Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Legal Malpractice

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.

ISBA Mutual Can’t Drop Defense of Law Firm in Fee Dispute

December 14, 2021

A recent Law360 story by Emily Lever, “Ill. Bar Insurer Can’t Ditch Law Firm Defense in Fees Fight,” reports that the Illinois State Bar Association Mutual Insurance Company can't avoid defending a law firm accused of wrongfully pocketing attorney fees for its handling of an estate case, an Illinois appellate court ruled, saying the suit is covered by the firm's malpractice insurance.  The insurer has a duty to cover lawyer Alan E. Sohn and his firm in a dispute with Randy Sly, the executor of an estate Sohn represented in probate court, over $280,000 in legal fees, according to a three-judge panel of the First Judicial District of the Appellate Court of Illinois.  The court held that the money at issue is not just for fees — it's also a loss incurred by Sohn's alleged malpractice, meaning it can be understood as damages.

"Sly's injury is not a consequence of the fees charged, but a consequence of Sohn's allegedly negligent advice," Justice Mary Ellen Coghlan wrote on behalf of the panel.  Justices Aurelia Pucinski and Carl A. Walker concurred.  The court rejected ISBA Mutual's 2019 appeal, which argued that the suit against Sohn seeks repayment of attorney fees rather than damages, and therefore the issue is a billing dispute and not about the practice of law, so Sohn's insurance shouldn't have to foot the bill.

Sly is suing Sohn, claiming his former attorney gave him faulty legal advice on executing the estate of Linda Loessy, who died in 2012.  The Circuit Court of Cook County ruled that Sohn's work "resulted in little benefit" to Loessy's estate, which was "not a complicated estate to administer."  The court ruled that he should have been paid no more than $135,000 for his services and should return the excess, which amounted to $185,000, plus more than $95,000 in court fees incurred by a court-appointed guardian for Loessy's children in his action against Sohn.

Sohn's insurance, which was active throughout the course of case, covers "wrongful acts" related to the "rendering of or failure to render professional services," but excludes attorney fees, which ISBA Mutual argued let it off the hook for the $280,000.  A straightforward billing dispute would be "purely ministerial" and not sufficiently related to the practice of law to qualify for coverage, according to the panel, but this dispute is both about the fees billing and about the alleged misbehavior by which Sohn obtained the fees, the panel held, noting that the court-appointed guardian's filings say the payouts to Sohn "substantially reduced" the estate.

Florida Attorney Gets Attorney Fees in Malpractice Action

December 3, 2021

A recent Law360 story by Carolina Bolado, “Buchanan Ingersoll Atty Gets Fees in Malpractice Suit,” reports that a Florida appeals court ruled that a Buchanan Ingersoll & Rooney PC attorney who dodged legal malpractice claims from a prominent Miami developer can collect attorney fees and costs under the state's offer-of-judgment statute.  Florida's Third District Court of Appeal affirmed the award of attorney fees and costs to Buchanan Ingersoll partner Richard A. Morgan, who had made a settlement offer to former client Avra Jain earlier in the litigation before he won on summary judgment.

Jain argues that Morgan, not the firm, made the settlement offer to her, and because he himself never incurred any attorney fees, he is not entitled to recover them under the offer-of-judgment statute.  But the appeals court disagreed, finding that fees and costs were incurred on his behalf by Buchanan Ingersoll, which was also named as a defendant in her legal malpractice suit stemming from an $11 million judgment against her.

"While we agree with Jain that Morgan himself did not incur attorney's fees, we disagree with Jain's contention that attorney's fees were not incurred on his behalf," the court said.  The appeals court in June already affirmed the summary judgment ruling for Morgan and Buchanan Ingersoll, denying Jain's bid to make them pay the millions in damages, interest and attorney fees she was found to owe a former business partner.

No Arbitration for Attorney-Client Fee Dispute

August 11, 2021

A recent Law 360 story by Caroline Simson, “No Arbitration For King & Spalding Client Fight, Court Hears”, reports that a Dutch citizen who accuses King & Spalding LLP of fraudulently colluding with Burford Capital to maximize fees ​​in a treaty claim​ against Vietnam​ is fighting the law firm's efforts to send the fee dispute to arbitration, arguing that an arbitration clause in the funding agreement is inapplicable.

Trinh Vinh Binh sued King & Spalding and two of its international arbitration partners in Houston, Reggie R. Smith and Craig S. Miles, in June, alleging they made a "mockery of the fiduciary obligations an attorney owes to their clients" by "colluding" with litigation funder Burford to take more of the arbitration proceeds than Binh had agreed to.  The law firm had represented Binh in a treaty claim against Vietnam over the confiscation of certain real estate that ended in a $45 million award against the country in 2019.

King & Spalding pressed a federal court in Houston last month to send the dispute with Binh to arbitration, citing an arbitration clause in the funding agreement and alleging that Binh excluded Burford from his suit in an attempt to skirt the clause.  The law firm claims that even though it is not a signatory to the funding agreement, the broad scope of the clause provides for arbitration of any dispute arising out of the pact.

But Binh argued that the clause governs disputes only between him and Burford, and not with any third parties. He said that the engagement agreement he signed with King & Spalding when he retained the firm for the Vietnam matter makes no mention of arbitration for disputes.  "Defendants are attorneys, and they certainly know how to draft an arbitration clause.  But the engagement agreement between Binh and defendants contains no arbitration clause," Binh's attorneys said. "Try as they might, defendants have not shown — and cannot show — that they may properly invoke the [funding agreement's] arbitration clause.  Binh therefore respectfully requests that this court deny defendants' motion."

