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Law Firms Improperly Paid Attorney Fees, Suit Says

August 8, 2021 | Posted in : Attorney-Client Relationship, Expenses / Costs, Fee Agreement, Fee Allocation / Fee Apportionment, Fee Dispute, Fee Dispute Litigation / ADR, Fee Entitlement / Recoverability

A recent Law 360 story by Matt Perez, “Foley & Lardner, Nelson Mullins Improperly Paid, Suit Says”, reports that the founder of a marketing and manufacturing company says in a complaint filed in Florida federal court that Foley & Lardner LLP and Nelson Mullins Riley & Scarborough LLP have been improperly paid over $1 million in legal fees to represent his former colleagues in litigation against him.

Mathew Inskeep, who founded Baccus Global LLC in 2008, contends that company funds were used to pay for counsel in several cases brought against him, in violation of operating agreements between the parties.  Inskeep alleges that by March 2021 Baccus Global had paid at least $100,000 in legal fees but that the total amount is "likely over a million dollars."  He is seeking judgments declaring that all payments of fees and costs to the two firms are improper, and that they should be paid to him along with any other relief the court deems necessary.

Inskeep alleges that Baccus Global employees Ling To Shum, Ryan Powers and Mark Milocco "purported to oust" him from the company in February 2020 and have prevented him from engaging in Baccus Global's operations.  Inskeep claims that he still represents the company's interests.  "Shum, Powers and Milocco have pretended to take actions — including suing and defending lawsuits — as 'Baccus Global' as a way to benefit themselves and their individual interests," Inskeep says.

According to the complaint, Foley & Lardner was brought in to represent Shum, Powers and Milocco in the litigation against Inskeep, and Nelson Mullins was brought in to represent Baccus Global, former counsel to Inskeep and former company general counsel Jhan Lennon, and other current and former employees.  Inskeep argues, however, that for the company to contract debt or incur a liability of greater than $20,000, Inskeep must be the party OKing the payments unless all members, including himself, consent in writing.

He bases these arguments on two operating agreements signed by Inskeep, Shum, Powers and Milocco, as well as Jennifer Inskeep, one executed in 2009 and one in 2010.  The complaint says that there are "various versions" of the 2010 agreement and that "disputes exist as to which document, if any, is valid."