Wednesday, October 9, 2024

No Anti-SLAPP Attorneys Fees For Voluntarily Dismissed Suit

A press release of the Tennessee Supreme Court on a decision issued today

The Tennessee Supreme Court today held that a party could not recover attorney’s fees under the Tennessee Public Participation Act (“TPPA”) after the original lawsuit was voluntarily dismissed.  The TPPA is Tennessee’s version of an anti-SLAPP statute.  SLAPP stands for “strategic lawsuit against public participation” and refers to a lawsuit that is brought primarily to chill the speech of individuals by subjecting them to costly litigation, without regard to prevailing on the merits.  A defendant in what is believed to be a SLAPP suit may file a petition under the TPPA, which provides a mechanism to achieve the swift dismissal of a non-meritorious lawsuit before litigation costs mount.  The TPPA also shifts the attorney’s fees incurred by the defendant to the party that brought the SLAPP suit.

In this case, Robert E. Lee Flade brought a lawsuit against several defendants based on what he considered to be disparaging remarks that were made on social media.  In response, two of the defendants filed petitions under the TPPA, arguing that Mr. Flade’s lawsuit was a SLAPP suit that should be dismissed.  Before the petitions were heard by the trial court, Mr. Flade voluntarily dismissed his lawsuit.  Nevertheless, the defendants sought to have the trial court rule on their petitions.  The trial court declined, finding that Mr. Flade’s voluntary dismissal concluded the matter.  The Court of Appeals upheld the trial court’s decision.

In a unanimous opinion, the Supreme Court affirmed the decision below.  The Court noted that the availability of a voluntary dismissal is a longstanding right under Tennessee law subject only to certain limited exceptions.  The Court examined whether the filing of a TPPA petition fell within one of those exceptions, such that Mr. Flade could not unilaterally dismiss his lawsuit without having the TPPA petitions adjudicated.  The Court considered three arguments advanced by the defendants for an exception, but it held that none of them amounted to a valid exception to the voluntary dismissal rule.

To read the Supreme Court’s opinion in Flade v. City of Shelbyville, authored by Justice Jeff Bivins, visit the opinions section of TNCourts.gov.

(Mike Frisch)

October 9, 2024 in Billable Hours | Permalink | Comments (0)

Thursday, August 29, 2024

Zeal Remains OK, Celebrity Endorsements Allowed In Florida

The Florida Supreme Court has adopted some amendments to its Rules regulating the Bar and declined to adopt other proposed changes

Notably not changed

As to the amendments proposed to the Preamble and rule 4-1.3, the Bar proposes deleting the terms because “the contemporary, plain language use of and reference to zeal are often associated with negative extremist behavior and character,” and because the terms have been used by lawyers to justify unprofessional conduct. But the public meaning of the terms has changed little since we first adopted the Preamble and rule 4-1.3, and we have made it abundantly clear that zealous advocacy on behalf of a client is not an excuse for any type of misconduct under the rules. See, e.g., Fla. Bar v. Schwartz, 382 So. 3d 600, 611 (Fla. 2024) (stating that “the requirement of providing zealous representation is not a sword to wield as an excuse to otherwise engage in misconduct”); Fla. Bar v. Norkin, 132 So. 3d 77, 90 (Fla. 2013) (“Effective and zealous representation does not require antagonistic or acrimonious behavior.” (quoting the Guidelines for Professional Conduct))

As to the amendments proposed to rule 4-8.6(e), the Bar proposes requiring an individual subject to an emergency or other indefinite suspension lasting 91 days or longer to sever employment with and financial interests in an authorized business entity. The rule currently applies to individuals with suspensions lasting 91 days or longer who have been found guilty of committing misconduct and are suspended as part of the discipline for those findings. With emergency or indefinite suspensions, there is no such finding of guilt and the suspension is not related to a finding of guilt. Individuals suspended under these provisions may not yet have had the opportunity to defend themselves against pending discipline allegations. Because of this distinction, we decline to adopt the Bar’s proposed amendments to rule 4-8.6(e).

Adopted

In addition to various grammatical changes, we amend the Comments to rules 4-1.1, 4-1.6, 4-5.1, and 4-5.3, adding a warning about the necessity to take care in using generative artificial intelligence. We also amend rules 4-7.13 and 4-7.15 to allow for testimonials of a celebrity who is a current or former client, so long as the testimonial otherwise complies with the rules.

The celebrity endorsements should be interesting, to say the least. (Mike Frisch)

August 29, 2024 in Billable Hours | Permalink | Comments (0)

Monday, August 26, 2024

Judgment Not Inclination

The Tennessee Court of Appeals remanded a fee award in a disability discrimination claim to require application of the fee factors set out in RPC 1.5

Ms. Garner sought an award of $695,660 in attorney fees for prevailing on her claim pursuant to the TDA. See Tenn. Code Ann. §§ 8-50-103, 4-21-306, and 4-21- 311(b) (stating that the court “may award to the plaintiff actual damages sustained by such plaintiff, together with the costs of the lawsuit, including a reasonable fee for the plaintiff’s attorney of record”). Ms. Garner contended that the requested fee was reasonable when analyzed pursuant to the ten factors the courts have been directed to consider in the Tennessee Rules of Professional Conduct, Tenn. Sup. Ct. R. 8, RPC 1.5. She supported her request for attorney fees with a declaration from her counsel and itemized billing statements showing 1,430.6 hours of time billed at the rate of $450 per hour, in addition to 157.7 hours of time billed at a paralegal rate of $100 per hour. She also filed four declarations from other local attorneys in support of her request. In her supporting memorandum, Ms. Garner argued that the TDA is the type of statute that is enacted for the purpose of protecting the rights of Tennessee citizens and the public interest, and therefore, any fee award under the TDA is not subject to a proportionality argument in relation to the amount of damages awarded, citing Smith v. All Nations Church of God, No. W2019-02184-COA-R3-CV, 2020 WL 6940703, at *10 (Tenn. Ct. App. Nov. 25, 2020), City of Riverside v. Rivera, 477 U.S. 561, 576-78 (1986), and Hensley v. Eckerhart, 461 U.S. 424, 435 (1983).

