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Law Firms Paul Weiss, Lowenstein Sandler Sanctioned in Perelman Case

A New Jersey judge ordered two law firms to pay $1.96 million in legal fees after sanctioning them for filing frivolous litigation they pursued on behalf of billionaire Ronald Perelman.

Superior Court Judge Ellen Koblitz imposed the fees on Paul Weiss Rifkin Wharton & Garrison LLP of New York and Lowenstein Sandler PC of Roseland, New Jersey. Koblitz ruled the firms filed a frivolous amended complaint for the estate of Perelman’s late wife, Claudia Cohen, in seeking hundreds of millions of dollars from her father, Robert Cohen, and brother James Cohen.

The judge said the evidence in the case should have convinced the firms that Robert Cohen didn’t make an oral promise before 1978 to leave Claudia as much of his estate as James would get. Koblitz said Paul Weiss, which made $650 million in revenue in 2009, and Lowenstein Sandler, which made $183 million, were unrepentant.

“A monetary sanction will discourage a repetition of frivolous litigation, especially in light of the lack of acknowledgement of wrongdoing,” Koblitz ruled Aug. 20 in Hackensack, New Jersey. “Without remorse, or any acknowledgement of wrongdoing, how can they reassure the court that this behavior will not reoccur?”

Koblitz, who dismissed the lawsuit last year after a trial, said that while Lowenstein Sandler now has an internal method to safeguard against frivolous litigation, Paul Weiss claims it has never been sanctioned for that reason in the 100-year history of the firm.

‘Firms Change’

“They argue it will not happen again because it did not happen before,” Koblitz wrote. “Of course firms change lawyers and practices. Without recognizing and addressing a problem, it is hard to be sure that it will not resurface.”

Both law firms vowed to appeal.

“We believe the lower court’s decision and monetary award are unjustified,” Paul Weiss’s chairman, Brad Karp, said in a statement. “We firmly believe that the representation we provided our client was proper and appropriate.”

Lowenstein Sandler Managing Director Gary Wingens said in a statement that the firm “acted properly at all times in representing its client in this matter. We believe that this decision is contrary to established law and may have the unfortunate consequence of chilling effective advocacy in this jurisdiction. We fully intend to appeal the court’s ruling.”

The New Jersey Appellate Division on Aug. 19 reversed Koblitz’s imposition of a frivolous-litigation sanction against a law firm in a separate case.

Perelman Lawsuit

Claudia Cohen, once a New York Post gossip columnist, died of cancer in 2007, 13 years after her marriage to Perelman ended in divorce. Perelman sued on behalf of her estate, valued at $60 million. His wife’s estate and their daughter Samantha were entitled to a share of the estate of her father, Robert, who had a form of Parkinson’s disease, according to the complaint.

Robert and James Cohen have long held shares in Hudson Group, which had $630 million in revenue in 2007. In December 2007 Boston-based private-equity firm Advent International Corp. bought a majority stake. Dufry Group of Basel, Switzerland, bought the company in 2008.

The judge ruled that Perelman’s lawyers amended the complaint on March 20, 2009, in a frivolous way to claim that Robert Cohen promised his daughter a share of his estate before Sept. 1, 1978. New Jersey passed a law making verbal promises about wills unenforceable after that date.

‘Harsh, Painful’ Tactics

Koblitz ruled that Perelman’s lawyers used “harsh and painful” tactics in questioning Robert Cohen during an examination on his mental capacity. She discounted Perelman’s testimony about Robert Cohen’s alleged oral promise on how he would divide the estate between Claudia, James, and a third child who died.

Koblitz said Perelman’s testimony “did not support the promise claim,” which changed several times during the litigation. She said the “changing nature of the purported promise” is “an additional indication of the frivolous nature” of the claim.

Perelman, who controls the cosmetic maker Revlon Inc., declined to comment on the ruling, said a spokeswoman, Chris Taylor.

The New Jersey case is Estate of Claudia L. Cohen v. Cohen, BER-C-134-08, Superior Court of New Jersey, Bergen County (Hackensack).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

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