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Howrey bankruptcy could trouble Alliance for Municipal Power communities

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POTSDAM - The bankruptcy of a large law firm, Howrey, could ensnare the 24 member communities in St. Lawrence and Franklin counties of the Alliance for Municipal Power, which was billed but never has paid $3.2 million for services toward establishing a public utility.

“The specter is if the bankruptcy referee decides that the communities owe that money,” Brasher Supervisor M. James Dawson said. “That would bankrupt the towns.”

AMP Chairman Robert C. Best Jr. and James I. Monroe, a past chairman of AMP and chairman of the North Country Power Authority — the entity created by the state Legislature with assistance from Howrey — testified Monday in depositions taken at the Gouverneur law firm of Henry J. Leader.

“The whole process was for the bankruptcy and dissolved Howrey estate,” Mr. Monroe said. “They are looking for money. They’re just trying to see if they can collect from either AMP or North Country Power Authority.”

Mr. Best has called a meeting of AMP for 7 p.m. Thursday in the Potsdam Town Hall to go over the issue. Mr. Best declined comment other than to say the meeting — which he said mostly will be in executive session — will involve the Howrey contract.

Howrey, which had offices in Washington, D.C., and New York City, dissolved in March 2011 but attorneys associated with it continued to pursue a contract with NCPA, the organization pushed by AMP as the best way to achieve a public utility. Infighting about whether NCPA should continue with Howrey led to the authority board’s implosion before it barely got off the ground.

Mr. Monroe questioned the wisdom of continuing with a defunct law firm and wanted detailed accounting of the $3.2 million bill submitted by Howrey to AMP.

“I think Howrey at the end was desperate and trying to jam the contract down our throats,” Mr. Monroe said.

The billing included expenses for travel, meals, experts, telephone, postage, publications and other fees.

“We had asked for a detailed breakdown of their bill. There was no specification what the charges were for,” Mr. Dawson said. “They never produced it.”

NCPA petered out after one of its members resigned, leaving the authority without enough people to have a quorum and Gov. Andrew M. Cuomo never made additional appointments.

“It’s a pity all that energy is down the drain,” Mr. Monroe said. “Whether it can be resurrected, I don’t know.”

NCPA is not obligated to Howrey because it is an authority whose revenues would have been based on the sale of electricity and not beholden to municipalities, Mr. Monroe said. Howrey’s contingency contract that would have paid it $15.5 million if successful was to create a municipal power company that would have been owned and controlled by its members, he said.

“They never created that. That is the crux ” he said. “They have no claim.”

However, the bankruptcy trustee, Allan B. Diamond of Diamond McCarthy, believes otherwise.

“The trustee believes that Howrey may have a substantial claim for fees from either one or both of these entities, their constituents or their successors for the extensive legal work performed relating to the creation of a municipal power authority in northern New York,” he wrote in a court filing that was reported by The Am Law Daily in January.

Howrey’s fee was to be part of the costs included in the bond that would have been issued to pay for the start-up of the public utility. Mr. Diamond’s filing claims that Howrey also could demand reimbursement from AMP for its expenses if NCPA did not proceed.

AMP had no way of forcing NCPA to continue working with Howrey, but it promised the firm in writing that it would “assign (its) rights” or “otherwise cause” the new authority to retain Howrey as its legal representation.

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