Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Dispute

Plaintiffs Firm Sues for Fees in Celgene $280M Settlement

August 16, 2017

A recent Bloomberg Big Law Business story by Max Siegelman, “Plaintiffs Firm Sues for Fees in Celgene $280M Settlement,” reports that court filings show plaintiffs law firm Grant & Eisenhofer is suing their former client and their former co-counsel from a $280 million settlement against pharmaceutical giant Celgene Corporation.

G&E claims it racked up a $7 million tab that has not been paid since the case was settled in July, and that it is entitled to a share of the contingency fee for the recovery effort.  Their original deal would have won the firm anywhere between $28 and $33 million, according to the complaint filed in California federal court.

In 2010, G&E filed a complaint against the pharmaceutical company Celgene on behalf of Beverly Brown, one of its former sales managers.  According to that complaint, the company pressured Brown and others to promote the drug Thalomid as a treatment for bladder, breast and brain cancer, despite lacking FDA approval for these uses.  As part of its marketing plan, the complaint alleged, Celgene dispatched over 100 “agents,” to hospitals and doctors offices around the country to aggressively push the drugs and their untested results.

The case was settled for $280 million in July, 2017.  Most of the settlement is earmarked for the federal government, 28 states and Washington D.C.  The payment is equivalent to about two weeks worth of sales of Revlimid, which generated $6.97 billion in revenue for Celgene last year, according to data compiled by Bloomberg News.

G&E is suing Brown, California firm Bienert, Miller & Katzman, and South Carolina based Richard Harpoolitan on the grounds that those firms and a former G&E director Reuben Guttman, poached Brown as a client after Guttman left the firm.  They are suing for breach of contract, intentional interference with contract, quantum meruit and declaratory relief in the U.S. District Court in the Central District of California.

The claims stem from a frayed relationship between the firm and Guttman, who took on the plaintiff Brown as a client in 2009, according to the complaint.  He left the firm in early 2015 and shortly after, Brown replaced the G&E legal team with Guttman and another former lawyer from the firm who later started a firm with Guttman called Guttman, Buschner & Brooks PLLC.

Despite the switch, G&E claims it should be compensated for the work it performed on behalf of Brown in the case.  According to the G&E complaint, whistleblowers typically receive 25 to 30 percent of the settlement.  Given the $280 million settlement with Celgene, that means Brown could receive anywhere from $70 to $84 million as a whistleblower “bounty,” some of which will go to her legal team.  According to G&E, their original deal with Brown would have won the firm a 40 percent contingency fee — anywhere between $28 and $33 million.

Law Firms Dispute Attorney Fees in Nearly 200 NFL Concussion Cases

August 15, 2017

A recent Legal Intelligencer story by Max Mitchell, “Fla. Firms Challenge Fee Liens in Nearly 200 NFL Concussion Cases,” reports that four Florida law firms that banded together into a limited liability company are disputing attorney fees in nearly 200 cases that resolved under the National Football League's settlement over concussion-related conditions.

The firms, which formed a professional limited liability company called Neurocognitive Football Lawyers PLLC, filed objections to attorney liens filed in 184 cases pending in the U.S. District Court for the Eastern District of Pennsylvania.  The objections contend that the attorneys who filed the liens at issue do not currently represent the 184 former players, and those attorneys failed to properly file those liens with the court, or provide any material benefits to their former clients.

"The vast majority of the liens were asserted by former individual counsel who filed boilerplate lien notices with no detail, or with scant detail reflecting any beneficial service that may have been performed for each listed NFL player before the effective date of the settlement," the objection, filed by Theodore Karatinos of Holliday Karatinos Law Firm in Tampa, Florida, said.  "While prior counsel may assert a quantum meruit lien after being discharged, most of the discharged counsel failed to prove that their legal services conferred substantial benefits to their clients, the former NFL players."

In 2013, the NFL agreed to settle the roughly 20,000-plaintiff multidistrict litigation for about $1 billion.  Some players sought—and failed--to challenge the accord, and some opt-out plaintiffs were recently given permission to outline a new set of claims against a company that made football helmets.

In February, lead attorneys in the litigation also filed a request asking the court to award $112.5 million in legal fees.  Since that time numerous attorneys have sought to score their piece of the potential fees.

