Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Dispute

Four Season’s $11M Fee Dispute in Arbitration

June 5, 2017

A recent the Law 360 story by Natalie Olivo, “Four Seasons Hotel’s $11M Fee Spat Sent to Arbitration,” reports that the owners of a Four Seasons-branded hotel in Los Angeles will have to arbitrate their request for the hotel chain to return an award of nearly $11 million in legal fees stemming from a contract dispute over split loyalties, after a California judge cited the companies’ arbitration agreement.

In sending Burton Way Hotels LLC’s fee request to arbitration, U.S. District Judge Philip S. Gutierrez noted that Ontario-based Four Seasons Hotels Ltd. has contended that the parties’ arbitration agreement covers the fee request, which should be decided by a new arbitration panel.  In addition, Judge Gutierrez said, Burton Way has indicated that it was also willing to have the fee request decided in arbitration.

“In light of the clear language in the parties’ arbitration agreement providing for the arbitrators’ power to adjudicate the questions presented in Burton Way’s fees motion, and the parties’ mutual agreement to bring the fees motion before the new arbitration panel, the court concludes that the fees motion is to be decided by the new arbitrators pursuant to the parties’ arbitration agreement,” Judge Gutierrez said.

The award at issue was handed down in underlying arbitration that dismissed Burton Way’s claims accusing Four Seasons Hotels of breaching their deal for the exclusive use of the brand and ordering Burton Way to pay Four Seasons $10.2 million in fees and costs.  However, after the Ninth Circuit vacated the award in October, Burton Way sought to have the payment returned, saying it is now owed more than $10.9 million with interest.

Neal Marder, an Akin Gump Strauss Hauer & Feld LLP attorney representing Burton Way, told Law360 that "we advised the court that Burton Way was comfortable with the panel deciding this issue so the decision was welcomed and not unexpected."

The dispute over Four Seasons' decision to manage and operate the nearby Regent Beverly Wilshire Hotel, which Burton Way says is a direct competitor, has been barreling back toward arbitration at least since Judge Gutierrez refused Burton Way's bid last month to void an agreement to arbitrate the dispute over a licensing deal under which Four Seasons has managed the Burton Way-owned Four Seasons Hotel Los Angeles since the late 1980s.

Burton Way had claimed the arbitration agreement was void because the hotel owner agreed to it only if a certain judge — who recused himself in January under a request from Burton Way alleging improper ex parte communications — was involved in the arbitration.  But Judge Gutierrez instead ruled that the provisions did not reference the judge in a way that would render the agreement void now that he has recused himself.

Following Judge Gutierrez’s order declining to void the agreement, the parties have squared off over remaining issues in the dispute.  Four Seasons in April told the court that Burton Way could not relitigate the entire contract case, arguing that the Ninth Circuit issued a very limited mandate for still-live issues to be contested when the case returns to arbitration.

According to Judge Gutierrez’s order, Four Seasons had noted that Burton Way’s fee request depends on a determination of which party is the “prevailing party, which is a question reserved for the arbitrators.

While Burton Way had also agreed to arbitrate its fee request, the company claimed that Four Seasons was trying to keep the district court from ruling on the fees motion on the grounds that it has no jurisdiction under the parties’ arbitration agreement, while at the same time asking the court to rule on the scope of the Ninth Circuit’s order, rather than allowing both issues to be arbitrated.

The case is Burton Way Hotels Ltd. et al. v. Four Seasons Hotels Ltd., case number 2:11-cv-00303, in the U.S. District Court for the Central District of California.

Jenner Wins Fees in Contingency Agreement

May 23, 2017

A recent the NLJ story by Marcia Coyle, “Skadden Loses a Tax Dispute, and Jenner Wins Fee Fight,” reports that Jenner & Block won fees in a case, Parallel Networks v. Jenner & Block, that stemmed from a 2007 contingency fee arrangement in which Jenner agreed to represent Parallel Networks in two patent cases.

The fee arrangement contained a provision that allowed the law firm to withdraw from the representation and still get fees whenever it “determine[d] at any time that it is not in its economic interest to continue the representation.”  If the firm withdrew, Parallel Networks was to pay “an appropriate and fair portion of the Contingent Fee Award” at “the conclusion of any” patent lawsuit.  The agreement also called for arbitration of any disputes.

