The Daily Tar Heel
Printing news. Raising hell. Since 1893.
Monday, June 17, 2024 Newsletters Latest print issue

We keep you informed.

Help us keep going. Donate Today.
The Daily Tar Heel

Records: Firm worked before approval

On Jan. 9, UNC received permission from Gov. Pat McCrory’s office to retain New York-based law firm Skadden, Arps, Slate, Meagher & Flom, LLP, keeping in line with North Carolina General Statute 147-17, which requires the approval of the governor, on the advice of the state attorney general, for any state agency to hire outside counsel.

But public records and invoices say Skadden racked up a bill of $342,936.23 in fees for “professional services rendered through Dec. 31.”

“We had been in discussions with both the Attorney General’s Office and the Governor’s office well before (Jan. 9),” UNC spokesperson Jim Gregory said in an email. “Based on those discussions and the press of pending litigation, we signed a retention letter with Skadden on Dec. 29, 2014, so that the firm could participate in a mediation scheduled for the following day.”

However, UNC’s contract with Skadden, signed by interim general counsel David Parker, is dated to Dec. 26 and back-dated to Dec. 9 — both before Dec. 29. The first email received by the state’s attorney general’s office from Parker requesting permission to retain Skadden was sent Dec. 22.

Parker, who has been at the head of the University counsel office since Leslie Strohm left in January, said in a phone call Tuesday that he does not recall the exact day Skadden started, but that it was prior to Dec. 26.

Parker said his office needed to brief Skadden for an impending mediation at the end of December for the University’s now-resolved case with 10 media organizations, including The Daily Tar Heel. Michael Scudder, a partner with Skadden, was present at the mediation hearing between the University and the media outlets.

University spokesperson Rick White said Tuesday the University had been in constant communication with the governor’s and state attorney general’s offices during December and would not have sent Skadden if they had not received permission; he admitted the official permission letter was sent after the media organization case had concluded.

The University did not publicly announce the Skadden retention until Jan. 13 in a campuswide email that said the firm would help with the University’s “numerous pressing legal challenges.”

Chancellor Carol Folt approved the internal decision to retain Skadden, White said, after a recommendation from Board of Trustee members Lowry Caudill, Dwight Stone and Jefferson Brown, as well as Felicia Washington, vice chancellor for workplace strategy, equity and engagement.

“Of the firms considered, Skadden offered the best team to match the particular litigation challenges faced by the University,” Gregory said.

According to emails obtained by The Daily Tar Heel, the University sent requests for proposals to 17 law firms, including Skadden. Only five of the firms were based in North Carolina.

A March 6 memo from Parker to Matthew Fajack, vice chancellor for finance and administration, said the $342,936.23 bill was for “legal services rendered ... for the month of December” and that Parker reviewed and approved the payment.

Despite the invoices being public record, the University will not publicly release an itemized version of Skadden’s bill to precisely identify the “legal services rendered” or explain the monthly “expenses,” often climbing above $10,000, paid to the company .

“We do not receive itemized invoices from Skadden. Invoices are reviewed on Skadden’s secure website,” Gregory said.

Including the $342,936.23 cost for December, Skadden has charged UNC more than $2.7 million from December to May. Gregory said the University has not yet received the bills for June, July and August.

In comparison, the 8-month-long Wainstein investigation cost the University $3.1 million. The single invoice received for the Wainstein report was itemized and made public record by the University.

Both Wainstein’s and Skadden’s teams are paid by the University’s main donation arm, the Chapel Hill Foundation. In May, the foundation published its first 990 form — a yearly financial document required for all 501(c)3 nonprofits — since 2008, after not releasing any budget information for nearly a decade.

A representative from Skadden did not respond with a comment before press time.

To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.

Timeline of Events 

Oct. 22, 2014 — UNC publicly releases private investigator Kenneth Wainstein's report in academic improprieties in the former department of African and African-American Studies

The report detailed nearly two decades of fake classes that helped artificially inflate GPAs of student-athletes to keep them eligible

Nov. 6, 2014 — Former football player Michael McAdoo files a class-action lawsuit against UNC

McAdoo's suit claims the University did not provide him a proper education.

Nov. 14, 2014 — UNC sends a request for proposal to Skadden, Arps, Slate, Meagher & Flom

The request said the Wainstein report and other investigations has put the University in two lawsuits with more litigation likely.

Nov. 14, 2014 — Leslie Strohm announces her departure from the University

Longtime General Counsel Leslie Strohm announced that she would leave her post in January to fill a similar role at Louisville University. David Parker, previously associate general counsel, became the interim general counsel. As of Sept. 21, 2015, a search committee has not yet been named to find Strohm's permanent replacement.

Nov. 19, 2014 — Deadline for Skadden's response to UNC's request

Skadden only had three business days to respond to UNC's request for proposal.

Nov. 25, 2014 — The Daily Tar Heel sues UNC

The DTH, along with nine other North Carolina media organizations, sued the University for access to personnel records of employees fired as a result of the Wainstein report.

Dec. 9. 2014 — David Parker signs contract with Skadden

Parker signed a contract with the Skadden, approving the rates of $990 per hour for each partner that will work on UNC's legal matters. The agreed upon associate billing rate ranged from $450 to $975 depending on the experience of the associate working on the matter. UNC has not yet received from the state to retain Skadden.

Dec. 12, 2014 — Judge orders UNC, media organization case to mediation

The Daily Tar Heel, and nine other media organizations, were ordered to mediation with UNC after a superior court judge wanted to give both sides a chance to resolve the case in a non-courtroom setting.

Dec. 22, 2014 — David Parker requests permission for Skadden

Under state law, an agency run by the state, such as UNC, needs the permission of the Governor to hire outside counsel. The Governor must be advised to do so by the state's Attorney General's office. Parker had signed the contract with Skadden nearly two weeks before reaching out to the necessary agencies

Dec. 29, 2014 — UNC tells the state Skadden is coming

According to state Department of Justice spokesperson Noelle Talley, UNC informed her office that a Skadden representative would be at the mediation between UNC and the media organizations the next day. Later, UNC Spokesperson Rick White said Skadden was permitted to be there by the Attorney General's office.

Dec. 30, 2014 — Mediation between UNC, media

Skadden partner Michael Scudder represents, among other legal counsel, the University. The state has yet to officially approve the University's retention of Skadden.

Jan. 9, 2015 — Skadden approved by the Governor’s office

A letter sent by Robert Stephens confirms the hiring of Skadden at the rates agreed upon in the contract David Parker signed in early December. There is no mention of the media organizations' suit against the University in the list of approved cases for Skadden in the final version of the letter.

Jan. 13, 2015 — UNC announces Skadden retention

More than a month after David Parker signed a contract with Skadden, UNC announces its agreement with the New York-based law firm.

March 4, 2015 — Skadden sends first invoice

The first invoice for "legal services rendered" by Skadden is for more than $340,000. The bill said it was for services offered in the month of December — before the Governor's office approved the hire.

March 6, 2015 — Parker approves December Skadden invoice

In a memo from Parker to Vice Chancellor Matthew Fajack, Parker said he has reviewed and approved the invoice from Skadden's December costs.