Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes


News Blog

Category: Fee Dispute

Fee Dispute Litigation Moves Forward with Firm that Skipped Retainer, Invoices

February 7, 2018

A recent New York Law Journal story by Jason Grant, “Client Fee Suit Continues Against Nassau County Law Firm That Skipped Retainer Invoices,” reports that a Nassau County law firm that failed to provide its client with a written retainer agreement or an accounting of time spent working on his case will continue to face a lawsuit alleging that the firm owes him thousands of dollars in never-earned fees.

An Appellate Division, First Department, panel ruled that the lawsuit, claiming breach of an oral agreement, launched by physician Alan Dubrow against his former lawyers at Herman & Beinin must go forward and not be dismissed.

Dubrow has sued the boutique firm for what he calls the “unearned portion” of a $176,500 retainer he paid to the firm near the start of his employment discrimination action, according to the panel. The exact amount of money he wants returned was not specified by the court.

“In context of an attorney-client relationship, the attorney bears the burden of showing that the parties’ fee agreement was fair, reasonable, and fully known and understood by plaintiff,” the unanimous panel wrote.

The panel simultaneously dispensed with Herman & Beinin’s argument that Dubrow’s breach claim was barred by the “voluntary payment doctrine.” The court wrote that, “while defendants assert that plaintiff voluntarily made payments to compensate them for their services, they have not established that plaintiff had full knowledge of the relevant facts, such as the number of hours spent by defendants in connection with their representation of him. Nor did they submit any evidence to show that the amount of plaintiff’s payments was fair and reasonably related to the value of services rendered.”

On Tuesday, Herman & Beinin’s Mark Herman, who described himself as having more than 35 years of litigation experience, said that while he “respects” the First Department’s decision, he believes the panel “failed to appreciate the fact that Dubrow didn’t want a retainer.”

“There was never a retainer because he didn’t want a retainer. We’d be happy to give him a retainer,” Herman said by phone, adding that “every quarter [we took in payments from Dubrow] was earned.”

“I’m not in the business of taking money and not doing services for it. That’s wrong,” Herman said. He added that as the case progresses, his firm intends to provide an itemization of the time it billed when representing Dubrow in what he said was an age discrimination lawsuit lodged by the nephrologist after being dismissed by Beth Israel Medical Center.

But the panel, composed of Justices Sallie Manzanet-Daniels, Judith Gische, Peter Tom, Ellen Gesmer and Anil Singh, wrote in the Jan. 25 decision that Herman & Beinin had “not conclusively refute[d] plaintiff’s allegations,” and therefore its motion to dismiss had been properly denied by Manhattan Supreme Court Justice Ellen Coin.

The justices also took the Bellmore, Long Island, law firm to task for not providing Dubrow with more information about the lawyer-client relationship, and the billing and services performed. “It is undisputed that defendants never provided plaintiff with a written agreement, as required under 22 NYCRR 1215.1, and failed to provide plaintiff with written billing statements, as required by 22 NYCRR 1210.1(4),” the panel wrote in Dubrow v. Herman & Beinin, 651605/16.

“Nor does defendants’ contention that plaintiff never questioned their legal fees until the underlying matter was dismissed on summary judgment warrant dismissal,” the court continued. “Plaintiff alleges that defendants promised to return any balance at the resolution of the underlying action, and his attempts to obtain an accounting after dismissal of the action are in line with this alleged understanding.”

Jonathan Strauss, the lawyer for Dubrow, said that while it has been hard to pin down the exact amount of money owed to his client, because he “still doesn’t have a breakdown” of the services rendered by Herman & Beinin, “it’s nowhere near 176,500.”

“It’s much more of a nominal amount,” he said, while contending that Dubrow had paid Herman & Beinin the large retainer in advance of a trial or appeal, but that his discrimination action never went to trial because it was dismissed.

Strauss, a solo practitioner in Manhattan, also said that he has asked for punitive damages against the law firm, “because I think a New York County jury may look at this and find outrageous conduct in it.”