The trial court had awarded over $500,000 in fees, 34 times the jury award

Because it does not appear that the trial court actually evaluated the amount of the fee in light of the appropriate factors, and the findings it made do not permit us to conduct a meaningful review of its decision, we vacate and remand for a new determination under the applicable factors and caselaw. We reiterate that “‘[d]iscretionary choices are not left to a court’s inclination, but to its judgment; and its judgment is to be guided by sound legal principles.’”

(Mike Frisch)

August 26, 2024 in Billable Hours | Permalink | Comments (0)

Thursday, August 22, 2024

Production Of Litigation Funding Agreement Ordered

The Delaware Court of Chancery has required production of a litigation funding agreement in a class action brought against Genworth Financial

This decision resolves the defendants’ motion to compel (the “Motion”) as it relates to the production of two categories of documents: (1) a litigation funding agreement and (2) unredacted fee agreements. The plaintiffs’ arguments as to the latter are wholly dependent on the success of their arguments as to the former. As to the former, the plaintiffs raise two objections to the production of the funding agreement—relevance and the work product doctrine. Delaware state courts have addressed the production of litigation funding agreements and related communications on several occasions. Three decisions have required production of the funding agreements but permitted limited redactions on work product grounds.

But this Court’s most recent decision to address the issue seems to have rejected the general applicability of the work product doctrine to litigation funding agreements. And in another decision, this Court ordered production of litigation funding communications, notwithstanding objections on work product grounds. None of these cases, however, arise in the class action context.

As explained below, I find the litigation funding agreement relevant for two reasons. First, the class action context and specific aspects of this litigation give rise to several unique concerns, including the potential for class counsel to face conflicts of interest and for the third-party funders to exercise improper control over the litigation. These concerns may foreseeably bear on my decision as to the pending motion for class certification. Second, the parties to the litigation funding agreement set forth their collective “expectation” that the agreement would be disclosed to the Court during litigation in advance of class certification. I read this “expectation” as an acknowledgment of relevance. I conclude further that the plaintiffs’ three-sentence argument as to work product does not satisfy their burden of showing the
funding agreement may be withheld on that basis. Accordingly, I grant the Motion as to the funding agreement. And the plaintiffs’ only argument as to the fee agreements rises and falls with their arguments as to the funding agreement.

Class action context

If it is not already clear, this Court takes its thorough evaluation of the Rule 23 requirements seriously. Indeed, “[t]he adequacy of the class representative” requirement set out in Rule 23(a)(4) brings with it “a constitutional dimension. The Due Process Clause of the United States Constitution requires ‘that the named plaintiff at all times adequately represent the interests of the absent class members.’”

As it relates to these considerations, I believe there may be legitimate concerns that counsel could face a conflict of interest. There are many instances where a funder’s interests might diverge from those of a claim holder. But the class action context seems especially ripe for a third-party funder to exercise improper control over the litigation, at least relative to the heightened degree of oversight that might tend to accompany an ordinary attorney-client relationship.

And “[t]his concern is even more problematic[,]” as here, where class counsel “contract[s] directly with a funder for financial resources” since, in doing so, counsel may take on duties to the funder that are separate and apart from counsel’s “professional duties to the class.”

Given these clear concerns, it seems relevant to determine whether, or the extent to which, diverging interests may impact counsel’s ability or willingness to adequately represent the class.

Such questions seem almost inherently to implicate the Funders’ identities and the extent of their control (whether direct or indirect) over the litigation. These are questions the Funding Agreement can help answer.

(Mike Frisch)

August 22, 2024 in Billable Hours | Permalink | Comments (0)

Wednesday, July 31, 2024

Self Retention Does Not Preclude Compensation

The Maryland Appellate Court has held that an attorney trustee who retains himself as trust counsel is entitled to be paid

This appeal examines whether a trustee, who is also an attorney, is entitled to compensation when they hire themselves as counsel to provide legal services for a trust. By order of the Circuit Court for Anne Arundel County, Elliot N. Lewis, Esq. (“Lewis”) was appointed successor trustee of a trust. Lewis hired himself to perform legal work in connection with the administration of the trust. He later petitioned for his fees to be paid from the trust funds. The court denied the fee petition after concluding that the self-hiring posed a conflict of interest under the Maryland Trust Act, Md. Code, Est. & Trusts (“ET”) § 14.5-802 (1974, 2017 Repl. Vol.).

Lewis timely noted an appeal and presents the following question, which we have consolidated and rephrased:  Did the circuit court err in denying Lewis’s fee petition? For the reasons below, we hold that it did. Accordingly, we reverse and remand to the circuit court with instructions to make findings of fact as to the fair and reasonable compensation for legal services performed by Lewis for the administration of the trust.

Appealability

we conclude that the order denying Lewis’s fee petition falls within the collateral order doctrine. Regarding the first element of the collateral order doctrine, the denial order conclusively determined the disputed question of whether Lewis was entitled to his attorneys’ fees.

The other elements were also present.

Merits

Applying the relevant statutes and caselaw to the circumstances here, we conclude that the court erred in interpreting ET § 14.5-802(c)(4) to mean that a conflict of interest strictly prohibited Lewis from an allowance for reasonable compensation as trustee when he hired himself as counsel to perform legal services for the Trust. Regardless of whether the self-employment was self-dealing under ET § 14.5-802(b) or other conflict of interest under subsection (c)(4), the compensation Lewis sought as trustee was for legal work that he purportedly performed using his specialized skill as an attorney. See ET § 14.5-806 (“A trustee that has special skills or expertise . . . shall use those special skills or expertise.”). Therefore, the payment of “reasonable compensation” to Lewis is not precluded under subsection (f)(2) if “fair to the beneficiaries[.]"

Result

We reverse and remand the judgment of the circuit court with directions to make findings of fact as to the fair and reasonable compensation for legal services performed by Lewis for the Trust. On remand, the court should hold a hearing and permit Lewis to present any additional evidence supporting the fee petition.

