A recent BLT Blog story, “D.C. Circuit Rules for Zuckerman Spaeder in Fee Dispute” reports that Zuckerman Spaeder has prevailed in a federal appeals court in Washington in the firm’s legal fight to force a former client in a tax fraud case to pay $834,000 in attorney fees.  The three-judge panel for the U.S. Court of Appeals for the D.C. Circuit unanimously upheld a trial judge’s ruling in March 2010 to deny staying the proceedings in Washington federal district court.  The former client, James Auffenberg Jr., and his lawyers tried to convince the appeals court that the dispute belongs in arbitration, not in federal court.

The trial court last year said Auffenberg failed to invoke arbitration “prior to actively participating in this litigation.”  Judge Douglas Ginsburg, sitting with Judge Marrick Garland and Senior Judge Stephen Williams, said in the appeals court ruling it’s undisputed Auffenberg failed to invoke arbitration in or before filing his answer to Zuckerman’s suit.  “In this appeal, we affirm the district court’s denial of the stay because Auffenberg failed to make a timely assertion of his rights to arbitrate, and his litigation activity after he failed his initial answer and counterclaim imposed substantial costs upon Zuckerman and the district court,” Ginsburg wrote in the opinion.

Auffenberg sued the firm in a counterclaim for legal malpractice, saying the firm agreed to cap fees at $1.5 million.  He alleged the $834,000 beyond that was unreasonable.