University of Idaho funnels $7.3 million to president’s former employer

The University of Idaho has outsourced at least $7.3 million of consulting work to President C. Scott Green’s previous employer.

Hogan Lovells – an international law firm with 48 offices across the globe – appears to have received most of the money the UI has spent for consulting on its proposed $685 million University of Phoenix purchase, according to documents obtained by Idaho Education News.

Hogan Lovells’ invoices reveal little more than the bottom line. UI officials blacked out the invoices almost entirely, citing attorney-client privilege. The documents say only that Hogan Lovells provided “professional services” to the university.

In written responses, the UI shed more light on Hogan Lovells’ work.

The firm counseled the UI on “all aspects of the transaction,” and from early in 2023, when the university first explored buying the for-profit online giant. “This included initial discussions, establishing the diligence process, conducting and directing consultants in the diligence process, negotiating the asset purchase agreement, and moving the transaction to closing.”

The UI also answered questions about the current relationship between Hogan Lovells and Green – who was the firm’s global chief operating and financial officer until the summer of 2019, when the Idaho State Board of Education of Education hired the UI alum as the university’s 19th president.

Green and his family have no “ongoing financial relationship” with Hogan Lovells, the UI response said. “There is no personal benefit to them from the work being performed by Hogan Lovells for the university.”

Hogan Lovells did not respond to EdNews’ requests. Through spokesman Mike Keckler, the Idaho State Board of Education also declined to answer several specific questions.

State law “allows colleges and universities to employ private legal counsel to advise and represent them,” Keckler said. “The board does not approve outside counsel retained by the institutions.”

On Dec. 22, EdNews requested invoices related to the Phoenix purchases – bills to the UI and to the nonprofit that would finance the purchase, known now as Four Three Education. EdNews sought documents dating back to May 18, the day the Idaho State Board of Education approved the Phoenix purchase.

EdNews received more than 400 pages of UI and Four Three invoices on Wednesday. Citing attorney-client privilege and trade secrets, the Hogan Lovells invoices were almost entirely blacked out, leaving little more than the date and the total cost. The UI even redacted employees’ billable hours and billing rates.

Where the money went

The EdNews records request doesn’t reflect all of the money the UI spent on due diligence before the Idaho State Board of Education’s May 18 vote. The Hogan Lovells invoices, however, do include billings dating back to March 13, illustrating that the UI brought in the firm early in the acquisition process.

The UI’s responses are not current, either – because it took nearly two months for the university to fulfill EdNews’ request, and because the UI says it is still outsourcing work to Hogan Lovells and other vendors.

While only a partial snapshot, the $10 million for all legal costs in the invoices still far exceed the costs the UI has publicly acknowledged.

In a January interview with the Idaho Statesman, Green pegged the due diligence costs at $7 million. That was an early estimate, covering the 2022-23 fiscal year that ended June 30, the UI said Monday.

The UI spread its money around to multiple vendors:

Ernst and Young, an international accounting firm based in Secaucus, New Jersey, has received at least $994,000. The largest line item, according to invoices received by EdNews, went to “financial due diligence.”

Rieth Jones Advisors has received at least $714,000. The firm, based in Columbus, Ohio, with a satellite office in Sun Valley, Idaho, was among two firms hired to help “produce representations and closing conditions to mitigate any risks found,” according to a UI “frequently asked questions” web page on the Phoenix purchase.

PFM – the UI’s financial advisers, headquartered in Philadelphia – has received at least $580,000. PFM has advised the UI on past bond issues, and is assuming a similar role on the Phoenix purchase.

Hawley Troxell, a Boise-based law firm, billed the UI an additional $152,000 in November and December. Like the Hogan Lovells invoices, these documents also were heavily redacted, obscuring billing hours and rates. The $152,000 is on top of work that Hawley Troxell did on the front end.

UI officials have long cited a June memo from the firm – addressing the legality of the university’s plan to finance the Phoenix purchase through an affiliated nonprofit. Hawley Troxell has said Phoenix-related work resulted in a big increase in its UI billings in 2023.