(Mike Frisch)

July 31, 2024 in Billable Hours | Permalink | Comments (0)

Thursday, July 11, 2024

Kugel Mess

The Rhode Island Supreme Court has entered an order in a dispute over legal fees staying the proceeding 

This case stems from a dispute between attorneys who together represented numerous claimants in personal-injury lawsuits against the makers of a hernia repair patch. The defendants, Steven M. Johnson and the Law Offices of Steven M. Johnson, P.C., d/b/a The Johnson Law Firm (collectively, Johnson), appeal from an order of the Superior Court denying their motion to stay proceedings pending the resolutions of two arbitrations in the State of Texas. At issue in the Superior Court proceedings is another motion, filed by the plaintiff, John Deaton, to disburse legal fees arising from the lawsuits to which he claims he is entitled.

We briefly recount the complex travel of this case, which spans over ten years and has involved at least seven courts. The defendants, a Texas-based attorney and law firm, represented hundreds of clients in personal-injury lawsuits against the Rhode Island-based manufacturer of a surgically implanted hernia repair product known as the Kugel Patch or Kugel Mesh. Each of defendants’ clients signed an Attorney Representation Agreement (ARA), which providesin part that “any dispute arising from the interpretation, performance, or breach of [the agreement], including any claim of legal malpractice, * * * shall be resolved by final and binding arbitration conducted in” Texas. The ARAs further provide that clients shall pay their attorneys on a contingency basis and be represented by “associate counsel” at defendants’ discretion and expense.

Deaton was not a party to the ARA

Nearly six years after the parties entered into their first agreement, in 2014, a global settlement was reached in the Superior Court that resolved the universe of Kugel Mesh claims brought by Johnson’s clients, including those in which Deaton was local counsel. The resulting settlement agreement provided not only that all disputes “arising under” or “relating to the subject matter” of the agreement “shall be filed only in the Superior Court of Rhode Island,” but also that defendants and their “[c]o-[c]ounsel” would submit to the personal jurisdiction of that court and that the agreement would be governed by the laws of Rhode Island. The agreement further provided that defendants would file a motion in the Superior Court to establish a Qualified Settlement Fund (QSF), which would serve as a repository for settlement awards and associated attorneys’ fees. The agreement was signed by Steven M. Johnson on behalf of the Johnson Law Firm, but it was not signed by Deaton.

Fire hazard

The 2014 global settlement appears to have suppressed one fire and ignited several others, including the dispute at the heart of this case. According to Deaton, Johnson negotiated the settlement without his knowledge; indeed, Deaton avers that he was unaware of the settlement until he contacted one of the clients for whom he served as local counsel. In October 2015, after what Deaton characterized as Johnson’s “repeated failure” to respond to his inquiries about the settlement, plaintiff sent counsel for the Kugel Mesh defendants notice of a lien for $1 million in attorneys’ fees related to his service as local counsel in the Kugel Mesh litigation. Weeks later, in November 2015, Johnson sent Deaton a letter discharging him, with cause, from the representation of their clients.

The court recounts to various proceedings

It is clear to us that the circumstances in this case are far different now than on October 22, 2020, when the Superior Court issued its decision on Johnson’s motion to stay. The two arbitrations in Texas have both concluded, final awards have been issued, and judgments have entered confirming both awards in their entirety. Deaton has appealed from one such judgment, however, which appeal remains pending in the Court of Appeals for the Eleventh District of Texas.

In the motion to stay proceedings, which is the only matter under review by this Court, defendants prayed the Superior Court to “stay all proceedings relating to Attorney Deaton’s Motion to Disburse, pending resolution of the [Texas] [a]rbitrations.” Thus, it is clear that the appeal before us will become moot when the pending Texas appeal is resolved and any further appeals are exhausted.

In light of the current posture of these various proceedings, we deem it prudent to stay any further action on Deaton’s motion to disburse until the remaining arbitration in Texas is finally resolved.

(Mike Frisch)

July 11, 2024 in Billable Hours | Permalink | Comments (0)

Payment Due

The District of Columbia Court of Appeals held that an appointed guardian was entitled to compensation for work on an appeal

Appellant Tamara McDowell Christian was appointed to represent Sally Glass in a proceeding before the Superior Court, Probate Division, to determine if Ms. Glass required a general guardian. Ms. Christian received an adverse ruling and appealed it to this court on Ms. Glass’s behalf, and she subsequently sought payment for her work on that appeal. The Probate Court denied this request on the ground that it was unauthorized. We hold that, when counsel is appointed by the Probate Court to represent an allegedly incapacitated individual in a discrete matter such as the appointment of a guardian, counsel has an obligation to zealously advocate for their client through an appeal of that matter and has a corresponding entitlement to be paid for their work on appeal. Accordingly, we reverse and remand.

The trial court had denied payment

The Probate Court determined it did not have the authority to grant Ms. Christian’s Petition for Compensation because her court appointment had automatically terminated with the issuance of its ruling appointing a general guardian. We review this ruling de novo.

Held

we conclude that Ms. Christian was obligated by the Guardianship Act, the Probate Rules, and the D.C. Rules of Professional Conduct to see Ms. Glass’s guardianship proceeding through its appeal and that her representation of Ms. Glass did not automatically terminate upon the Probate Court’s ruling granting the petition to appoint a general guardian for Ms. Glass.

The court reversed and remanded. (Mike Frisch)

July 11, 2024 in Billable Hours | Permalink | Comments (0)

Monday, July 8, 2024

Notice Of Arbitration Rights Required

An attempt to collect a legal fee was rejected by the New York Appellate Division for the Fourth Judicial Department

Where, as here, the attorney’s complaint fails to allege that the attorney timely provided the client with notice of both the fee being sought and the right to arbitrate a dispute over that fee, it must be dismissed.

