Ruling on Legal Bills at KPMG Could Be a Boon to Aipac Pair

A new ruling that the government improperly pressured an accounting firm, KPMG, not to pay for the legal defense of a group of the firm's employees could be a boon to two pro-Israel lobbyists facing trial in Virginia.

In a closely watched case, Judge Lewis Kaplan ruled that employers usually have an obligation to pay for their employees' legal defense in work-related litigation. He also declared that the government runs afoul of the Sixth Amendment right to counsel when it seeks to prevent such payments.

"An employer often must reimburse an employee for legal expenses when the employee is sued, or even charged with a crime, as a result of doing his or her job," Judge Kaplan wrote in an 88-page decision issued Tuesday. "Those who commit crimes - regardless of whether they wear white or blue collars - must be brought to justice. The government, however, has let its zeal get in the way of its judgment. It has violated the Constitution it is sworn to defend."

The KPMG decision immediately caught the eye of lawyers for the two fired lobbyists for the American Israel Public Affairs Committee, Steven Rosen and Keith Weissman, who have been charged with conspiring to obtain and disclose classified information while working for the group.

"I think it's a terrific decision and I think it has a lot of bearing" on the Aipac case, an attorney for Mr. Weissman, John Nassikas III, told The New York Sun yesterday.

For more than a year, Messrs. Rosen and Weissman have been locked in a dispute with Aipac over the payment of their legal bills. The Sun reported last month that defense lawyers complained to Judge Thomas Ellis III that investigators were inquiring about how the two men were funding their defense.

Judge Kaplan's decision is not binding in other cases, but Mr. Nassikas said the judge's rationale is compelling. "I'd like to think it's going to be read by the Aipac folks in a way that they're going to see a lot of judicial force behind the idea employees and managers should have their legal fees paid by their organization," the defense attorney said. "It's a very significant decision."

A lawyer for Mr. Rosen, Abbe Lowell, said yesterday that he was closely reviewing the KPMG decision. Asked if he might seek to use the ruling in court, Mr. Lowell said, "Stay tuned."

A spokesman for Aipac, Patrick Dorton, said there is no parallel between the two cases.

"The facts in this situation are completely different. The government has nothing to do with this issue," he said last night. "Aipac has offered on several occasions to pay the legal fees."

A spokesman for the federal prosecutors in Virginia did not return a call seeking comment for this article.

The trial of Messrs. Rosen and Weissman is set for August 7, but is likely to be pushed back as lawyers wrangle over the handling of classified information.

The ruling in the KPMG case also drew praise yesterday from a class-action law firm being prosecuted for alleged payoffs to plaintiffs, Milberg Weiss Bershad & Schulman LLP. "The ruling is a clear affirmation of every defendant's right to the due process guaranteed by the U.S. Constitution and a refutation of the government's insistence that to avoid indictment, companies must refuse to advance the legal fees of their employees," the firm said in a statement.

Milberg Weiss contends that it was indicted after refusing a deal under which it would have been required to waive legal protections, such as the attorney-client privilege. A 2003 Justice Department policy accords leniency to companies that waive privileges and refuse to pay legal fees incurred by their employees.