“If jurors believe the worse [about Herman & Beinin and the firm’s motives], they could decide to send the bar a message” by awarding high punitive damages, he said. Then, after pausing, he said of the entire episode and lawsuit, “It’s disturbing that it has had to come to this.”

Fee Allocation Dispute in Toyota’s Defective Accelerator Settlement

February 5, 2018

A recent Star Tribune story by Randy Furst, “Lawyers in Minnesota Toyota Case Battle Over Legal Fees,” reports that three years after a Minneapolis jury awarded $11 million in a suit against Toyota over a high-speed crash that led to three deaths, the lawyers for some of the victims are in a bitter dispute over the spoils.

More than $1 million in legal fees is at stake, and law firms continue to battle over who gets what, with some accusing others of exaggerating their roles in winning the hefty verdict and appeals.  A jury found that a 1996 Toyota Camry’s accelerator was defective.

“These money disputes between and among lawyers often bring out the worst in lawyers,” says Joseph Daly, emeritus professor of law at Mitchell Hamline College of Law. “It fits the stereotype of lawyers not pursuing justice but pursuing money.”

One firm, Napoli Shkolnik, based in New York, is accused by other lawyers of having so botched its role it should get no payout at all.

“What cannot be disputed is that the Napoli firm’s conduct was grossly negligent, in reckless disregard of their duties as lead counsel and harmful to plaintiffs,” wrote attorney W.B. Markovits of Cincinnati in a court document filed on Jan. 5.

The Napoli firm’s response is sealed. But in an earlier brief, Napoli’s Nicholas Farnolo argued that Napoli’s lawyers did not conduct themselves “in bad faith” and that “no actual fraud was conducted and the firm deserves to be paid for its work.”

It’s all in the hands of U.S. District Judge Ann Montgomery, who presided at the February 2015 trial where lawyers for Koua Fong Lee of St. Paul convinced a jury that the fatal 2006 crash was caused by an accelerator that became stuck, increasing speed even as he applied the brakes.

Three people died and several others were seriously injured.

Neither Lee nor his attorneys, headed by Texas lawyer Bob Hilliard, are involved in the post-trial dust-up over fees, though Hilliard was the lead attorney and most responsible for the victory at trial.

The dispute instead largely involves the lawyers who represented the people who were riding in the Oldsmobile Ciera that Lee’s Camry struck, along with their surviving families.

Killed in the crash were Javis Trice-Adams, Sr., 33, and Javis Trice-Adams Jr., 10, both of whom died instantly, and Devyn Bolton, 6 at the time of the accident, who died a year later after being rendered quadriplegic.

In the civil verdict against Toyota, the main payouts went to Bolton’s mother, Beatrice Trice ($5.5 million); Lee ($785,000); his wife, Panghoua Moua ($884,000); Bolton’s grandfather Quincy Adams ($1.7 million); and Trice-Adams Sr.’s daughter Jassmine Adams ($3 million).

The Trice family went through several attorneys.

The victims in the Ciara first retained attorney Michael Padden of Lake Elmo. Padden sought the assistance of lawyer Kenneth R. White of Mankato.

White and Padden brought in the firm of Waite Schneider Bayless & Chesley of Cincinnati. But a key lawyer in that firm was accused of wrongdoing in an unrelated case and recommended he withdraw, to be replaced by the Napoli firm.

In 2014, Trice learned the Napoli firm made a pretrial offer to Toyota — to settle for $5 million — without consulting her or her attorneys, White and Padden. Toyota then broke off settlement talks because the “demands were too high to lead to productive negotiations,” according to documents.

Trice fired Napoli and retained the law firm of Markovits, Stock & DeMarco. “This conduct breached your fiduciary duty with me and is totally unacceptable,” she wrote Napoli. Padden also wrote Napoli that “the whole scenario is unconscionable and incomprehensible to me and Mr. White.”

The other lawyers also accused the Napoli firm of failing to disclose all the medical bills in time for trial, costing Trice $500,000 that the jury might have awarded, and $250,000 in prejudgment interest. “Under the facts and law presented herein, the Napoli firm has forfeited any right to attorney’s fees arising out of this case,” Markovits wrote.