The facts

The underlying fee dispute between the parties arises from legal services performed by plaintiff and his firm to defendants between July 2014 and June 2015 in a residential real property contract dispute. Although plaintiff did not provide defendants with a written letter of engagement, defendants delivered to plaintiff a $1,500 advance payment. When the contract dispute settled in June 2015, plaintiff returned the advance payment to defendants along with the settlement proceeds. Four and a half years later, plaintiff’s firm sent defendants an invoice for legal services relating to the property contract dispute, but did not provide written notice of defendants’ right to arbitration of fee disputes under the [Fee Dispute Resolution Program]. In 2021, plaintiff commenced this action to recover the invoiced fees, alleging in his complaint that the FDRP did not apply because his firm had not rendered legal services to defendants “for more than two years prior to the date of th[e] complaint.” When defendants sought to have the dispute resolved by arbitration, the Bar Association of Erie County rejected their petition and advised that FDRP rules “do not allow for arbitration where no attorney’s services have been rendered for more than two years.” Defendants then moved to dismiss the complaint based upon plaintiff’s failure to provide timely notice of their right to arbitration of fee disputes pursuant to the FDRP. Supreme Court granted defendants’ motion, and plaintiff now appeals. We affirm.

(Mike Frisch)

July 8, 2024 in Billable Hours | Permalink | Comments (1)

Friday, July 5, 2024

Yankee Doodle Dandy

The Connecticut Appellate Court has concluded that an attorney retained on a contingency basis who was discharged prior to resolution of the accident injury claim was entitled to a fee ($9,000) for work he had performed

[Discharged attorney] Cohan has furnished no authority for the proposition that the doctrine of substantial performance applies in litigation seeking enforcement of a contingency fee agreement where a client discharged an attorney prior to settlement. Our research likewise has uncovered no such authority. Rather, our jurisprudence on contingency fee agreement cases allows an attorney discharged by a client prior to settlement to recover for the reasonable value of the services the attorney performed on the client’s behalf.

The attorney was not entitled to 1/3 of a policy limits offer of $100,000 that the client had rejected before discharging him

In the present case, the court determined Cohan’s award to be ‘‘the reasonable value of the services he performed . . . .’’ The court analyzed the work performed by Cohan under the terms of rule 1.5 of the Rules of Professional Conduct and found that an award in the amount of $9000 constituted the reasonable value of the services he performed on the plaintiff’s behalf. Accordingly, we conclude that the court properly applied Cole v. Myers, supra, 128 Conn. 230, rather than the doctrine of substantial performance, in determining the proper measure of damages.

Cross claim of the client

The plaintiff directs our attention to case law that he claims stands for the proposition that, in a contingency fee agreement case where a client discharges an attorney prior to settlement, the client will not be held liable for breach of contract. See Cole v. Myers, supra, 128 Conn. 229–30; McCullough v. Waterside Associates, supra, 102 Conn. App. 28. That same authority, however, permits an attorney, such as Cohan, who has been discharged to ‘‘receive reasonable compensation for the work he has done up to that point . . . .’’ Cole v. Myers, supra, 230

Successor counsel settled the claim for $1.5 million with the policy limits actually paid

The judgment further stated that the plaintiff would receive the remaining 1.4 million dollars from the defendant ‘‘if he has a windfall such as lottery income, an inheritance or any other financial gain . . . .’’ 

(Mike Frisch)

July 5, 2024 in Billable Hours | Permalink | Comments (0)

Wednesday, June 19, 2024

No Mandatory Arbitration Of Departing Lawyer Fee Disputes

A staff report on the web page of the Ohio Supreme Court

The Ohio Board of Professional Conduct has issued an advisory opinion clarifying the application of a rule that mandates the arbitration or mediation of fee disputes between lawyers.

The Ohio Rules of Professional Conduct direct the arbitration or mediation of fee disputes between lawyers who are not in the same firm and agree to jointly represent a client.  These arbitration or mediation services are provided by bar associations.  In Advisory Opinion, 2024-04, the Board concluded that the conduct rule does not mandate the arbitration or mediation of fee disputes that arise between a law firm and a lawyer who has departed the firm.  The Board suggested that lawyers and their former law firms may voluntarily submit to an arbitration or mediation process to resolve these types of fee disputes.

(Mike Frisch)

June 19, 2024 in Billable Hours, Law Firms | Permalink | Comments (0)

Thursday, June 6, 2024

Not Kosher

A claim for legal fees was rejected on appeal to the New York Appellate Division for the First Judicial Department

We affirm dismissal of the breach of contract claim, but on different grounds; namely, that the claim is barred by the statute of frauds. The unpaid legal fees at issue –for which plaintiff claims Katz agreed to be personally liable – were incurred in connection with plaintiff’s representation of defendant Kosher Sports, Inc. (KSI) in the Queens Ballpark Company, LLC (QBC) action. On appeal, even plaintiff characterizes this case as an effort to enforce an agreement “to pay for legal services provided to another,” namely, KSI. General Obligations Law § 5-701 (a)(2) requires that any “promise to answer for the debt . . . of another” be in writing and signed by the party to be charged therewith; however, plaintiff never produced a retainer agreement signed by Katz (see Parma Tile Mosaic & Marble Co. v Estate of Short, 87 NY2d 524, 527 [1996]; Rosenheck v Calcam Assoc., 233 AD2d 553, 554 [3d Dept 1996]). While plaintiff claims that this case does not involve an agreement to answer for the debt of another, and instead concerns an “original and primary” obligation owed to him by Katz, but the cases he cites in support are inapposite, either because they involved express acknowledgements by defendants that their obligations were “joint and several,” a factor absent from this case.

No basis to enforce fee agreement

Even if Katz had signed the retainer agreement, or whether upon application of the missing witness rule, it could be inferred that he did (e.g. Matter of Nassau Co. Dept. of Social Servs. v Denise J., 87 NY2d 73, 79 [1995]), we would still affirm, as the retainer agreement, which included a single signature line for Katz, is inadequate for purposes of imposing personal liability upon him.

