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Category: Fee Dispute Litigation / ADR

Houston Attorneys Sued for $5M Over Altered Fee Agreement

December 19, 2021

A recent Law360 story by Jessica Corso, “Houston Attorneys Sued for $5M Over Altered Fee Agreement,” reports that three Houston-based attorneys are being sued for around $5 million by a former client who claims that they deceived her into changing their fee agreement during a legal fight over her late father's will.  Caroline Allison sued Jorge Borunda, Nicholas Abaza and Michael Trevino in Harris County District Court on Nov. 9, arguing that the attorneys should return most of the money she paid them to represent her in a probate dispute involving the will of her father, who died in 2017.

Allison claims that she agreed in 2019 to hire the lawyers on an hourly basis but, a year later, they asked for a change to a contingency fee agreement whereby they would get 35% of any money or assets she collected from her father's estate.  According to the lawsuit, the lawyers made Allison believe that the case would go to trial and end up costing a lot of money.  In reality, they knew that her father's second wife, with whom Allison was fighting over the estate, was close to a settlement at the time they asked for the 35% fee, according to the lawsuit.

"By October of 2020, the lawyers determined that the estate was worth more than $18 million," according to the complaint. "Unsatisfied with their current arrangement with Caroline, and with dollar signs in their eyes, the lawyers set upon a course of conduct to fraudulently induce Caroline to change her agreement from an hourly rate to a contingency fee."  Six months after signing the new contingency agreement, the case settled, with Allison and her brother, who had also hired Borunda and Abaza, together receiving around $9.5 million, according to the lawsuit.

Allison claims that she ended up paying the lawyers $1.65 million more than she would have had she stuck to an hourly rate.  She is suing for that money back, plus treble damages she said she was owed under the Texas Deceptive Trade Practices Act.  She is alleging violations of the Texas law, as well as negligence, breach of fiduciary duty and fraud.

Dentons Wants Out of Japanese Billionaire’s $50M Fee Dispute

December 18, 2021

A recent Law360 story by David Thomas, “Dentons Wants Out of Japanese Billionaire’s $50M Fee Fight With Law Firm,” reports that Global law firm Dentons asked to withdraw from representing a Japanese pachinko billionaire in a $50 million legal fee fight with Chicago-based litigation firm Bartlit Beck.  Dentons partners Alex Gude, Meaghan Klem Haller and Robert Richards told U.S. District Judge John Kness in Chicago that there was "an irretrievable breakdown" in their attorney relationship with client Kazuo Okada.

They did not say why the relationship soured but said Okada consents to the firm's withdrawal.  They asked for deadlines in the case to be extended by two months so Okada can find new counsel.  The Chicago-based 7th U.S. Court of Appeals last month appeared skeptical of Dentons' arguments that Okada shouldn't be forced to pay $50 million in legal fees to Bartlit Beck stemming from an earlier court fight with Wynn Resorts Ltd.

Okada hired Bartlit Beck to represent him in a lawsuit against Wynn Resorts after the U.S. casino giant forced Okada's Universal Entertainment Corp to sell back its stake in the company at a discount following an internal anti-corruption investigation.  That case settled in March 2018 for $2.6 billion.

Bartlit Beck, a firm specializing in high-stakes litigation founded by ex-Kirkland & Ellis partners, took Okada to arbitration after he failed to pay $50 million it claimed he owed in legal fees.  Okada withdrew from the arbitration proceedings days before a U.S.-based evidentiary hearing in October 2019, arguing his engagement agreement with the firm was invalid.  Okada also said he was unable to travel due to his health.  The arbitration panel awarded Bartlit Beck $50 million by default in 2019.  Kness ordered Okada to pay Bartlit Beck in March, sparking the appeal.  The 7th Circuit's decision is still pending.

Taylor English Seeks $2.8M in Fees From Former Client

December 15, 2021

A recent Law360 story by Emily Sides, “Taylor English Seeks $2.8M in Fees From Ex-Client,” reports that a Texas-based oil and gas corporation owes Taylor English Duma LLP over $2.8 million for nearly 3,000 unpaid billable hours, expenses and interest, according to a suit the law firm filed in Georgia state court.  Frontera Resources Corp. reneged on its February 2019 retainer agreement with the Atlanta-headquartered law firm, according to the six-page complaint by Taylor English.  In addition to the over $2.1 million for unpaid legal work and expenses and $721,655 in interest, Taylor English wants its ex-client to reimburse the firm's attorney fees for having to pursue the payment litigation.

The complaint alleges one count of breach of contract, one count of unjust enrichment and one count of account stated against Houston-based Frontera Resources.  As part of alleging account stated, Taylor English said that the total sum is the correct amount that Frontera Resources owes. Taylor English referred to a state law that states that a defendant in an action must either deny the debt or reply with how much is truly owed to the plaintiff.  According to Taylor English, the corporation had retained the firm and agreed to pay up to $795 an hour for legal services.

"At [Taylor English's] expense, [Frontera Resources] has been unjustly enriched through the conduct described above, and [Taylor English] is entitled to be compensated for the benefit that [Frontera Resources] has enjoyed and will enjoy as a result of its receipt of the services provided to it under the engagement agreement," Taylor English said in its complaint.  In a two-page letter dated Feb. 8, 2019, Bryce D. Linsenmayer of Taylor English thanked Levan Bakhutashvili of Frontera Resources for agreeing to retain the firm.  Linsenmayer outlined terms of their agreement, including how Frontera was responsible for paying for any legal services provided and for any interest accrued for an unpaid balance.

