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Contingency Fee Allocation Dispute in Deepwater Horizon MDL

August 12, 2015 | Posted in : Contingency Fees / POF, Ethics & Professional Responsibility, Expenses / Costs, Fee Agreement, Fee Allocation / Fee Apportionment, Fee Dispute, Fee Dispute Litigation / ADR, Quantum Meruit

A recent Texas Lawyer story, “Houston Lawyers in Fight Over Contingency Fees,” reports that Houston lawyer Hamilton G. Rucker filed a suit seeking more $3.1 million as his share of contingency fees in Deepwater Horizon litigation, alleging that Houston lawyer Jan Woodward Fox and Houston’s Reich & Binstock have “made it clear” that they will not honor the fee-sharing agreements.

Rucker and his firm, Rucker Law Firm of Houston, allege in a petition filed on July 31 that Fox and Reich & Binstock are not honoring fee agreements with Rucker for representing the city of Houston (COH) and the Metropolitan Transit Authority of Harris County (Metro) in litigation against BP and other defendants related to the 2010 Deepwater Horizon oil spill.

"In short, even though Rucker was the attorney who catalyzed the litigation on behalf of COH and Metro, defendants Fox and [Reich & Binstock partner Dennis] Reich have thwarted Rucker's efforts to claim his rightful portion of the attorney's fees due," Rucker alleges in a petition he filed in the 164th District Court in Harris County.

Rucker and his firm bring breach of contract, unjust enrichment, tortious interference, fraud and quantum meruit causes of action against the defendants.  He seeks at least $3.1 million in actual damages, interest and attorney fees.

In Rucker Law Firm v. Fox, Rucker alleges that he was co-counsel in Deepwater Horizon litigation for the city of Houston and Metro with Fox, Reich and Norman Jolly of Norman Jolly P.C. of Houston.  Rucker alleges that Jolly assigned his interest in the litigation to him and that he "continued to comply with his obligations as counsel" for the COH and Metro along with meeting Jolly's obligations.

Rucker alleges that on April 17, 2013, the Houston City Council approved an agreement with lawyers to litigate claims against BP and other responsible defendants, with a 33.3 percent contingency fee for any recovery made through settlement prior to trial.  He alleges that according to an "internal agreement between the parties," Fox, Reich and Jolly would split the contingency fee equally, and Jolly would pay all expenses.  Rucker alleges that "it was understood by all parties" that he would work on the litigation because he was then an attorney at Jolly's firm.

Additionally, Rucker alleges, he, Jolly, Fox and Reich entered into an agreement, also providing for a 33.3 percent contingency fee, with Metro to litigate the transit agency's claims against BP and others.  He alleges that all firms were to split the fee equally and he was individually listed on that agreement.

Rucker alleges that in September 2013, Jolly assigned his one-third interest in the COH litigation and his one-quarter interest in the Metro litigation to Rucker, who by then was a former associate of Jolly's firm, and Jolly withdrew from the litigation.  Rucker alleges that he reimbursed Jolly $25,000 in expenses for the lawsuits.

Rucker alleges that he was an attorney of record in both suits and worked on them, even after both were transferred to the Deepwater Horizon MDL.

"Despite his efforts, Reich and Fox have attempted to keep Rucker out of the 'settlement loop' and deny him his attorney fee interest (both original and assigned) in the COH litigation and the Metro litigation," he alleges in the petition.

In September and October 2013, Rucker alleges, he informed Fox and Reich that Jolly had assigned his interests in the litigation to him, but Fox and Reich attempted to "exile" Rucker from the litigation, including efforts to exclude Rucker from settlement negotiations.

On July 6, Rucker alleges, Fox and Reich informed him that expenses were to be submitted to the client in anticipation of a settlement.  He alleges that when he reminded Fox that he had incurred more than $25,000 in expenses because of Jolly's assignment, "Fox then feigned ignorance of any assignment, responding, 'What assignment?'"

He alleges that on July 9, Fox and Reich informed him of a proposed settlement between BP and Metro, but "refused to discuss any matters" relating to the city of Houston.

Rucker alleges that the settlement in the city of Houston litigation totaled $12.2 million, according to a media report, and Metro will receive $9.2 million in settlement.  Rucker alleges that that entitles him to more than $1.6 million in fees from the city of Houston settlement and another $1.5 million from the Metro settlement.