(Mike Frisch)

June 6, 2024 in Billable Hours | Permalink | Comments (0)

Friday, March 8, 2024

Jarndyce V. Jarndyce In Rhode Island

The Rhode Island Supreme Court has affirmed the closing of a probate estate and - to put it mildly - presumably has ended a longstanding dispute

This appeal arises from more than a decade of litigation concerning the administration of Mr. Mendes’s father’s estate and his longstanding dispute with defendant, Kirshenbaum & Kirshenbaum Attorneys at Law, Inc. (defendant). The factual background of this matter can be found in our prior decision, Mendes v. Factor, 41 A.3d 994 (R.I. 2012); we limit our factual recitation in this matter accordingly. See Mendes, 41 A.3d at 996-1000. Mr. Mendes also named Alfred Factor as a defendant in this matter, but Mr. Factor died following remand of this case and is therefore no longer a party. We emphasize the length of time since the inception of this matter, as well as the emotional toll that this dispute has taken on the individuals involved: The decedent died on September 30, 1976, and Mr. Mendes continues to contest matters that the Providence Probate Court addressed in a March 3, 2009 consent order. Id. at 997, 998.

After a remand and agreement to settle

Notwithstanding the on-the-record agreement and the entry of an order accepting the two accountings and closing the decedent’s estate the following day, Mr. Mendes changed his mind. Specifically, Mr. Mendes asserts that the day after the parties settled in court before the trial justice, he reconsidered his decision, refused to sign any further documentation memorializing the settlement agreement, and instead filed a notice of appeal on February 3, 2023. However, the trial justice subsequently dismissed the notice of appeal, on defendant’s motion to strike, based on Mr. Mendes’s failure to comply with Article I, Rule 10 of the Supreme Court Rules of Appellate Procedure.

The court held that agreement to settle was enforceable but

It is clear from the procedural history of this matter that the trial justice improperly heard and granted defendant’s motion for attorneys’ fees. We therefore vacate the award of attorneys’ fees.

(Mike Frisch)

March 8, 2024 in Billable Hours | Permalink | Comments (0)

Thursday, February 15, 2024

Fee Fight Remanded

The District of Columbia Court of Appeals remanded a fight among law firms over an arbitration of fees

After the law firm Quinn, Racusin & Gazzola Chartered (“QRGC”) moved to vacate an arbitration award arising from a dispute with several other law firms, the other firms opposed the motion and sought confirmation of the arbitration award. The trial court dismissed the vacatur motion on the grounds that it had been both filed and served out of time, and it subsequently confirmed the arbitration award. QRGC now appeals that decision, but in an effort to invalidate the entire proceeding, claims for the first time in its reply brief that the Superior Court lacked subject-matter jurisdiction to entertain the original vacatur motion because the arbitration award at issue was a non-final interim award. We conclude that the trial court had statutory authority to review the interim award. Additionally, although we hold that QRGC timely filed its vacatur motion, we agree with the Superior Court that service was untimely and affirm the court’s dismissal on this basis. Finally, we hold that the trial court erred by confirming the arbitration award under D.C. Code § 16-4423(e) based solely on its dismissal of QRGC’s motion, and we remand for the trial court to consider whether the arbitration award should be confirmed on the merits.

The underlying suit

In 2009, Wye Oak Technology, Inc., sued the Republic of Iraq in the United States District Court for the District of Columbia over a contractual dispute relating to the refurbishing of Iraqi military equipment. The litigation continued for roughly ten years until Wye Oak obtained a substantial monetary judgment in 2019. The Republic of Iraq successfully appealed that decision, and litigation has continued.

QRGC served as Wye Oak’s counsel leading up to the litigation and was heavily involved in its initial stages. Wye Oak later retained Pavich Law Group to assist, and QRGC’s role gradually diminished as the litigation progressed. Wye Oak retained two more firms (Whiteford, Taylor & Preston and Kalbian Hagerty), and, in December 2019, all four firms drafted an “Agreement Concerning Attorneys’ Fees” to resolve disputes over compensation. The agreement established a collective 46% contingency fee for all four firms and further provided that “[a]ny claim or dispute between any of the aforementioned parties arising out of or relating to this Agreement . . . including any fee owed to any party, w[ould] be resolved by arbitration in the District of Columbia.”

Pavich Law invoked arbitration

On August 12, 2021, the arbitrator resolved various questions of liability in favor of the Pavich Law Group and the other appellees. As a result, it issued an interim award allocating the agreement’s 46% contingency fee as follows: 27.5% to Whiteford, Taylor & Preston; 18% to Pavich Law Group; 0.5% to Kalbian Hagerty; and 0% to QRGC. The interim award did not give any attorneys’ fees to QRGC because the arbitrator concluded that QRGC had “tortiously interfered with [Pavich Law Group]’s contractual relationships with Wye Oak Technology.” The arbitrator additionally stated that “[i]t is not intended that this Interim Award be subject to judicial review.”

Bottom line

Because we hold that that trial court “dismissed” rather than “denied” QRGC’s vacatur motion, the trial court was not required to confirm the arbitration award. We therefore remand for the trial court to consider whether, on the merits, the award should be confirmed.

(Mike Frisch)

February 15, 2024 in Billable Hours | Permalink | Comments (0)

Wednesday, February 14, 2024

Failure To Pay

The New York Appellate Division for the Second Judicial Department affirmed an order declining to dismiss an action brought by a former law firm attorney

The plaintiff, an attorney, was employed by the defendant Curan & Ahlers, LLP (hereinafter the firm), for approximately 18 years. On June 30, 2021, the plaintiff commenced this action against the firm and its managing partner, the defendant Keith J. Ahlers, asserting causes of action sounding in breach of contract and violation of Labor Law § 193 based on allegations that the defendants failed to pay him certain amounts constituting salary and nondiscretionary bonuses for work that he performed. As alleged in the complaint, pursuant to an agreement negotiated between the plaintiff and Ahlers in 2004, the plaintiff would be paid an annual salary of $70,000 and an
incentive bonus of 5% of any attorneys’ fees recovered on cases that he litigated. Prior to January 2008, the plaintiff was paid pursuant to this arrangement.

