Pride, anger fueled Conte-Towson U. fight

October 10, 2001|By Jay Hancock

ECONOMIST Michael Conte got on Towson University's bad side long before his bosses there accused him of incompetence and betrayal.

It was the bonus.

As director of the university's RESI economics institute, Conte thought he was owed $124,000 in incentive pay for 1997. That was on top of a base salary of $127,000.

It must have seemed outrageous. Even Towson's full professors made an average of only $57,000 at the time, and top school administrators apparently balked at the idea of an employee making more than they did.

University President Hoke L. Smith earned $140,000 that year, a school spokeswoman said.

Conte pushed. The school hedged. Conte walked out of a meeting with bosses. Then came a cash-flow problem. Then Conte hung up on a client. Then came allegations of billing irregularities. Then things went kablooey.

The first lesson from the Conte-Towson fight is that financial litigation soon gets to be about more than the money. Interviews with participants and a review of documents suggest the spat ended up being driven by pride and anger as much as dollars.

A few days ago a Baltimore County jury awarded Conte $927,000, finding the state-run university unjustly fired him.

On both sides, the span of the spite is impressive. Conte and his lawyers spent thousands of hours on the case and had Towson produce 10,000 pages of documents.

The state, for its part, called more than a dozen witnesses and deposed Conte for four days. The state rejected what Conte's attorney said was a settlement proffer of around $400,000, possibly because the Board of Public Works was unlikely to accept it.

The second lesson is a parable of the ivory tower and the mahogany boardroom.

Any business person contemplating an academic partner might want to chat with Conte, now an independent consultant, about his Hell Year at Towson.

Any university administrator eyeing a venture with incentive-driven entrepreneurs could do worse than phone up former Towson University Provost John Haeger, now at Northern Arizona University, and ask about Conte.

In the interest of full disclosure, I should say that I have known Conte for years and that in the past he has helped me and numerous other reporters at The Sun by supplying data and insight on the Maryland and U.S. economies.

He is extremely bright and confident, and it's not hard to see how he came across to his academic bosses as pushy and condescending. He built RESI from nothing into a 110-person shop through smart marketing and innovative crunching of regional economic data, starting at the University of Baltimore in 1989 and moving to Towson amid big hoopla in 1996.

The prominence of RESI - Regional Economic Studies Institute - threw credit on the university that sponsors it.

Founded as a teacher's college in 1866, Towson is overshadowed by other state schools but has made strides recently in reputation and scholarship, of which RESI is a part.

The institute booked a surplus of $1.17 million last year, according to Conte's lawyer. The school declined to comment on the figure.

The bonus clauses in Conte's contract seem plain enough. For every dollar of RESI revenue over $1.5 million, Conte was supposed to get a cut: 6 percent of the first $500,000; 5 percent of the second $500,000; 3 percent of the rest.

The school wanted the economist to find new business. He did. Then it wouldn't pay him.

By June 1998 Conte was threatening to sue. Memos from his bosses went from "Dear Michael" to "Dear Dr. Conte."

Then there were administrative problems. The place had ballooned in employment; workers complained about what they saw to be Conte's erratic management; a top client had sharply cut its contract; and managers warned that the institute was running in the red.

The client, Maryland's Department of Human Resources, was also challenging RESI on billing. Richard Larson, an experienced, respected DHR manager, thought Conte might be charging DHR to pay for other institute projects. A quick university investigation seemed to support his suspicions.

Adding to the unease was Conte's work on a plan - approved by the school - to set up RESI as a for-profit company with the possibility of stock ownership for managers. There was talk of seeking venture capital.

He was gone by December.

Conte's legal victory last month was an expensive embarrassment for the university, whose case for sacking him eroded in court.

Yes, there was a problem tracking expenses and creating bills. But much of it was of the university's own device. With one exception, said to be an accident, DHR apparently was never charged for work it did not commission.

Yes, there were cash-flow and management issues. RESI under Conte wasn't going to win any Six Sigma process-quality awards. Employees sat around for weeks at a time "reading" while bosses tried to land business to put them to work, according to testimony.

But Towson did not prove to the jury that Conte was incompetent, which was the standard it needed to can him.

The university now knows the result of spicing employment contracts with open-ended incentive clauses, and it learned that entrepreneurs sometimes sail closer to the wind than you would like when it's your money on the line.

Conte found that university backing isn't the same thing as having a bank loan or equity partner, and that academic politics and personalities are sometimes more important than business prospects.

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