A recent Law 360 story by Christine DeRosa, “Jones Day and Former Client Spar Over $678K in Fees”, reports that Jones Day and a one-time client have gone to court in competing lawsuits, with the client — Ambassador Enterprises LLC and two of its entities — accusing the firm of charging an unreasonable fee in Indiana and the firm firing back in a breach of contract suit seeking to recover its nearly $700,000 bill in Pennsylvania.  The dispute broke into public view on Nov. 24, when Ambassador filed for a declaratory judgment in an Indiana court claiming that a dispute had arisen with Jones Day based on the firm allegedly demanding $678,025.44 for services it provided during its representation of Hixwood Metal LLC, one of Ambassador's entities, in a federal lawsuit.

Ambassador and its two entities, Ambassador Supply LLC and Hixwood Metal, which are named in both the Indiana and Pennsylvania suits, said in the Nov. 24 filing that the fee is unreasonable and that they were not given information about the charges they would be expected to pay until they accumulated over $400,000 in legal fees within a month.

The private equity firm alleges that it told Jones Day the amount was unacceptable and directed the firm to scale back its time on the case, but the law firm sent another invoice, for $200,000.  Ambassador ended its relationship with Jones Day and retained counsel to represent Hixwood, according to Ambassador's filing.  "Recognizing that it received some benefit based on Jones Day's work, Ambassador has offered to pay Jones Day a reasonable fee for the work completed," Ambassador wrote.  "Jones Day has not agreed to accept a reasonable fee and has threatened to bring suit to collect the full payment, plus interest and costs of collection."

Jones Day then filed a breach of contract suit in Pennsylvania state court, providing more details about the dispute.  Jones Day said it entered into an engagement agreement with the Ambassador entities on June 6 to represent them in a suit against Hixwood Metal and one of its employees by competitor Everlast Roofing Inc.

Jones Day said that it represented the Ambassador entities zealously and that its work included responding to the complaint; conducting employee interviews, which Ambassador Enterprises' in-house counsel attended; drafting documents; and negotiating the scope of expedited discovery.  The firm added that it regularly briefed and sought approval from its client.

Jones Day sent Ambassdor's in-house counsel periodic detailed billing statements by email and, on July 21, sent an invoice for legal services and costs from the beginning of the representation until June 30 for $387,769.34, the complaint states.  The firm said in-house counsel acknowledged that it received the invoice on Aug. 3.  A second invoice for services from July 1 through July 31 for $239,812.50 was sent on Aug. 11, according to the complaint.  On Sept. 8, a third invoice of $50,443.60 was sent for the firm's August work, and in-house counsel acknowledged that it received all three invoices, Jones Day said.

The firm said in its complaint that it made significant write-downs to the July and August invoices despite the write-downs not being agreed upon in the engagement agreement.  After the first invoice, the Ambassador entities became less responsive to the firm's updates and communicated less before informing Jones Day on Aug. 3 that it would be retaining new counsel and wouldn't pay the full amount of the first invoice, the complaint states.

At the direction of Ambassador's in-house counsel, Jones Day stayed on the Everlast litigation through the Aug. 17 settlement conference, where the parties agreed to a stipulated injunction resolving Everlast's motion for a preliminary injunction, Jones Day said.  The firm then moved to withdraw as counsel, which the court approved, and worked to transfer the case file to the new counsel, according to the complaint.

Jones Day said it made multiple attempts to reach an agreement regarding payments of the money it was owed, but Ambassador's in-house counsel ultimately declined to pay the amount owed.  In-house counsel told Jones Day that they were unwilling to pay anything more than $150,000 for the firm's services, according to the complaint.

"The Ambassador entities have never provided any reasoned or detailed basis to Jones Day for the paltry amount they have offered to pay," Jones Day said in the complaint.  "Their only rationale, advanced by in-house counsel for Ambassador Enterprises, has consisted of general complaints that Jones Day's invoices were too high, and that Jones Day spent too much time working on the case."

In the Pennsylvania litigation, Jones Day is seeking $678,025.44, plus interest, and any other relief the court deems just and proper.  In Indiana, Ambassador said it should not be responsible for the firm's charges and asked the court for a declaration that it is responsible for only a reasonable fee, not the fee Jones Day is requesting.