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Nevada High Court Upholds Gordon & Rees Win in Fee Dispute Case

November 2, 2018 | Posted in : Expenses / Costs, Fee Agreements, Fee Award, Fee Collection, Fee Dispute, Fee Dispute Litigation / ADR, Fee Issues on Appeal, Legal Malpractice, Unpaid Fees

A recent Law 360 story by Aebra Coe, “Nevada High Court Affirms Gordon & Rees Win in Fee Dispute” reports that the Nevada Supreme Court has upheld a jury verdict awarding Gordon & Rees LLP more than $250,000 in a fight with a former radio station client over thousands in unpaid legal fees.  The state's highest court affirmed a unanimous verdict in favor of Gordon & Rees in its battle to ward off a legal malpractice counterclaim and recoup $106,500 in unpaid legal fees as well as other litigation expenses totaling $251,600 from its former client, Edward Stolz, who owns several radio stations and other businesses.  It is believed to be the first time in Nevada a court has awarded fees and costs to a self-represented litigant. 

The court rejected Stolz’s assertion that the lower court should have applied California, not Nevada, law because the underlying lawsuit — in which Stolz was accused of not paying for the rights to the music his radio stations broadcasted — was filed in California and because Gordon & Rees is headquartered in the state.

Instead, the appeals court agreed with the law firm’s assertion that Nevada law applies because several of Stolz’s businesses are in the state, because his initial consultation was in the Las Vegas office of the firm with a Nevada bar-licensed attorney, and because it was in the state that the conduct Stolz takes issue with occurred.

The legal malpractice counterclaims stem from Stolz’s allegation that Gordon & Rees failed to disclose to him, in writing, that it represented his insurer and thus could not represent him in the lawsuit over his radio stations’ use of music if the insurer, Hartford, refused to assume his defense in the lawsuit, which it did.  Instead, that information was conveyed verbally, according to court documents.

“We conclude that the district court correctly applied Nevada law. The incident in question — whether Gordon & Rees should have disclosed the Hartford conflict in writing before representing Stolz — occurred in Nevada.  The fee agreement, in fact, was signed by the managing partner in Gordon & Rees's Las Vegas office,” the high court’s opinion said.  Additionally, the appeals court found that the lower court did the right thing when it awarded Gordon & Rees attorneys' fees and costs in the case, despite the fact that the law firm represented itself, something that is often a disqualifying factor for obtaining fees and costs in Nevada.

The reason the court came to that conclusion is because Stolz signed a contract with the firm stating outright that Gordon & Rees could collect fees and costs if litigation were to occur over its representation of the business owner.  “Here, the district court found that there was a contract between the Stolz companies and Gordon & Rees providing that Gordon & Rees could obtain attorney fees in the event there was a dispute to enforce the agreement.  Thus, the district court awarded fees because Stolz agreed to pay those fees, even if Gordon & Rees was representing itself," the opinion said.

The cases are Royce International Broadcasting Corp. et al. v. Gordon & Rees LLP, case numbers 72148 and 74272, in the Supreme Court of the State of Nevada.