Jenner & Block did withdraw.  New counsel entered and settled the two patent cases.  In 2011, Jenner submitted a $10 million fee request that Parallel Networks would challenge.  The dispute went to arbitration and Jenner was awarded $3 million and a 16 percent future contingent stake.  On appeal, Parallel Networks argued the withdraw-and-still-pay provision was prohibited under Texas law.  Texas state courts upheld the award.

In the high court, Parallel Networks, represented by Daniel Geyser of Stris & Maher, argued the circuit courts were divided over whether public policy challenges are viable under the Federal Arbitration Act and also are confused about the permissible grounds for vacating arbitration awards following the Supreme Court’s 2008 decision in Hall Street Associates v. Mattel.  “There is simply no indication that Congress intended to intrude on the power of state courts, acting under settled state law, to resist arbitration awards that violate core state public policies,” Geyser wrote.

Jenner & Block waived its right to respond to Parallel Network’s petition.  In earlier litigation, the law firm had argued that it had invested 24,000 hours in the patent litigation, which formed the basis for the later successful outcome.  The firm said it had reason to withdraw because Parallel Networks was habitually late reimbursing litigation expenses.

“We’re obviously disappointed,” Geyser said.  “There was an acknowledged conflict on an important issue that has caused substantial confusion in the lower courts.  This case was an appropriate vehicle, and we wish the court had decided to take it up.”

Firms Fight over Jurisdiction in Fee Allocation Dispute in MDL

May 22, 2017

A recent the Law 360 story by Jess Krochtengel, “Plaintiffs Firms Duel Over Texas Jurisdiction in Fee Fight,” reports that a Rhode Island attorney who served as local counsel for a Texas firm in multidistrict litigation over hernia mesh made by C.D. Bard Inc. subsidiary Davol Inc. told a Texas appellate court he shouldn’t have to litigate a fee dispute in Texas.

Attorney John E. Deaton and his Deaton Law Firm LLC, both based in Rhode Island, say a Dallas trial judge wrongly refused to dismiss them from a dispute over a fee-sharing agreement with Texas attorney Steven M. Johnson and his firm, Steven M. Johnson PC.  Deaton has claimed Johnson failed to pay him 5 to 10 percent of fees earned as part of a global settlement Johnson negotiated for nearly 200 mesh cases the lawyers had worked on together.

Johnson argues that when Deaton signed a stipulation of nondisclosure related to the settlement amounts for his clients, Deaton became bound by the terms of underlying attorney representation agreements Johnson signed with his clients, including their provision disputes, would be arbitrated in Texas.  Deaton argues his role in the case is defined by his fee-sharing agreements with Johnson, which don’t have an arbitration clause.  The case has “far-reaching implications for any local counsel hired by a Texas lawyer,” Deaton attorney Brian H. Fant of Law Offices of Brian H. Fant PC said during oral argument before the Fifth Court of Appeals.

Fant said 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 in federal court.  That case, involving Louisiana resident Rickie Patton, was initially filed in the Southern District of Texas, but transferred to Rhode Island District Court for pretrial proceedings.

The panel pressed Fant on what Johnson has argued are Deaton’s ties to Texas. Justice Elizabeth Lang-Miers said 13 of the 174 clients were Texas plaintiffs, and asked whether Deaton had developed relationships with those clients over the years.  Justice David Evans pointed out Deaton had recommended the Patton case be tried in Texas and that Deaton be the lawyer to try it.  And Justice David Bridges questioned the weight of the fact 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.

Fant said Deaton had recommended the expert, but it was Johnson who actually hired and paid the expert witness, and said Deaton never visited Texas during that time.  And he said the expert witness’ Texas residency isn’t relevant to jurisdiction over Deaton.

Arguing for Johnson, Thomas R. Needham of The Law Offices of Thomas R. Needham said Deaton spent eight years working on a Texas federal case, establishing jurisdiction in Texas for the fee dispute.  Although the Patton case’s 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.

And Needham said Deaton waived his right to contest jurisdiction in Texas when he signed the nondisclosure stipulation referencing Johnson’s attorney representation agreements.  Johnson’s position is that Deaton is equitably estopped from denying the applicability of the ARA’s arbitration clause because he’s claiming benefits under the ARAs in the form of legal fees.

