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A law firm believes a conflict of interest may cost the school district money.

Two law firms represent the school district in trying to recover millions of dollars lost through fraud and abuse over several years. One, Saul Ewing LLP, a Princeton law firm, believes the other firm, Schenck, Price, Smith & King LLP of Morristown, has a conflict because it represents one of the parties the district might sue.

 
From 1998 to 2003, several contractors allegedly defrauded the district by padding bills, charging for incomplete work, receiving double payments and using other tactics.

Three former school district employees have so far been prosecuted for their roles in the case and the investigation is ongoing. Schenck Price has filed five lawsuits on behalf of the district since 2004 and recovered about $1.5 million thus far, said Sidney Sayovitz, an attorney for the firm.

But Schenck Price also represents Epic Construction Management, Sayovitz confirmed. John Pribish, a Saul Ewing lawyer, sent a letter obtained by the Herald News to the district on Sept. 14, 2006, expressing his concerns.

Pribish described Epic Construction as the construction manager during the time when the contractors sued by Schenck Price conducted their work. The Saul Ewing law firm was retained by the district to pursue litigation against Epic.

Now Pribish is saying that Schenck Price's representation of either the school district or Epic Construction compromises the law firm's ability to "maintain its duty of loyalty and confidentiality to both clients where the clients' interests are adverse."

Michael Glascoe, schools superintendent, was unavailable for comment Friday. Officials from the state Education Department would not comment on the matter.

Pribish said the matter is privileged between the attorney and his client, the school district, and would not comment.

In his September letter to Glascoe, Saul Ewing attorney Pribish asked to meet with school officials and Board of Education members to discuss the matter further.

No one confirmed whether a meeting has been set or ever took place.

Sayovitz, the Schenck Price lawyer, believes that his firm is not jeopardizing the district's ability to recoup money.

"Everyone understood from the beginning that we could not be involved with Epic. This was all very openly discussed," Sayovitz said Thursday. "Saul Ewing is free to sue Epic. That's why they were retained."

Sayovitz said the district informed his law firm to go ahead with its litigation against everybody but Epic. There is no record of any lawsuit being filed in Superior Court in Passaic County against Epic.

Mike Azzara, the district's former assistant superintendent for operations in 2002-2005, when both law firms were retained, said Schenck Price notified the district that they could not represent Paterson in anything related to Epic Construction. Azzara is the chief operations officer/treasurer in the Tredyffrin/Easttown school district in Pennsylvania.

"So I called around to find out who I could hire for a potential fraud investigation," of Epic, Azzara said Thursday, adding that Saul Ewing was recommended to him. "They knew I was hiring them because there was a conflict with our regular solicitor."

Saul Ewing lawyer Pribish wrote that Epic Construction may use the fact that it was not originally named in any lawsuits as a basis to argue that any further suit should be disallowed. The contractors currently being sued could also say that Epic is really culpable, and so the contractors themselves could not be held responsible.

Sayovitz said his firm has acted professionally and legally in all matters involving the school district.

"If they had filed suit against Epic," Sayovitz said of Saul Ewing, "and said they were intertwined with the other suits, then we would've done what we are required under the rules of professional conduct. We would've walked away."


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