Lexington, VA • Friday, May 11, 2007
Professor Lyman Johnson
Lyman Johnson, Robert O. Bentley Professor of Law at the Washington and Lee University School of Law, served as a consultant and expert witness to the law firm obtaining what may be the largest settlement payment ever by outside corporate directors following corporate misconduct allegations.
According to an April 23 Wall Street Journal story, Just for Feet, Inc., the second-largest athletic shoe retailer in the U. S., collapsed in 1999 amid an accounting fraud. The trustee for the bankrupt company hired the Baltimore law firm of Whiteford Taylor Preston to recover damages from several former directors accused of breaching their fiduciary duties. Johnson worked with Whiteford Taylor Preston on this part of the case for several months.
Suit was also brought against Just for Feet's former accountants, Deloitte & Touche. Deloitte & Touche agreed to pay $24 million to settle, while the five outside directors agreed to pay a combined amount of $41.5 million. By comparison, the former directors of Enron paid $13 million to settle claims and the former directors of Worldcom paid $24.8 million of their own money.
In all, the trustee recovered roughly $80 million for company creditors, the Wall Street Journal reported. Three former executives pleaded guilty to crimes.
"The fiduciary duties owed by directors of public companies continue to be an important component of healthy corporate governances," said Johnson.
Professor Johnson teaches and writes about corporate and securities law subjects at the School of Law.