But all of these costs pale in comparison to the $7.3 million UI has paid Hogan Lovells, Green’s previous employer.

Why Hogan Lovells?

The decision to hire Hogan Lovells was made not by Green, but by legal counsel, the UI said Monday. But Green “directed UI general counsel” to attorneys on Hogan Lovells’ staff.

“The university could have selected a different firm,” the UI statement said Monday. “However, Scott Green has managed some of the largest and most successful law firms in the country. His knowledge of the legal profession in this area is second to none. There is no question that his goal is what is best for the University of Idaho, and no reason to question that his recommendation of the Hogan Lovells firm puts the best interest of UI first.”

The UI also painted Hogan Lovells as uniquely qualified to consult on the Phoenix purchase.

On its Phoenix frequently asked questions page, the UI touts Hogan Lovells’ experience in acquisitions, education law and income tax law. In written responses to EdNews, the UI said the firm also is “a national leader in issues relating to the (U.S.) Department of Education.”

Green’s time at Hogan Lovells

Before returning to his alma mater in July 2019, Green was Hogan Lovells’ global chief operating and financial officer at the New York office. Now a university president with no background in academia, he was at the time the first nonlawyer to run a firm on the American Lawyer 100 list, which ranks the nation’s 100 highest-grossing law firms.

Green oversaw more than 3,000 employees in 30 nations, and ran Hogan Lovells’ global operations, finance, technology and conflicts functions, according to his biography on the UI’s web page.

Like Green’s UI roots – his undergraduate education in the early ’80s, his time as UI student body president – Green’s business background is woven into his public persona. Supporters of the Phoenix deal invariably point to Green’s Harvard MBA and his career in global finance.

In an Ada County courtroom in January, Green talked about his transition from Hogan Lovells’ boardroom to the administration building at his alma mater.

“I’m lucky,” said Green, testifying during the civil trial challenging the Idaho State Board of Education’s closed-door Phoenix meetings. “I’m from here. I plan to retire here. … I left a job I loved and took a job I love even more.”

‘Proper due diligence’

While many details of the work remain under wraps, UI and state board officials have defended the importance of outsourcing.

“President Green and his staff went to great lengths to ensure proper due diligence of this proposed transaction,” then-Idaho State Board of Education President Kurt Liebich said in a May 23 guest opinion.

The guest opinion cited Ernst and Young and Hawley Troxell. But it made no mention of Hogan Lovells – even though the UI was already on the hook for several million dollars of work with the firm.

That nonmention was not an attempt to cover up Hogan Lovells’ work, Keckler said.

“Ernst and Young is a national brand. Hawley Troxell is a statewide brand,” he said.

“Both were cited in the guest opinion, because of their name recognition as examples of experts used to vet the proposal.”

So, who pays these bills?

That’s another question surrounding the UI’s courtship of Phoenix. And the UI has sent mixed signals.

On its FAQs page, the UI says it will reimburse itself “from revenue streams emanating from the University of Phoenix.”

But this assumes that the Phoenix acquisition is indeed a moneymaker. UI officials have said they expect to collect $10 million a year from Phoenix, and have said they expect revenues to grow over time – but they have also acknowledged the university could be on the hook for $10 million a year in loan payments.

On Monday, in its responses to EdNews, the UI laid out a different plan for the outsourced costs. These costs will be folded into the $685 million in financing.

This plan, however, makes its own assumption. It assumes that the UI and Phoenix actually close a deal, and the clock is ticking.

If a deal isn’t done by May 31, either party could opt out. Court appeals have put financing on ice.

If Four Three can’t start marketing bonds by May 1, “the purchase of the University of Phoenix will be delayed and likely undone entirely,” UI general counsel Kent Nelson said in a court filing.

So, if the Phoenix sale falls through, the UI could be on the hook for the bills it has already paid, and other bills that follow.

“In the event the transaction does not close, the university will use reserves from sources other than general fund dollars to bear the unreimbursed costs,” the UI said Monday.

This story has been edited for length and style.