A recent Texas Lawyer story by Brenda Sapino Jeffreys, “Former Houston Energy Exec Sues Trail Firm AZA Alleging ‘Gross Fee Churning’, reports that Houston trial firm Ahmad Zavitsanos Anaipakos and three of its name partners were sued by a former Houston energy executive who alleges the firm engaged in “gross fee churning” when representing him in an employment dispute. “The several Houston lawyers breached their agreement with their client by over-charging, padding their bills for services and providing unreasonable and unnecessary charges solely to place their interests ahead of their client’s interest so they could improperly line their pockets at their client’s expense,” Paul A. Bragg, the former chairman and former chief executive officer of Vantage Drilling, alleges in a petition filed in state district court in Houston.
Bragg seeks more than $1 million from the defendants including actual and punitive damages and fee forfeiture. He brings negligence, breach of duty of fair dealing, breach of fiduciary duty, and fraud causes of action against the defendants, who include the firm partners John Zavitsanos, Demetrios Anaipakos and Joseph Ahmad. Bragg alleges that AZA’s representation provided him with “no benefit whatsoever,” because he ended up agreeing to a settlement during an arbitration that was essentially the same as what his former employer offered him initially when he was terminated.
In a written statement, the law firm defendants said the allegations don’t deserve to even be characterized as meritless. “We will defend it, of course, and we will win. There is no payday coming for Mr. Kassab, the lawyer who filed this lawsuit. We categorically deny his lawsuit’s allegations which we consider pure fiction,” the defendants wrote in the statement.
They wrote that Bragg’s lawsuit is retaliation by his attorney, Lance Kassab, because AZA is working pro bono, defending the estate of a Houston attorney who was sued for barratry by Kassab. Lance Kassab could not be reached for immediate comment, but his nephew, David Kassab, who works with his uncle at Kassab Law Firm, said he is not surprised the defendants would say that.
“It’s absolutely ludicrous. We are happy to represent Mr. Bragg in his lawsuit against AZA because of the conduct as alleged in the petition,” David Kassab said. In their statement, the law firm defendants also said that if Michael Cohen, President Trump’s former lawyer, still had a law license, “even he would have refused to take this case.”
As alleged in Bragg v. Zavitsanos, Bragg hired AZA shortly after Vantage Drilling International, a successor to Vantage Drilling, fired him on March 21, 2016, and Anaipakos and Ahmad were the main lawyers at AZA representing him. “After reviewing the employment agreement, both lawyers told Bragg he had a ‘slam dunk’ case and that Vantage would be held responsible for severance pay, MIP [management incentive plan] awards, legal fees and expenses,” Bragg alleges in the petition.
Bragg alleges Vantage offered him severance, excluding the MIP, when he was terminated, but he declined the offer. He also alleges that on the advice of AZA counsel, he declined a similar offer during mediation in September 2016 and also one just prior to an arbitration in July 2017. “Importantly, each time the offer was made, AZA counsel reacted with disdain to the offer and held firm that Bragg would prevail on the MIP award,” Bragg alleges in the petition.
Bragg claims that on the third day of the arbitration, his AZA lawyers were “suddenly very negative about the likelihood of prevailing on the MIP award,” and they encouraged him to accept the Vantage offer on the table, to which he “reluctantly agreed.” Bragg alleged that his employment agreement required Vantage to pay him up to $300,000 in legal fees for any dispute with the company, but it paid only $108,000 because that is all AZA had invoiced prior to the time of settlement.
He alleges as the settlement was finalized, AZA informed him that the fees would total between $400,000 and $500,000, but later revised that to $750,000 and Vantage eventually paid AZA $875,000 in fees and expenses. He alleges that despite assurance from the firm that it would rebate any excess fee payment from Vantage to him, Bragg said he received no final accounting or rebate from the firm for several months.
Bragg further alleges that AZA encouraged him to continue with the arbitration, “promising” him he would recover his MIP and treble damages, but he ended up with a settlement that was equal to the settlement Vantage offered before Bragg hired AZA. “He would have received the same result and eliminated 90 percent of the legal fees he incurred at the hands of AZA,” Bragg alleges in the petition. Bragg further claims that AZA used “block billing”—billing multiple tasks as a single billing entry—which he alleges is a “known tool used to inflate fees.”
Also, Bragg alleges, there were instances of duplicative billing that led to $22,148 in fees, “questionable and vague billing entries” for communication, preparation and general tasks totaling $148,554, clerical work for $23,475, research services for $5,273, and “undocumented disbursements” totaling $196,160. Bragg also alleges that Zavitsanos billed nearly $40,000 to depose a witness in Greece to “enjoy an all-expense paid trip to his villa in Greece at the cost of his client.” “Only after getting caught with his hand in the proverbial ‘cookie jar,’ did AZA refund a portion of these charges,” Bragg alleges.
In addition to the firm’s statement, Zavitsanos, in an interview, disputed allegations related to fees and billing. He said the litigation settled at Bragg’s insistence and Bragg “did not pay a penny out of his pocket on his fees.” He also said that because Vantage was paying Bragg’s legal bills, under a provision in his employment contract, AZA provided Vantage with general billings because “we did not want to give them a roadmap” to legal strategy.