However, as alleged in the complaint, in 2008, Ahlers began withholding the plaintiff’s biweekly paychecks and some of his bonus checks, advising that the firm had insufficient funds to pay him. Throughout this time, the plaintiff kept a spreadsheet of the bonus money that he was owed and periodically showed the spreadsheet to Ahlers, who repeatedlyacknowledged that the plaintiff would “eventually be paid the full 5% bonus on each case that he litigated.” On July 17, 2015, the plaintiff received his last bonus payment from the firm, but Ahlers continued to make assurances that the plaintiff would be paid the outstanding bonus money that he was owed. In August 2020, Ahlers changed course and informed the plaintiff that he would not receive any of the outstanding bonus money. At this point, the plaintiff resigned.

No dismissal

Here, contrary to the defendants’ contention, the plaintiff stated a cause of action to recover damages for violations of Labor Law § 193 based on the allegations that the firm failed to pay a portion of his salary and nondiscretionary bonuses (see Gertler v Davidoff Hutcher & Citron LLP, 186 AD3d 801, 808; Ackerman v New York Hosp. Med. Ctr. of Queens, 127 AD3d at 795). Further, as alleged, Ahlers and the firm are each “employers” that may be held liable for violations of Labor Law § 193 (see id. § 190[3]; Lomeli v Falkirk Mgt. Corp., 179 AD3d 660, 663; Cohen v Finz & Finz, P.C., 131 AD3d 666, 667).

Contrary to the defendants’ contention, the plaintiff can maintain a cause of action alleging breach of contract against Ahlers individually. Although the Partnership Law provides Ahlers, a partner in a limited liability partnership, with certain protections from liability (see id. § 26; Salazar v Sacco & Fillas, LLP, 114 AD3d 745, 747), there is an exception in the event that the partnership becomes insolvent

A related order is linked here.

Here, the plaintiff alleged that, over a course of years, the defendants made repeated assurances that they would pay him salary and bonus money that he was owed pursuant to his employment arrangement. Further, he alleged that the defendants made a partial payment of outstanding bonus money to the plaintiff on July 17, 2015, within the statute of limitations. Under these circumstances, the plaintiff raised a question of fact as to whether the statute of limitations was tolled or revived (see Lew Morris Demolition Co. v Board of Educ. of City of N.Y., 40 NY2d at 521; RTT Holdings, LLC v Nacht, 206 AD3d at 836; Matter of McDonald, 79 AD2d 754, 755).

The Supreme Court erroneously concluded that the plaintiff was required to show a writing in order to meet his burden of raising a question of fact as to whether the statute of limitations was tolled or revived by virtue of partial payment. Unlike General Obligations Law § 17-101, which is applicable when a party seeks to show that a statute of limitations is tolled by a written acknowledgment, there need not be a writing in order for a plaintiff to demonstrate that the statute of limitations is tolled or revived by reason of partial payment (see generally Lew Morris Demolition Co. v Board of Educ. of City of N.Y., 40 NY2d at 521).

(Mike Frisch)

February 14, 2024 in Billable Hours, Law Firms | Permalink | Comments (0)

Friday, January 12, 2024

At Her Own Peril

The North Dakota Supreme Court affirmed and remanded in an appeal of an award of legal fees

Michelle Vetter appeals from a district court judgment entered after a bench trial on a claim for unpaid legal fees and counterclaim. She argues Larson Latham Huettl breached the terms of the fee agreement, unilaterally altered its terms, and committed fraud or deceit. We affirm the judgment, and remand for consideration of Larson Latham Huettl’s attorney’s fees for this appeal.

Facts

Michelle Vetter retained Larson Latham Huettl for legal services relating to her divorce. She paid a $6,000 retainer under a fee agreement that specified a rate of $180 per hour for legal services. Vetter later terminated the firm and retained other counsel. Her final bill exceeded the retainer by $552.

After Vetter failed to pay, Larson Latham Huettl filed a small claims affidavit seeking $848. Michelle Vetter answered, denying she owed any part of the claim because the legal services were not completed and the firm was terminated. Vetter also filed a counterclaim, alleging she did not receive an itemized billing from Larson Latham Huettl, disputing the amount owed, and requesting $195,000 for the additional money, time, and emotional trauma. Vetter removed the action from small claims court to district court. Larson Latham Huettl denied the allegations in the counterclaim and asserted affirmative defenses.

The firm showed up for the trial and claimed a $200 per hour fee; the client did not appear

The district court ordered $4,242 in attorney’s fees. Judgment was entered in the amount of $5,488 against Vetter and in favor of Larson Latham Huettl.

On appeal

Vetter argues billing at $200 per hour instead of the $180 per hour resulted in an “overcharge” of $655, increasing the total bill of $5,895 to $6,052, resulting in the small claims action and accumulation of interest. She argues the withholding of this final bill accounting was purposeful fraud or deceit by Larson Latham Huettl. She also argues the firm unilaterally changed the terms of the agreement by charging her $200 per hour instead of $180 hour.

The court recounted the district court's conclusions

The district court found the fee agreement is valid and enforceable, and clear and unambiguous, and included a provision that the “applicable hourly rate may increase during the course of the Firm’s representation.” The court further found the firm performed its obligations under the agreement and the amounts charged by the firm for performed legal services were reasonable. The court found Vetter breached her duties under the agreement and ordered judgment for the unpaid fees, prejudgment interest, costs, and attorney’s fees. Finding Vetter did not appear at trial and did not provide evidence in support of her answer and counterclaim, the court dismissed her claims.

The court

Vetter removed the matter to district court. Section 27-08.1-04, N.D.C.C., allows a defendant to remove an action filed by the plaintiff in small claims court to district court. “If the defendant elects to remove the action from small claims court to district court, the district court shall award attorney’s fees to a prevailing plaintiff.” N.D.C.C. § 27-08.1-04. A party removes a small claims matter to district court at her own peril.