Farnolo of the Napoli firm wrote that not communicating with his clients “was a harmless error” and that the demand was similar to the award ultimately gained through the trial. He said attorney White shares the blame because he did not disclose the additional medical bills, either.

Markovits also said that while Padden was supposed to get 30 percent of the fees and White 15 percent, it should be reversed. “The evidence does not support that the service performed by Mr. Padden warrants 30 percent of the fee,” firm representatives wrote. “He has no time records supporting work performed, and the record shows that his substantive involvement was minimal.”

Padden’s response is redacted but he includes among his exhibits an affidavit from former St. Paul Pioneer Press reporter Emily Gurnon in which she said Padden was her “main source” for articles on the case and his work was “very important.”

“While publicity may have helped Mr. Padden,” Markovits wrote in response, “Mr. Padden cannot be suggesting that the jury verdict or the post-trial or appellate decisions in this case were due to his public relations efforts. This was not significant, nor time-consuming, substantive work.”

Daly, the professor, said if Montgomery does not decide the matter herself, she will order the law firms to hire a mediator.

If she decides the case, Daly said, “In all likelihood she’ll consider three things: the quality of work, the amount of time and effort put in by each law firm, and the degree of negligence, if any, by the lawyers handling the case.”

PA Court: Employer Can’t Clawback Attorney Fees Already Paid

January 19, 2018

A recent Business Insurance story by Gloria Gonzalez, “Employer Can’t Claw Back Mistaken Payment to Attorney: Court” reports that the Pennsylvania Supreme Court has ruled that an employer cannot recover attorneys fees erroneously paid to an injured worker’s lawyer.

Section 440 of the Pennsylvania Workers’ Compensation Act provides that an employee in a workers compensation case is entitled to attorneys fees when an insurer unreasonably contests its liability under the statute, according to the ruling released Thursday in County of Allegheny v. Workers’ Compensation Appeal Board.

The employer, Allegheny County, was ordered to pay $14,750 in attorneys fees under Section 440 after the Workers’ Compensation Appeal Board determined that the county unreasonably contested its liability. The county sought to stop enforcement of the order, which was denied, so the county paid the awarded fee to the employee’s counsel.

However, the Commonwealth Court reversed, concluding that the county not only had a reasonable basis for its contest, but a prevailing one, and that the employee was no longer entitled to workers compensation benefits. After that, the county filed a separate petition before a workers compensation judge in which it sought reimbursement of the erroneously awarded attorneys fees from the employee’s counsel, according to the ruling.

But the state Supreme Court found that the General Assembly, in enacting the Workers’ Compensation Act, did not provide any mechanism by which employers can recoup erroneously awarded counsel fees once paid. Rather, the General Assembly contemplated that when a merits appeal is undertaken, a court may suspend an order awarding attorneys fees, according to the ruling. Because such an order was requested and denied in this case, requiring the appellee to pay the awarded attorneys fees, and there is no statutory provision authorizing reimbursement if the award is reversed, the Supreme Court held that the county may not recoup the already paid attorneys fees from the employee’s counsel. The Supreme Court vacated the Commonwealth Court’s order and reinstated the order of the Workers’ Compensation Appeal Board, which affirmed the denial of the county’s reimbursement petition.

“Indeed, the absence of a statutory provision expressly providing for reimbursement of attorney’s fees is consistent with the General Assembly’s overall policy goals in enacting this statutory scheme,” the court said in its ruling.

“It is not the function of this court to add missing language to a statute in order to provide relief, particularly when doing so would undermine that statute’s goals of protecting workers and discouraging employers from unreasonably contesting their liability,” the court continued. “Consequently, we decline to engraft on to the act a means for reimbursement of previously paid counsel fees, where the General Assembly did not see fit to so provide.”