The objection filed was not the first time the Neurocognitive Football Lawyers have disputed with others over the fees.  In March, the group asked the court to appoint a special fee master to look into the proposed fee agreements, and challenged the amount proposed be set aside for the lawyers.

The latest objection for the four firms focused on the argument that the prior counsel could not show the plaintiffs received any benefit from their former attorneys' representation, and contended that some of the discharged firms did not register the player with the claims administrator.

"Sending emails and form letters to the former NFL players with updates on the progress of the concussion class action before the claims process opened constituted an immaterial legal service," the objection said. "Where the former NFL player could simply Google the case website or secondary news source for updates on the progress of the case, legal services which merely updated the clients provide no 'reasonable value.'"

The objections also said that Pennsylvania law does not allow a discharged attorney to assert a lien on an unmatured contingency fee, and that many of the firms were unable to produce a fee agreement for the court to evaluate the claims.

Fee Dispute Between Firms in SAC Capital Case

August 2, 2017

A recent New York Law Journal story by Christine Simmons, “Reed Smith Battles Rival Firms Over Fees, Conflicts in SAC Capital Case,” reports that two plaintiffs firms are urging New York judges to deny Reed Smith's claim to $6.75 million in attorney fees for its work as co-counsel in a securities class action, claiming the traditionally defense-side firm misled them in stating it was free from conflicts.

Wohl & Fruchter, a four-attorney firm that was class counsel with Pomerantz, contends Reed Smith should not be allowed any portion of a $27 million attorney fee award obtained in May in the class action against SAC Capital Advisors and other defendants.  "No reasonable attorney would have supported Reed Smith's continued representation of the plaintiffs," said the class counsel firms, represented by Paduano & Weintraub in the fee dispute, in explaining why the firm was terminated.

The fee dispute became heated in June when Reed Smith filed a lawsuit in Manhattan Supreme Court against Wohl & Fruchter and name partner Ethan Wohl, alleging tortious inference with a contract and unjust enrichment.  Reed Smith claims that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm "overmatched by the resources available to the SAC defendants," represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell.

Under its engagement letter, Reed Smith said it immediately committed significant resources to the SAC action.  And soon after Reed Smith filed notices of appearance in the case, the SAC defendants reached out to Wohl for settlement discussions, Reed Smith said.  "Reed Smith's appearance was the obvious catalyst for the settlement discussions, which proved to be successful," the firm claims.

But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith.  "[Wohl] intentionally exploited Paul Weiss' statements in order to malign Reed Smith and to induce the lead plaintiffs to terminate the engagement agreement," Reed Smith said.

Wohl and his firm deliberately blocked and excluded Reed Smith from any interactions with the lead plaintiffs or opposing counsel in the SAC case, Reed Smith claims.  Reed Smith's engagement agreement states if the firm is terminated for any reason other than good cause," Reed Smith will continue to be entitled to the contingent fees," the firm notes.

Reed Smith was originally represented in the fee dispute by Marc Kasowitz at Kasowitz Benson Torres.  Earlier this month, Dechert partners Gary Mennitt and Andrew Levander replaced Kasowitz as Reed Smith's counsel.  Hitting back, the Wohl firm has moved to dismiss Reed Smith's case in state court.  It also brought a motion in the federal securities case last week, urging Koeltl to deny the fee claims and enjoin the state lawsuit.

Wohl and Pomerantz said Reed Smith should be barred from asking for fees because it chose not to apply for fees before the federal court and because its claim is too late.  The firms argue Reed Smith represented the plaintiffs "for less than a week," and the firm was dismissed after admitting it was not free from conflict.  "Its conflicts of interest and lack of candor fully justified class counsel's determination that it should be terminated," they said.

Fee Allocation Dispute in MDL Moves to Texas Court

July 24, 2017

A recent Law 360 story by Michelle Casady, “RI Atty Must Face Fee Dispute Suit in Texas, Court Affirms,” reports that Texas' Fifth Court of Appeals affirmed a trial court's ruling in a fight between two plaintiffs firms, holding a Rhode Island-based attorney and his firm will have to face litigation in Texas stemming from a fee-sharing agreement with a Texas attorney and his firm.

John E. Deaton and Deaton Law Firm LLC had argued the trial court wrongly refused to dismiss him and his firm from the dispute with Texas attorney Steven M. Johnson and his firm, Steven M. Johnson PC.  Deaton, who served as local counsel for Johnson's firm in multidistrict litigation over alleged injuries from hernia mesh made by C.D. Bard Inc. subsidiary Davol Inc., argued he shouldn't have to litigate the fee dispute in Texas.

