Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes


News Blog

Attorney Denied Bulk of $5.3M Fee Award in VA Suit

March 29, 2022 | Posted in : Fee Allocation / Fee Apportionment, Fee Award, Fee Award Factors, Fee Dispute, Fee Reduction, Fees in Escrow, Hours Billled, Trial / Jury / Verdict

A recent Law 360 story by Jonathan Capriel, “Atty Denied ‘Lion Share’ of $5M Fee in Paralyzed Vet Suit” reports that the personal injury lawyer behind a $21 million win for a man paralyzed due to a botched surgery in a Veterans Affairs hospital won't keep the "lion's share" of a $5.3 million attorney fee award, a New York federal judge ruled, saying it was "inappropriate" to short his former law firm.

U.S. District Judge Frederick J. Scullin Jr. called attorney Robert B. Nichols' work "instrumental" in securing a multimillion-dollar award for veteran Charles Malmberg, who sued Syracuse VA Medical Center claiming a 2004 spinal operation left him significantly immobile.  But Nichols' assertion that his previous employer, the Office of Paul William Beltz based in Buffalo, is entitled to only a tenth of the award was far too small, the judge said.

"The Court finds that Mr. Nichols's work in bringing this matter to its conclusion weighs in favor of his receiving a larger than 50% share of the counsel fees," Judge Scullin said in his order.  "However, because so much of the work that Mr. Nichols conducted in this case was done on behalf of the Beltz Firm, the Court further finds that his request for 'the lion's share,' i.e., 90%, of the counsel fees is inappropriate."

The judge ordered that the Beltz firm should receive 40%, or $2.1 million. Nichols and his co-counsel Alan J. Pierce, an attorney at Hancock Estabrook LLP, are entitled to the remaining 60%, or nearly $3.2 million, of the counsel compensation.  While this money has been sitting in an escrow account since at least March 2021 as the two sides debated who deserved how much, the attorneys in this lawsuit, which was filed in 2006, have been waiting much longer to get paid.

In an April 2010 bench trial, Judge Scullin determined that the VA hospital had deviated from the accepted standard of care and committed medical malpractice, which caused Malmberg's injuries. Nichols, who was working at the Beltz firm throughout the litigation, left to start his own practice in January 2011 and took Malmberg as a client.  The judge awarded the veteran nearly $4.5 million in damages in 2012. Malmberg, whose medical condition had become worse, asked the court to increase the award amount to $15 million and later to $25 million, but the district court said no.

He appealed to the Second Circuit with co-counsel Pierce brought on board.  Ultimately, the panel agreed with Malmberg, saying Judge Scullin should have taken into account expert testimony that said the deteriorating nature of the veteran's condition wasn't obvious at the time of filing.  "Following two appeals to the Second Circuit, two remands, and various settlement negotiations, the parties ultimately stipulated to $21.5 million in damages for plaintiff," Judge Scullin said, summing up the case history.

About 25% of the award was set aside for attorney fees.  But there was a dispute between Nichols and his old firm.  During two months of mediation in 2021, Nichols and Pierce offered the Beltz firm only $540,000, or just over 10% of the fee, but Beltz claimed it was entitled to 60%.  Nichols and Pierce claimed that of the 1,880 hours spent on this case, the Beltz firm contributed only 185, or 10.1%.  On top of that, Nichols was the lead attorney the entire time when he was at Beltz.

Beltz rejected this, arguing, in part, that the nearly 1,700 hours they put into Malmberg's case should largely be ignored when calculating the two attorneys' share. The firm said that those hours were spent in appeal trying to fix a mess Nichols made at the start of the case.  He erroneously requested an "inadequate" amount in damages of just $6 million, Beltz said.  While both sides couldn't agree to their share, they did acknowledge that this situation was somewhat novel.

"The parties agree that there are no known cases in this Circuit in which an outgoing attorney left after the liability phase of trial and the incoming attorney managed the damages phase and appeals," the judge said.  Ultimately, the judge agreed that Nichols had messed up when requesting such a small amount of money at the onset of the case. Still, he didn't want to discount the work he did overall.  "Mr. Nichols was also instrumental in obtaining the highest possible damages judgment for plaintiff, despite his error in requesting only $6 million when he filed the complaint as part of The Beltz Firm in 2006," the judge said.