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Fee Allocation Dispute Freezes Jury Award in Tobacco Case

April 12, 2016 | Posted in : Ethics & Professional Responsibility, Fee Agreement, Fee Allocation / Fee Apportionment, Fee Collection, Fee Dispute

A recent Daily Business Review story, “Fee Fight Freezes $3.5M Award in Tobacco Case” reports that a dispute among plaintiffs attorneys over the division of attorney fees has hung up the distribution of a $3.5 million jury award against R.J. Reynolds Tobacco Co. in an Engle progeny tobacco case after appeal.  A six-member legal team won the verdict three years ago, and the losing defendant isn't standing in the way of payment.

But Miami attorney Donald Fitzgerald of the Fitzgerald Law Firm filed a charging lien last December in Escambia Circuit Court, alleging a dispute exists about the undisclosed fee distribution agreement.

Details of the fee agreement are confidential.  However, the plaintiffs attorneys say the split by the six lawyers is not even.  Payment was approved by R.J. Reynolds but will not be made until the fee dispute is resolved in one of about 8,000 smoker cases filed after a statewide class action was disbanded by the Florida Supreme Court.

After unsuccessfully attempting to get the charging lien dissolved, one of Fitzgerald's former co-counsel sued him Friday in Miami-Dade Circuit Court.  Coral Gables attorney Richard J. Diaz sued on behalf of plaintiff Robert Thibault, the husband of the late smoker Evelyn Thibault, both residents of Navarre.

The other plaintiffs attorneys are Miami attorney J.B. Harris, Tallahassee attorney Robert Trammell, Coral Gables attorney Carlos Santisteban Jr. and Key Biscayne attorney John Crabtree.  The group has collaborated on a handful of other smoker cases but worked on only one with Fitzgerald before.

"We received a settlement on attorney fees that we felt was fair, and Mr. Fitzgerald took it upon himself to try to hold up the settlement," Harris said.  "As a result of his selfishness and greed, this will have the effect of holding up the distribution to a sick and elderly client — his own client."

Diaz's lawsuit alleges malpractice, breach of contract, breach of fiduciary duty and intentional infliction of emotional distress.  The lawsuit contends Fitzgerald filed the lien because he was in debt to a third-party litigation funding company — Appellate Advance — after borrowing money during the appellate process.  Many plaintiffs attorneys finance their litigation while waiting for the appellate process to wind down.

"Some time after the verdict, Fitzgerald applied for advanced funding from a third-party funding company during the appellate process," the suit said.  "These types of funding companies are quite unique.  Generally speaking, they gamble against the likelihood of an ultimate affirmation of the jury's verdict."

The companies provide 50 percent advance financing of the anticipated fee payable and require the attorney to repay 200 percent of the amount borrowed plus interest until the final judgment is paid.  The suit alleges Fitzgerald may have overstated the amount of fees he was due to get a higher loan.

"To obtain this advanced funding, Fitzgerald had to make certain representations to the funding company and assign all (or a part) of his interest in the expected final payout on the judgment," the suit continues.

The verdict was clearly less than the lawyers hoped for after asking jurors for $10 million.

Diaz's lawsuit accuses Fitzgerald of "placing his pecuniary interest" over that of his client.

"Fitzgerald is in a position of tremendous power over his own client, and Fitzgerald has abused that power and continues to abuse that power," the suit stated.