"Our firm customarily asks for a retainer at the outset for a new client engagement but we have agreed to forgo a retainer at this time," Linsenmayer said in the letter.  "In addition to our fees, you will be responsible for expenses in connection with this engagement, including travel, filing fees, courts costs, postage, online research fees and governmental filing fees, if necessary," Linsenmayer said in the letter.  "You may terminate this agreement with us at any time, but we are entitled to the full amount of fees earned."

NJ Law Firm Loses Challenge to Attorney Fee Reduction

December 13, 2021

A recent Law360 story by Nick Muscavage, “NJ Firm Loses Fee Cut Challenge in Walmart Injury Case,” reports that the Englewood Cliffs, New Jersey-based Law Offices of Andrew Park PC has lost its bid for a larger cut of the fees from a personal injury case against Walmart, after failing to submit a certificate of services detailing the work the firm put into the case.  A New Jersey Appellate Division panel found that the lower court correctly allocated to the Park firm one-third of the $41,666.66 contingency fee, or about $13,888, that was earned in the underlying slip-and-fall case against Walmart, which settled for $125,000 in 2017.

The other two-thirds of the award, which equaled about $27,777, was also correctly awarded to the plaintiff's former counsel, the Fort Lee, New Jersey-based Jae Lee Law PC, the appellate panel found.  The trial court, according to the appellate panel, rightly followed the principles in La Mantia v. Durst, a 1989 New Jersey Appellate Division opinion that laid out the principles that judges must follow when allocating fee awards.

In La Mantia, the court instructed trial judges to review the following circumstances when determining fee awards: the length of time each firm spent on the case relative to the total amount of time expended to conclude the case, the quality of the representation, the result of each of the firms' efforts, the reason why the client changed attorneys, the viability of the claim at counsel transfer and the amount of recovery resulting from the underlying lawsuit.  "Here, the trial court properly recognized that the allocation of the fee should be based on the principles enunciated in La Mantia as we directed," the appellate panel wrote in its Dec. 10 opinion.

As a result, the ruling by the trial court resulted from "appropriate findings of fact and conclusions of law" under La Mantia, the appellate panel added.  Additionally, the appellate panel noted that the Park firm did not submit a certification of services with supporting documents detailing the time the firm spent on the case, which was essential to the court's decision.  An affidavit or certification of services is required when a firm is seeking a fee allocation, according to the appellate panel.

Law Firm Accessed of Overbilling in New Jersey Litigation

December 12, 2021

A recent Law360 story by Jeannie O’Sullivan, Sills Cummis Accused of Overbilling in Rock Musician Suit,” reports that the former manager for Nile Rodgers has accused Sills Cummis & Gross PC of overbilling him in connection with contract claims against the musician and then abandoning the case, according to an amended complaint filed in New Jersey state court.  In a filing, Peter Herman said Sills Cummis and firm member Joseph B. Fiorenzo failed to honor negotiated bill corrections, charged "patently unreasonable fees" for unnecessary outside work and then withdrew from the matter, leaving him to fend for himself in court.

The firm has since demanded that the $315,000 settlement in the underlying matter be held in escrow to settle its claim against Herman for fees, according to the complaint, filed in Essex County Superior Court.  "As of the date of this complaint, Herman has received nothing of the settlement proceeds," the complaint said.  Herman hired Sills Cummis under a $20,000 retainer agreement that set forth hourly fees for the lawyers assigned to the case, according to the complaint.  Herman claimed he informed the firm that he only had $100,000 for legal fees.

The firm charged Herman "in excess of" $618,000 in connection with the civil matter and sought to collect on the whole amount, despite an agreement in which the parties had negotiated reductions, the complaint said.  The rates charged "far exceeded rates for similarly situated New Jersey based law firms," the complaint said.  Herman alleged that Fiorenzo informed him that the firm would no longer work on his file and would move to withdraw, forcing Herman "to negotiate directly with Nile Rodgers and accept a settlement far less than what was reasonable."  That settlement is now tied up in escrow, the complaint said.

The seven-count complaint says that the firm violated professional conduct rules requiring attorneys "to charge fair and reasonable fees and disbursements," and that the retainer agreement, which includes an arbitration clause, is "null, void and of no force and effect."  The fact that the settlement is escrowed constitutes a breach of the firm's agreement with Herman, and the firm's failure to cap its fees amounts to converting Herman's assets for its own benefit, the complaint says.

Herman also claimed that Fiorenzo made false statements "regarding his extensive experience and personal involvement" with the matter. The bills showed Fiorenzo "spent little time on the matter," the complaint said.  The complaint goes on to say that a conflict of interest arose when the defendants demanded Herman pay the fees or face a motion to withdraw.  Their service to Herman would be "materially affected by defendants' interest in their fee claim," the complaint said.  Herman wants compensatory and punitive damages, release of the escrow funds, and attorney fees and other costs. 

Harvard Sues Insurer Over Attorney Fees

September 20, 2021

A recent Law 360 story by Eli Flesch, “Harvard Sues Insurer For Legal Fees in Affirmative Action Suit,” reports that Harvard University sued Zurich American Insurance Co. for excess coverage of...

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