Husch Blackwell told to pay $62M for engineering firm’s loss in airport bidding process
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An arbitration panel has ordered Husch Blackwell to pay $62 million to an engineering firm in Kansas City, Missouri, that claimed it lost a contract to build the city’s new airport because of attorney ethical misconduct.
According to the report by the Kansas City Star, the $62 million awarded to engineering firm Burns & McDonnell represents the money it would have made if it won the airport contract. Above the Law and Bloomberg Law noted the story.
The arbitration was private and binding. The panel decision obtained by the Star was issued in October.
The arbitration panel found that Husch Blackwell attorney Charles Renner was hired to provide legal advice to the city on the process after Burns & McDonnell spurned the lawyer’s offer to represent the engineering firm. Husch Blackwell was one of two law firms hired by the city.
The panel found that Renner used his position to undermine the engineering firm’s bid and recommend it be disqualified from the process, according to the Star’s account. Instead, in May 2017, the engineering contract went to a firm that Renner had represented on a different project the prior year, Edgemoor Infrastructure and Real Estate.
Renner’s work for Edgemoor was disclosed when he asked the city to hire him. But Renner and Husch Blackwell said their representation of the engineering firm had ended in 2016. In fact, the arbitration panel said, Husch Blackwell continued to maintain contract with Edgemoor throughout 2016 and into 2017.
Husch Blackwell had also previously represented Burns & McDonnell in other matters.
The arbitration panel found that Husch Blackwell failed to disclose conflict of interest and failed to act “with undiluted and undivided loyalty to their client.”
Renner had contacted Burns & McDonnell about representation after word leaked about private meetings between the engineering firm and city officials, according to the Star’s reporting. Burns & McDonnell was proposing to find financing for the airport project in exchange for the exclusive contract.
After Renner’s email solicitation was “politely declined,” Renner sought to represent the city while suggesting that a no-bid contract would be a bad idea, according to the panel. Renner also provided a comment criticizing a no-bid process to a television station. Renner denied making the comment when asked about it by a Husch Blackwell partner who represented Burns & McDonnell, although Renner’s email to the reporter proved otherwise.
In 2017, after Renner was hired by the city, Husch Blackwell drafted a term sheet and memorandum of understanding for the other engineering firm, Edgemoor, to design and build the new airport.
“While Husch was preparing these documents and billing the city for the legal work, Renner still maintained favoritism and a legal confidential relationship with Edgemoor, all in direct competition with, and adverse to the interest of, Burns & McDonnell in the competitive bid process,” the panel wrote. “This conflict continued and went undisclosed by Renner and Husch. Burns & McDonnell was unaware of the material facts relating to this conflict of interest. The acts described above amount to a separate and ongoing conflict, and breach of Renner and Husch’s duty of loyalty to Burns & McDonnell.”
Renner told the ABA Journal he was not in a position to comment. Husch Blackwell provided this statement to the ABA Journal, which mostly tracked the statement it gave to the Kansas City Star:
“Burns & McDonnell and Husch Blackwell had a dispute relating to the professional services provided by Husch to Burns & McDonnell. Burns & McDonnell and Husch agreed to submit their dispute to confidential and binding arbitration. Because of the confidential nature of the arbitration proceedings, the parties are unable to comment on this matter.”