 25-day "go shop" period, although some private equity firms expressed interest.

The price being paid is below ExamWorks' 52-week stock market high of $44.09 and only a 4 percent premium over the closing price the day before the deal announcement, albeit 37 percent over the price when Leonard Green's first bid came in.

In the past, when there were questions about how a sale was run, lawyers were largely out of the line of fire. But this case threatens to open the floodgates and expose lawyers to the same type of conflict liability and heat that investment bankers are under. Paul Hastings is not a defendant, but the complaint indicates that it may become one.

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This is from a NY Times daily email, "Deal Professor" is where you can find the original on the NYTimes website.