Johnson — who negotiated a global settlement for nearly 200 mesh cases the lawyers had worked on together — had argued that when Deaton signed a stipulation of nondisclosure related to the settlement amounts for Johnson's clients, Deaton became bound by the terms of the underlying attorney representation agreements Johnson signed with his clients, which stated disputes would be arbitrated in Texas.  That includes the agreement with Louisiana resident Rickie Patton, he argued.

Deaton, who argued his role in the case is defined by his fee-sharing agreements with Johnson that contain no arbitration clause, has claimed Johnson failed to pay him 5 to 10 percent of fees earned as part of the global settlement Johnson negotiated.

The Fifth Court of Appeals held that all of the Johnson law firm attorney representation agreements, including the one with Patton, contained clauses that disputes would be arbitrated in Texas.  The court rejected Deaton's argument that he wasn't a signatory to Patton's attorney representation agreement.

“We conclude that, by undertaking to represent Patton as 'associate counsel' under the attorney representation agreement and reaffirming his status by signing the stipulation as to nondisclosure, Deaton consented to personal jurisdiction in Texas under the terms of the attorney representation agreement,” the court wrote.

Deaton served as local counsel on 174 hernia mesh cases for Johnson in Rhode Island state court over a period of eight to 10 years, and worked on one case, Patton's, in federal court.  That case was initially filed in the Southern District of Texas but was transferred to Rhode Island District Court for pretrial proceedings.  Deaton hired a Texas expert witness for the Patton case, which would have been tried in Texas had it not been for the global settlement.

In oral arguments before the appellate court in May, an attorney for Deaton said while he had recommended the expert, it was Johnson who hired and paid the witness and Deaton never visited Texas during that time.

But Johnson's attorney told the panel Deaton spent eight years working on a Texas federal case, establishing jurisdiction in Texas for the fee dispute.  Although the Patton case's original pretrial proceedings were in Rhode Island, Deaton's pretrial work was all aimed at a trial in Texas, and he had availed himself of the protections of the state.

NALFA’s Fee Dispute Mediation Program Achieves 86% Success Rate

July 19, 2017

NALFA’s Fee Dispute Mediation Program is the nation’s only program devoted exclusively to resolving attorney-client fee disputes.  NALFA’s Fee Dispute Mediation Program recently reached an achievement:  Since the program began, NALFA’s Fee Dispute Mediation Program has achieved an 86% success rate—parties who mediate in a session are resolved six out of every seven times.  This rate is significantly higher than most bar-administered fee dispute programs.  NALFA has settled over $5 million in disputed attorney fees between parties in over 40 cases.  The cases were brought by corporate clients and law firms ranging from fee disputes of $32,000 to $975,000 from across the U.S.  One fee dispute case was from the UK.

Attorney fee disputes are the result of a breakdown in the attorney-client relationship.  This breakdown may be a misunderstanding in the fee agreement or confusion over the law firm billing records.  Whatever the cause, mediation is the quickest, simplest, and most cost-effective way to resolve these attorney fee disputes.  NALFA fee dispute program is a private mediation service specifically designed to resolve attorney fee disputes of all types and sizes.

NALFA's fee dispute mediators are uniquely qualified to resolve fee disputes between parties in a cost effective and confidential manner.  These fee dispute mediators are trained neutrals who understand the underlying issues in fee and billing dispute matters.  Our fee dispute mediators are highly knowledgeable on reasonable attorney fees and proper legal billing practices.  They understand the array of issues in fee dispute cases such as fee agreements, hourly rates, billing practices and attorney fee ethics.

Unburden by bar association rules, NALFA provides parties with a mediation process that is flexibility, responsive and cost-effective.  Parties control when and where the mediation will occur, who will serve as the mediator, and whether they will accept a settlement offer.  Unlike most bar-administered programs, NALFA stays with the fee dispute case as long as necessary to bring it to a resolution.

"Our 86% success rate belongs to the outstanding work of our members, some of the nation's top rated fee dispute mediators," said Terry Jesse, Executive Director of NALFA.  "Their understanding of fee issues and their mediation skills are the reason we're celebrating this achievement," Jesse concluded.