A recent Legal Intelligencer story, “Philadelphia Newspapers Settle Morgan Lewis Fee-Bilking Row,” reports that Morgan, Lewis & Bockius has settled its fee dispute with Philadelphia Media Network for undisclosed terms. The parties filed a joint motion to discontinue the matter with prejudice, with both sides responsible for their own costs and attorney fees.
Throughout the suit, filed in November 2014, Morgan Lewis disputed that it should return to former client Interstate General Media (now known as Philadelphia Media Network) around $700,000 in fees the Philadelphia newspaper company said it was "bled" through the firm's alleged disloyal representation.
PMN sued Morgan Lewis over the firm's alleged "disloyalty" in siding with one faction of two feuding ownership groups in a 2014 ownership dispute while the firm was supposed to be acting more neutrally as counsel for the parent entity. H.F. "Gerry" Lenfest, who ultimately won ownership of the paper as part of a resolution of that dispute, has alleged Morgan Lewis' legal strategy was more in line with that of competing ownership group General American Holdings, a company led by George Norcross.
Morgan Lewis has said it provided nothing but diligent, good-faith representation to the parent company as the competing ownership groups fought over its future direction. IGM's independent directors approved the firm's hiring and Lenfest never complained about Morgan Lewis' work or sued those entities it thought should have paid the fees in question, according to Morgan Lewis.
The lawsuit against Morgan Lewis faced several jointly requested delays and some discovery battles over documents held by Dilworth Paxson, a firm also involved in handling the ultimate sale of the papers to Lenfest.
The resolution, docketed Oct. 28, came after three months of inactivity on the docket. Douglas Ress of Kaufman, Coren & Ress represented Morgan Lewis. "Philadelphia Media Network and Morgan, Lewis & Bockius are pleased to report that they have amicably resolved their differences and all claims and counterclaims in the civil action which had been pending in the Philadelphia County Court of Common Pleas have been discontinued with prejudice," Ress said.
The dispute between PMN and Morgan Lewis centered around two sets of fees—legal fees of about $380,000 IGM paid to Morgan Lewis, and about $325,000 in fees IGM paid to an expert witness in the case when IGM argued that fee was supposed to be paid, at least in part, by General American Holdings.
Morgan Lewis had said in its answer and new matter that at least $100,000 of the $380,000 in legal fees was billed for Morgan Lewis' work on behalf of IGM in related Pennsylvania litigation. Morgan Lewis said IGM had no grievances with the firm's work in the Pennsylvania litigation and should not be entitled to recoup those fees. The firm said the remaining fees generated from work in the Delaware litigation should not be returned because the firm did nothing wrong in that representation.
As to the fees for the expert witness, investment banker John G. Chachas, IGM had paid about $250,000 of Chachas' $325,000 fee before the Delaware Court of Chancery could rule on IGM's motion to preclude his testimony. The judge granted the motion but allowed either of the parties to present the expert if they so chose and to pay the remaining costs of his fee.
The Norcross group said its lawyers weren't prepared to do so since the Morgan Lewis attorneys, including lead partner Marc Sonnenfeld, had prepped the witness. The judge allowed Sonnenfeld to withdraw his appearance for IGM for the limited purpose of entering his appearance for General American to present Chachas at the dissolution hearing, according to court documents and sources familiar with the matter.
When it came time to pay the remaining $75,000 owed Chachas, Sonnenfeld sent the bill to General American Holdings, as per the Chancery Court's ruling. Norcross refused and said IGM should pay it. Sonnenfeld informed IGM of Norcross' position and IGM paid the bill.