Ashcroft's law firm set for windfall
TRENTON, N.J. -- Former U.S. Attorney General John Ashcroft's law firm could earn $52.2 million helping the U.S. attorney's office in New Jersey monitor a leading maker of knee and hip replacements, according to recent public filings.
Ashcroft's firm is among five legal teams U.S. Attorney Christopher Christie hand-picked to watch the manufacturers, who agreed in September to pay $311 million and hire monitors to settle allegations they paid surgeons to use and promote their devices.
Christie, who took office in January 2002 and worked under Ashcroft until Ashcroft stepped down in 2005, denied any conflict Tuesday.
"If he were still my boss or potentially my boss in the future, I guess that would be something to talk about, but you know I just don't see it as an issue," Christie said. "I hired him because I know he's somebody of honesty and integrity and who has the experience to be able to do a job like this."
The arrangement, disclosed in Oct. 31 filings with the Securities and Exchange Commission, was first reported Tuesday by The Star-Ledger of Newark.
The deal calls for Zimmer Holdings of Indiana to pay Washington-based Ashcroft Group Consulting Services an average monthly fee between $1.5 million and $2.9 million. That includes a flat payment of $750,000 to the firm's "senior leadership group," individual legal and consulting services at up to $895 an hour and as much as $250,000 in monthly expenses.
Ashcroft's firm could make the full $52.2 million, but it will earn less if Zimmer complies with the agreement, Christie said.
"If they're being cooperative and timely in their compliance as required in the agreement, there'll be much less work for the monitor to do," he said.
The agreements were made by Zimmer Holdings Inc., as well as Biomet Orthopedics Inc., DePuy Orthopaedics Inc., Smith & Nephew Inc. and Stryker Corp. The five companies account for nearly 95 percent of the market in hip and knee implants.
Zimmer will pay $169.5 million, Biomet, $26.9 million; DePuy, $84.7 million; and Smith & Nephew $28.9 million. Stryker will not be paying any money.
Ashcroft spokesman Mark Corallo said the fees outlined in the SEC filing -- "estimates based on our assessment of the current situation and (Zimmer's) obligations under the agreement," he said -- are consistent with other large-scale monitoring arrangements.
Corallo said Ashcroft was "uniquely qualified" to act as a monitor, noting he led the 120,000-employee U.S. Justice Department, oversaw the Enron investigation and worked as auditor, attorney general and governor in Missouri. He said Ashcroft's firm has more than 30 people working on the Zimmer case.
The other monitors include John Carley, a former Federal Trade Commission and Cendant Corp. attorney; David Kelley, the former Manhattan U.S. attorney; David Samson, the former New Jersey attorney general; and Debra Yang, the former U.S. attorney in Los Angeles.
"If you look at all the people I hired, they're all people I've worked with who have impeccable resumes and have run large legal operations," Christie said.
Christie said he wasn't involved in setting Ashcroft's fee, but said he's heard no complaints about the fees and said the fees were imposed in lieu of fines.
Ashcroft, a former U.S. senator from Missouri, became attorney general in 2001.
Christie -- often cited as a potential 2009 Republican gubernatorial candidate, though he hasn't said whether he will run -- was among 17 U.S. attorneys who served on an advisory panel that consulted regularly with Ashcroft until he resigned.