Consultation with Hostile Corporations -Case

1 January 2017

Lily’s Consultation with Hostile Corporations Summary Lily Advisors, a consulting firm based in Maryland, Washington DC, working with multi-disciplined teams for discrete projects, had a consulting agreement with Green Acres School System in Northern Virginia to resolve some issues arising from the construction of two new high schools. Unseasonable rains, contractor delays, weather issues, disagreements between architects and the school board were some factors contributing to the delays.

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With his extensive roles and experience, the school board hired Merv, President of Lily’s Advisors, to advise them about how to proceed under their tense circumstances Merv investigated the situation and submitted a confidential document, on the First High School this was in February 1999. The performances to date of Meyerhoff, the main contractor and Stewart and Sons, the architectural firm, were critically evaluated.

The major findings were that Stewart and Sons failed to control the scheduling properly and that it was making an unusually large profit for its administrative function. Merv was familiar with Stewart & Sons and was able to write about their methods of execution. The school board asked Stewart and Sons to renegotiate because of the findings of the report, but gave them the impression that it was based on the construction delays. The content of the report remained undisclosed.

After two months of very difficult negotiation, all groups signed an amended contract on June 30, 1999. All major issues were settled and they were able to proceed to the construction of the second high school. The new amended contract had further delays as the groups found that the excessive compromising that was done was becoming irksome. The school board had thought Stewart and Sons was very uncompromising and aggressive. Disagreements continued between the school board and the construction and architectural firms during the next eight months.

At this point, Stewart and Sons decided to hire Lily as a consultant. Stewart had worked with Lily before. They met and Merv disclosed that he had submitted an evaluation of the contract to the school board in a document, after making a proposal on September 24, 2000. The negative aspects of the report were never revealed. Sam Shapiro, the architect’s lawyer, contacted Merv about the document submitted and the potential conflict of interest which could arise but Merv denied any conflict of interest.

Shapiro and the representatives from Stewart gave Merv a contract to sign for his services on November 8, 2000. The situation further deteriorated during the next 4 months and the school board sued Stewart and Sons. The lawyers representing Stewart and Sons saw the confidential document, as was required by the law. This outraged Stewart and Sons as they viewed the document as impugning the company’s integrity and honesty. Stewart and Sons viewed it as a case of conflict of interest and not one with just the potential.

Merv believed otherwise. He explained that he recognized a potential conflict of interest and devised measures to prevent it. Merv was convinced of his flawless strategy and believed he had insulated the teams sufficiently to avoid this and, in any case, the construction of the second school was a new project. Stewart and Sons informed him that they would not pay the $102,500 that was due on the contract. After contemplating the amount of money to be spent on the case, he decided to proceed to prove otherwise.

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