The case is Deaton et al. v. Johnson et al., case number 05-16-01221-CV, in the Texas Court of Appeals for the Fifth District.

Pfizer Settles Fee Dispute in $785M FCA Deal

May 10, 2017

A recent the Law 360 story by Brian Amaral, “Pfizer Settles Fee Dispute in $785M FCA Deal,” reports that Pfizer Inc. and a relator who blew the whistle on false claims have agreed to resolve their dispute over how much in attorneys’ fees the company should pay after its $785 million settlement.

Details of the arrangement between the company and Dr. William St. John LaCorte in Massachusetts federal court were not made public; on Tuesday, Senior U.S. District Judge Douglas Woodlock signed a stipulation dismissing LaCorte’s motion for attorneys’ fees because of a settlement.

LaCorte had asked for $7.7 million for his attorneys at the Sakla Law Firm for thousands of hours of work on the case, which alleged that Pfizer unit Wyeth had overbilled Medicaid for the heartburn drug Protonix.  Pfizer said previously that LaCorte’s lawyers were not intimately involved in the development of the suit, in which the government intervened, and that LaCorte’s attorneys therefore didn’t need $7.7 million.  The fees are called statutory fees, paid out by Pfizer to a successful qui tam plaintiff as part of the False Claims Act.

The suit alleged that Wyeth, in a scheme that ended three years before Pfizer acquired it, misrepresented to the government how much it gave in discounts to hospitals to buy Protonix.  Wyeth had to tell the government its “best prices” and would pay rebates to state Medicaid programs for the difference so that the program for poor and disabled people would get the best price possible.  Wyeth avoided paying hundreds of millions of dollars between 2001 and 2006 by misreporting the discounts it gave hospitals, the government said.

The government stepped into the case and settled it.  Lauren Kieff, a former hospital sales representative for AstraZeneca Pharmaceuticals LP, and LaCorte, a frequent qui tam plaintiff who practices medicine in New Orleans, split $100 million in service awards for their help blowing the whistle.

That set the table for another fee dispute, separate from the one that was settled Tuesday.  LaCorte and his attorneys agreed to split their service awards, with 62 percent going to LaCorte and 38 percent going to his attorneys.  But the three firms that represented him are still fighting it out over how to split the 38 percent, with two of them — LaCorte's former lawyers at Vezina & Gattuso LLC and Boone & Stone — arguing that the fees should be split evenly, and a third, the Sakla group, saying that the other two firms didn’t do enough to justify an even split.

The most recent filings show that the firms are asking Judge Woodlock for summary judgment on that dispute.  The statutory fees from Pfizer, at issue in Tuesday's order, were for work that the Sakla firm had done. 

The case is U.S. ex rel. LaCorte et al. v. Wyeth Inc., case numbers 1:03-cv-12366 and 1:06-cv-11724, in the U.S. District Court for the District of Massachusetts.

Over $5M in Disputed Legal Fees Resolved in NALFA’s Mediation Program

May 1, 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 reached a milestone recently: Over $5 million in disputed legal fees resolved between parties.  Since its inception, NALFA’s Fee Dispute Mediation Program has settled over $5 million in disputed attorney fees and expenses between parties in over 35 cases.  The over 35 cases were brought by both law firms and clients ranging from fee dispute matters of $37,000 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 offers 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.  Their fee dispute mediators include former judges, seasoned litigators, and in-house counsel. 

NALFA's 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, tasked performed, fee entitlement, attorney fee ethics, and fee award factors.  These mediators can often provide each side with an unbiased assessment of the strengths and weaknesses of their case.  They can also discuss with the parties what might happen if the fee dispute does not settle. 

Since the program began, NALFA’s Fee Dispute Mediation Program has achieved a 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 is dedicated to providing parties a mediation process that offers flexibility, a level playing field, and time and cost savings.  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 matter as long as necessary to bring it to a resolution.

"This achievement belongs to the outstanding work of our members, the nation's best 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 milestone," Jesse concluded.

Five Tips for Fee Agreement ADR Clauses

April 4, 2017

A recent The Recorder article by Randy Evans and Shari Klevens, “5 Tips for Fee Agreement ADR Clauses,” address ADR clauses in fee agreements.  This article was posted with permission.  The...

Read Full Post