Remand

We affirm the judgment. We remand for findings on a reasonable amount of attorney’s fees for this appeal.

Oral argument is linked here.

Here is an interesting unrelated matter where the firm was granted summary judgment when it sued a former associate for return of salary based on billing less than a quota set in the employment contract.

From the employment agreement

In the event that Associate bills out less than the base quota for a three month period, the Associate’s salary will be reduced appropriately at the discretion of LLH in order to make up for any discrepancy. Any discrepancy where the actual hours billed is less than the base hours required will be considered to be a debt owed by Associate to LLH at the end of the calendar year or at the termination of employment.

The North Dakota Supreme Court affirmed the summary judgment

[Former associate] Iversen argues the employment agreement was unconscionable because LLH had sole control over his performance under the employment agreement and how many hours to credit him, and it had primary control over his work, which prevented him from being able to comply with the employment agreement. The district court assumed there was “some level of procedural unconscionability” because LLH drafted the document and asked Iversen to sign it after he had already begun his employment. Regarding substantive unconscionability, there are no terms in the employment agreement that support the contention that LLH had sole control over Iversen’s performance under the employment agreement...

We conclude the court did not err in concluding the employment agreement was not substantively unconscionable.

And

The district court did not err in concluding the employment agreement imposed no obligation on LLH to provide Iversen with sufficient work or a sufficient number of clients. See Burckhard, 2022 ND 230, ¶¶ 16-17. The court did not err in concluding there were no genuine issues of fact regarding Iversen’s impossibility defense.

Another decision upholding the clawback of salary arrangement is linked here. (Mike Frisch)

January 12, 2024 in Billable Hours | Permalink | Comments (0)

Friday, January 5, 2024

Fee Arbitration Award Upheld

The New York Appellate Division for the First Judicial Department rejected an appeal of a fee arbitration award

Respondent failed to establish any grounds for vacating the arbitration award (see CPLR 7511[b]; Matter of Brown & Williamson Tobacco Corp. v Chesley, 7 AD3d 368, 372 [1st Dept 2004]). Respondent contends that the arbitration panel exceeded its power by determining the parties' fee dispute because it was "inextricably intertwined" with her allegations of malpractice, which could not properly have been considered by the arbitrators under the Rules of the Chief Administrator of the Courts (22 NYCRR) part 137. However, respondent did not assert any "claim" of malpractice in arbitration. Indeed, the fee dispute was the only claim that was heard and resolved by the arbitration panel, which did not address respondent's conclusory malpractice allegations. Further, neither the plain terms of 22 NYCRR part 137 (e.g. 22 NYCRR 137.1[b][3]) nor the parties' engagement letter precluded the arbitration panel from hearing or determining petitioner's claim for unpaid fees.

Respondent's reliance on Filemyr v Hall (186 AD3d 117 [1st Dept 2020]) is misplaced, because in Filemyr we addressed whether a lawyer's service on a client of an untimely notice to arbitrate barred the lawyer's contract action for unpaid fees, an issue not raised in this action.

(Mike Frisch)

January 5, 2024 in Billable Hours | Permalink | Comments (0)

Thursday, December 14, 2023

Fee Reduction Affirmed

A guardian appointed in 1998 and 2000 for a ward who died in 2013 was largely unsucessful in his fee appeal to the District of Columbia Court of Appeals.

The conservatorship was established by the U.S. District Court in 1958 (prior to court reorganization); the ward resided in a psychiatric facility for veterans located in New York. 

The court rejected the guardian's jurisdictional challenge to the fee reduction

we do not believe that court-appointed guardians and conservators have reasonable grounds to insist on limiting the appellate scrutiny of their fee awards on appeal merely because there is no party opposing them. They are fiduciaries, and are held to the standards of a fiduciary; it is a violation of the trust reposed in them to take advantage of the absence of opposition. The trial court has plenary authority to examine every aspect of their requests for compensation from the ward’s estate or the Guardianship Fund, even in the absence of objection by an opposing party. When the fiduciaries ask this court on appeal to review a reduction of their requested compensation, we think it unreasonable for them to insist that we conduct that review with blinders on. The cross-appeal rule was not meant to apply in this sort of situation, where there is no adversary to protect the interests at stake and it is the court itself that bears the onus of doing so.

But here we had the functional equivalent of a cross-appeal by an opposing party with an interest at stake. That sufficed. We conclude that this court did not exceed its jurisdiction when it remanded in Smith III for the Superior Court to address the deficiencies in its compensation order. The Superior Court therefore did not violate Mr. Gardner’s rights by doing so.

Fees reduced by trial court

Mr. Gardner contends that Judge Fisher abused his discretion in cutting his fee requests for appellate work in Smith I and Smith II, time spent traveling to and from New York in connection with four visits in nine months to Mr. Smith at the nursing home, and time spent in connection with the preparation and explanation of his billing. With one qualification that will require clarification of the fee award for appellate work on remand, we disagree with Mr. Gardner and conclude that there was no abuse of discretion here.

Fee petition work

In his March 2016 fee petition, Mr. Gardner asked for 28.7 hours in fees for preparing prior billing statements and an additional 7.7 hours in fees spent preparing for a half-hour hearing held in November 2015 on the fee petitions that had been at issue in Smith I. This was 36.4 hours in total, all billed by Mr. Gardner at the $90 per hour rate; thus, Mr. Gardner was seeking over $3,200 in fees just for his prior fee-petition work. As noted above, some of this work was performed to correct defects and errors that Mr. Gardner himself had made in his earlier billing statements. It is unreasonable for a fiduciary to expect payment for such self-generated work. Moreover, some of this work was clerical in nature; for instance, Mr. Gardner sought to be compensated at $90 per hour for mailing and electronically filing his petitions for compensation. And why Mr. Gardner found it necessary to expend some 28 hours on the preparation of his fee petitions (which should be a routinized and automated administrative task), plus several more hours in preparation for the post-Smith I hearing, was and is unexplained. Judge Fisher reasonably found the entire request exorbitant. We conclude that Mr. Gardner has not made the strong showing necessary to establish that Judge Fisher abused his discretion by awarding Mr. Gardner compensation (at the full $90 per hour rate) for half of the time.

