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Legal Costs of A-12 Lawsuit Skyrocketing : Courts: Defense contractors' lawyers estimate litigation over canceled Navy Stealth jet could hit $480 million.

October 06, 1994|RALPH VARTABEDIAN | TIMES STAFF WRITER

WASHINGTON — The epic legal battle over the Pentagon's 1991 cancellation of the A-12 attack jet program reached a new milestone Wednesday when attorneys estimated that the suit's total legal costs have reached $240 million and could hit $480 million if the case goes to trial.

The estimate came during a court hearing from lawyers for McDonnell Douglas and General Dynamics, the big defense contractors that filed suit in 1991, charging that the Navy illegally canceled the firms' contract to build the A-12 Stealth attack jet.

Independent legal experts were stunned by the latest estimate, coming amid growing concern about the cost of complex business litigation.

" 'Oh my God' is all I can say," said David Weiner, chairman of the American Bar Assn.'s litigation section.

Among the expenses in the A-12 case is the large number of attorneys involved, including about 30 for the defense firms and a similar number for the government. Every night, dozens of clerks catalogue and file the huge number of documents being generated in the case.

In addition, the Navy earlier this year hired Arnold & Porter, one of the largest private law firms in Washington, to provide supplemental legal assistance to the Justice Department, including rendering a second opinion on whether the government should settle the case.

Each side is demanding payment of about $2 billion.

The projected $480-million legal tab is based on the Justice Department's proposal that the trial not start until 1998. At the hearing Wednesday before Claims Court Judge Robert Hodges, department attorney Mary Mitchelson said her team will not be prepared for trial until four years from now.

Hodges did not make an immediate ruling on the trial date, but he indicated he was not likely to accept 1998. "My inclination is to speed things up here, go forward."

Herbert Fenster, the attorney representing General Dynamics, said the expense of conducting another four years of legal skirmishes would be "crushing," and he asked the judge to start the trial next year.

The $480-million estimate includes direct legal expenses but not fees for a variety of outside services. In addition to the legal expenses, the losing side would have to pay back interest on any damages, which thus far would total about $360 million.

Another four years of litigation would double that interest expense, and a one-year trial would add another $100 million to the legal tab, Fenster said. In total, the legal expenses and the interest costs would reach $1.3 billion, in addition to actual damages, he added.

"It is in the government's interest to delay this case," Fenster said. "It is not in our interest."

Fenster cited the Justice Department's own reports to Congress that indicated it expected the trial to begin next year, and he said a trial next year would come as no surprise to the government.

But Mitchelson said such a schedule would hobble the government's defense. She said the government has to conduct depositions and sift through 33 million documents for possible evidence.

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