King & Spalding had represented Binh in an arbitration matter filed against Vietnam in 2015, in which Binh accused the country of improperly taking several valuable properties he says were worth an estimated $214 million.  Under their deal, the law firm agreed to hold back 30% of billings for fees and defer the payment of those amounts until work had concluded in the arbitration.  At the same time, Binh entered into a funding agreement with Burford Capital with a $4.678 million spending cap, according to the suit.

Binh claims that King & Spalding told him the firm could complete the arbitration work within that cap.  But by May 2016, the firm had already billed and been paid some $1.9 million, leaving about $1.8 million after initial costs and expenses had been paid out.

Binh alleges that at that point the firm, "motivated by securing continued, guaranteed immediate payment of their fees, colluded with Burford" to contrive a scheme to increase the amount potentially owed by Binh by increasing the cap on King & Spalding's legal fees and, consequently, increasing Burford's potential entitlement to an increased return.  The way the agreement worked was that the more King & Spalding billed against the cap amount in legal spending, the more Binh was at risk of paying a so-called success return, to be paid if Binh prevailed in the arbitration.  The success return was to be split between King & Spalding and Burford based on the relative portion of their investments in the arbitration.

Binh alleges that King & Spalding tried to make him agree to increase the cap on expenditures for legal fees — and potentially, provide more of a return for Burford — but that he refused.  Thereafter, Burford and the law firm allegedly executed a side agreement between themselves.

In addition to accusing King & Spalding of breaching its fiduciary duty, Binh's lawsuit includes claims for negligence if the overpayment of fees was due to a mistake, as well as claims of misrepresentation and fraud.  He also accuses the firm of negligence after the tribunal in the case against Vietnam rejected an expert report the firm provided stating that Binh's property was worth some $214 million.  The tribunal instead awarded $45.4 million.

Judge Slams Attorney For Waste in Deepwater MDL

August 2, 2021

A recent Law 360 story by Mike Curley, “Judge Slams Atty For ‘Shameful’ Waste in Deepwater MDL”, reports that a Louisiana federal judge has sanctioned a plaintiff attorney involved in a sprawling multidistrict litigation over the 2010 Deepwater Horizon spill, calling his multiple lawsuits, duplicative motions and other actions "a colossal waste of time" intended to harass others and get around the court's previous orders.  U.S. District Judge Carl Barbier also required Brian J. Donovan of The Donovan Law Group PLLC to post the sanction on his website.

In a scathing written opinion, Judge Barbier barred Donovan from filing any further suits against other plaintiff attorneys Stephen J. Herman of Herman Herman & Katz LLC and James P. Roy of Domengeaux Wright Roy & Edwards LLC, as well as Patrick A. Juneau of Juneau David APLC, claims administrator for the MDL's economic settlement.

"No party should have had to respond to any of these suits, and no court should have had to entertain them," Judge Barbier wrote. "Donovan has weaponized civil litigation to harass those with whom he disagrees.  His behavior has been a constant drain on judicial resources.  The waste Donovan creates is shameful and appalling."

Donovan had initially represented plaintiffs in a suit over the spill that was rolled into the MDL, but after some of his clients were denied claims, he sued other attorneys and Judge Barbier, saying Barbier should recuse himself over his past ownership of Halliburton Co. and Transocean Ltd. assets and that the other attorneys had colluded on the settlement to the detriment of class members and the benefit of BP PLC, which had operated the oil platform where an explosion started the spill.  Judge Barbier refused to recuse himself in November 2019 and scolded Donovan over his recusal motions but didn't levy sanctions at the time, instead referring his briefs, as well as Herman's opposition to the motion, to the clerk of the court to start a disciplinary proceeding against Donovan.

That suit, which named Herman as a defendant, was dismissed in March 2020, and Donovan filed two more, making the same allegations but adding the judge, Roy and Juneau as defendants, and both were voluntarily dismissed before Herman, Roy and Juneau moved for sanctions earlier this year, and at a hearing July 23, Judge Barbier granted the motions.

In the written order, Judge Barbier held little back, slamming Donovan's suits, as well as response briefs that came with more than 1,000 pages of exhibits, as repetitive and baseless, and attempts to harass those in the suit he disagreed with.  "Throughout the life of this MDL Donovan has inundated the court with wave after wave of motions that often do no more than repeat previous arguments," the judge wrote. "These practices have wasted the court's time and that of his opponents."

The judge further added that neither Donovan nor his clients have standing to assert many of the arguments he makes, as he's never argued that he or his clients are class members and his objections to the settlement are far too late.  "The fact that Donovan lacks standing to press his arguments makes every moment spent addressing them — whether by the parties, this court, or any other judicial body — a colossal waste of time," Judge Barbier wrote.

He added that it's "telling" that Donovan never sued BP, even though his filings point out that BP is liable for damages from the oil spill, and if he had he might have had a chance of recovering money for his clients, but instead he's only shown that his purpose in bringing the suits was to harass others.  Thus, Judge Barbier found it proper to block Donovan from filing yet another suit against Herman and the others over the same allegations, and further ordered Donovan to pay Herman's, Roy's and Juneau's attorney fees.

While Judge Barbier stopped short of fining Donovan for his behavior, he ordered Donovan to post a copy of the order on his website, as well as any other websites or blogs he owns, operates or maintains, and to provide the court with proof that he has given a copy of the order to his clients from his initial suit in the MDL.