“The Supreme Court got it right,” said David Landay, a Pittsburgh-based attorney who represented the injured worker, Harold Parker. “This was a unanimous decision, which is unusual for this court, and the decision was rendered within three months of oral argument, which is really fast. They clearly knew the Commonwealth Court made an error. All the court was doing was returning us to status quo because the law has always been and should always be that lawyers do not have to return their unreasonable contest fees. If we had to give back those fees, there would be a chilling effect.”

Attorney Fee Dispute in Keystone XL Matter

January 15, 2018

A recent KMTV story by Nick Starling, “Keystone XL Court Battle Over Attorney Fees” reports that the Nebraska Supreme Court took up a case involving legal fees stemming from a battle between landowners and oil company TransCanada in 2015.

Landowner attorney Dave Domina said each of his clients is owned $8,841 times 40 cases equals more than $350,000. 

"TransCanada doesn't want the landowners to have money for ammunition," said Domina, "We decided what we thought was a reasonable amount we took that up with our landowners and they agreed."

However TransCanada attorney Jim Powers argues the fee agreement was never offered, "There may be 46 cases or may be 100 more where attorney fees has been rewarded but not under this statute as far as affidavit evidence."

Powers claims this so-called contract lack specifics, "What is the fee agreement-what did you agree at the get-go, if it changed then discuss it, what evidence did you have."

For the dozens of landowners listening to this case, they said the money will help out.

"We aren't rich people, none of us are rich and we all have other obligations to try and make a living. And those of us farming and ranching-it's kind of difficult right now," said landowner Art Tanderup. 

Others view the potential compensation as being accountable, "It's a moral argument, I have my grandson here this is about keeping the world in-tact for what's coming," said landowner Jeanne Crumly. 

The Supreme Court will likely take months before making a final decision in this case. 

$10M Fee Award in Subway Co-Founder Case

January 10, 2018

A recent Delaware Business Court Insider by Celia Ampel, “Holland & Knight Nabs $10M Fee Award in Subway Co-Founder Case” reports that Holland & Knight attorneys were awarded more than $10 million in fees and costs on a nearly $13 million verdict they won for the estate of a Subway co-founder.

The fee award stemmed from the jury’s finding of civil theft against developer Anthony Pugliese, his business manager Joseph Reamer and the Pugliese Co.  The defendants stole $2.9 million from Subway co-founder Fred DeLuca that was meant to be invested in a real estate project south of Orlando, the jury found in February 2017.

Civil theft findings allow judges to award attorney fees before an appeal is complete.  The defendants are challenging the DeLuca verdict before the Fourth District Court of Appeal.

Palm Beach Circuit Judge Donald Hafele awarded Holland & Knight about $8.6 million in attorney fees, $1.3 million in costs and $19,000 in expert witness fees for eight years of litigation.  He also added $317,000 in prejudgment interest for a total of $10.3 million.

The firm tallied about 25,000 hours of work on the civil theft claims from 10 attorneys and two paralegals.  “The amount of attorney’s fees and costs awarded by the court was reasonable, given the fact that the Pugliese parties contested nearly every issue, regardless of how small or insignificant it was,” said Holland & Knight partner Rick Hutchison in West Palm Beach, who put in more than 5,000 hours on the claims.

The defense challenged the fee award, arguing Holland & Knight deserved no more than about $1.5 million in fees, particularly given that the civil theft award was $2.9 million.

The judgment came to $12.8 million after the theft amount was tripled and the jury awarded $4 million for breach of contract.  The judge added interest but deducted $1.2 million in restitution Pugliese paid as the result of a criminal case in which he was sentenced to six months in jail and 10 years of probation.

“The DeLuca parties’ counsel were only able to convince a jury to award an additional $1.7 million in damages after 20 days of trial,” wrote Pugliese attorney John Mariani of Kammerer Mariani in West Palm Beach in a court filing.  “Consequently, compared to the $43 million they demanded but did not receive, the DeLuca parties cannot state to this court that the attorney’s fees Fexpended are justified by the result.”  The door is still open for the DeLuca parties to ask for more attorney fees under the Florida Deceptive and Unfair Trade Practices Act after the appeal is done.