A recent law.com story, “Novel Fee Fight Lands at Calif. Appeals Court” reports that Cotchett, Pitre & McCarthy v. Universal Paragon Corp. is set to be heard in San Francisco’s 1st District Court of Appeal. The case involves millions of dollars in attorney fees and a novel attorney fee agreement based not on the client’s recovery of damages but on the estimated damages the client might suffer. One side is calling it an “ordinary fee dispute” while the other insists it raises issues about contingency agreements and arbitration that no court has ever addressed. The case ended up before JAMS arbitrator Rebecca Westerfield, who awarded Cotchett Pitre & McCarthy about $8 million in fees based on a lower damage estimate of $50 million, which was upheld by San Francisco Superior Court Judge Peter Busch.
Because UPC didn’t want to incur hefty up-front attorney fees and the Cotchett firm was taking a financial risk on complex litigation, the two sides came up with an agreement providing for a contingency fee of 16 percent of any money recovered in the suit, plus reduced hourly rates. It also provided that if UPC acquired the factory site owned by Ingersoll-Rand, the Cotchett firm would be paid a percentage of the amount equal to the greater of the fair market value or the amount of damages UPC estimated it would suffer for remediation cost, insurance, demolition and diminution in value.