A recent Texas Lawyer story, “Patton Boggs Alleges It’s Unpaid By Upaid,” reports that Patton Boggs has filed a breach of suit against former client Upaid Systems Ltd., alleging the British Virgin Island company owes it more than $3.1 million in unpaid legal fees and expenses, a 15 percent share of the settlement of a patent infringement suit and interest. According to the complaint (pdf) filed in the Eastern District of Texas, “Upaid has materially and repeatedly breached its obligations under the Engagement Agreement by failing to pay the Patton Boggs invoices for agreed monthly fees, costs and expenses, by failing to pay the contingency fee due upon the settlement moneys, and by failing to pay interest on the unpaid amounts as agreed.”
John Ward Jr., a partner at Ward & Smith who represents Patton Boggs said, “It’s an unusual set of circumstances. It’s unusual that clients stiff their lawyers after a good result.” In its complaint in Patton Boggs LLP v. Upaid Systems Ltd., the firm alleges the following: Upaid retained Patton Boggs lawyers in May 2007 to represent Upaid in a fraud and patent infringement suit it had filed in the Eastern District of Texas against Satyam Computer Services Ltd.
As alleged, the firm’s engagement agreement with Upaid called for the partners to reduce their billing rates by 40 percent and for Upaid to pay a “success fee” of 15 percent of the gross of “any damages award or settlement payment.” The agreement also specified that invoices should be paid in full within 30 days of receipt to avoid a 1 percent per month late charge. In February 2009, Patton Boggs alleges, Upaid paid only a portion of an invoice and “made no payments thereafter.” The firm alleged the Upaid “induced” it to continue working on the litigation by “promise of payment.”
Patton Boggs alleges that while Upaid had been delinquent in paying invoices since mid-2009, it subsequently used the firm for legal services from time to time, and delinquent billings now total $3.1 million. In addition to damages for breach of contract, Patton Boggs seeks a declaratory judgment that it is entitled to the “full amount” of its contingency fee, including 15 percent of any future settlement money paid to Upaid from Satyam. It also seeks attorneys’ fees and costs.