Travel time

Finally, Mr. Gardner sought compensation for around 50 hours of round-trip travel by car in four visits that he made in a period of nine months to visit Mr. Smith at his nursing home. Finding that this travel time was disproportionately expensive, involved the most minimal contact by Mr. Gardner with Mr. Smith and his care givers, did not benefit Mr. Smith, and should have been avoided because Mr. Gardner should have taken the steps necessary to transfer Mr. Smith’s conservatorship or guardianship to New York, Judge Fisher awarded Mr. Gardner only half the travel-time compensation he requested. The judge’s determinations were all supported by the evidence and the record of the conservatorship.

(Mike Frisch)

December 14, 2023 in Billable Hours | Permalink | Comments (0)

Tuesday, December 12, 2023

Liens On Me

The New York Appellate Division for the First Judicial Department declined to disturb charging liens in place between former law partners

The operating agreement of the parties' former partnership explicitly states that only the originating law partner is entitled to fees after dissolution (with one exception not relevant to this appeal) and that all prior work "will inure to the file and the partner who is entitled to retain it" (Operating Agreement § 3.04). The operating agreement states that the originating partner in disputed cases is to be determined by arbitration. The operating agreement also states, however, that a schedule to be revised yearly identifies who would retain files in the event of dissolution. This schedule was never revised. Therefore, neither party established its entitlement to the relief it sought, as the contested language is ambiguous as to the circumstances under which cases would revert to the originating partner upon the firm's dissolution (see Impala Partners v Borom, 133 AD3d 498, 499 [1st Dept 2015]; Patrolmen's Benevolent Assn. of City of N.Y., Inc. v City of New York, 46 AD3d 378, 381-382 [1st Dept 2007]). Although the requested arbitration has been held, consistent with our prior decision (Law Off. of J Bacher, PLLC v Saftler, 198 AD3d 570 [1st Dept 2021]), the arbitrator resolved only the factual issue of case origination and not the legal issue of entitlement to fees. Thus, Supreme Court properly concluded that a trial on these issues, among others, was needed to determine the parties' intent in drafting or negotiating the disputed terms.

We decline to disturb the charging liens already in place in Bacher's favor. Bacher contests Saftler's right to certain unfinished cases as the originating partner, and there is no genuine dispute that Bacher performed work on some contingency matters to which Saftler claims an entitlement (see Decolator, Cohen & DiPriscoLLP v Lysaght, Lysaght & Kramer, P.C., 304 AD2d 86, 90-91 [1st Dept 2003]).

Supreme Court properly rejected Bacher's request for an accounting and the appointment of a special referee "until the issue of which cases revert to which partner (or to the firm) is resolved." Bacher has not shown that he made a demand for an accounting and that Saftler had rejected such a demand, two elements also necessary to maintain the cause of action (see McMahan & Co. v Bass, 250 AD2d 460, 463 [1st Dept 1998], lv denied 92 NY2d 1013 [1998]).

We have considered the parties remaining contentions and find them unavailing.

(Mike Frisch)

December 12, 2023 in Billable Hours, Partners | Permalink | Comments (0)

Wednesday, November 29, 2023

Praise But No Recompense

The New Jersey Appellate Court affirmed the denial of fees in a guardianship matter

In this guardianship action, which was initiated by the Office of Adult Protective Services (APS), court-appointed attorney Steven J. Kossup, Esq., and court-appointed temporary guardian Brian C. Lundquist, Esq., appeal from an order denying their respective applications for fees and costs. Having consolidated their appeals, we now affirm.

Can't put this in the bank

Although pursuant to Rules 4:42-9(a)(3) and 4:86-4(e), the judge may have had the authority to grant a fee application "in such other manner as the court shall direct," the judge did not have the authority to grant appellants' fee applications in the manner – payment by APS – appellants had requested. Accordingly, we perceive no misapplication of law or abuse of discretion in the judge's decision, and we affirm the order denying appellants' fee applications.

In reaching that conclusion, we are mindful of the temporal and financial sacrifices appellants and their firms made in their laudable efforts on behalf of Hank, the court, and the legal profession in this case. We acknowledge in particular Lundquist's firm's payment of Dr. Williams's fee. We join the judge in her praise and expressions of gratitude, but given the applicable statutes and court rules, we can do no more. Like our Supreme Court, we "have no license to amend" statutes, and, unlike our Supreme Court, we have no constitutional authority to create court rules "to make our civil justice system more fair." DiFiore, 254 N.J. at 228.

(Mike Frisch)

November 29, 2023 in Billable Hours | Permalink | Comments (0)

Monday, October 30, 2023

Law Firm Prevails Over Departing Attorney

The Maryland Supreme Court affirmed a ruling in favor of a law firm against a departing attorney but reversed the Appellate Court's failure to award the firm prejudgment interest

Maryland Rule 19-305.6(a) prohibits an attorney from making “a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of an attorney to practice after termination of the relationship, except an agreement concerning benefits upon retirement.” The rule is based on ABA Model Rule of Professional Conduct 5.6(a).

The policy underlying the rule is enunciated in Comment 1: “An agreement restricting the right of attorneys to practice after leaving a firm not only limits their professional autonomy but also limits the freedom of clients to choose an attorney.” The rule prohibits agreements not to practice within a particular geographic or substantive area, agreements not to represent any of the firm’s clients, and restrictions on client contact or use of client information. Financial disincentives for representing certain clients may violate Rule 5.6(a) if they are disguised attempts to penalize competition.

An agreement “in clear and flagrant violation” of the rules of professional conduct may be “unenforceable,” because “it would be anomalous to allow a lawyer to invoke the court’s aid in enforcing an unethical agreement when that very enforcement, or perhaps even the existence of the agreement sought to be enforced, would render the lawyer subject todiscipline.” Post v. Bregman, 349 Md. 142, 168 (1998).

An agreement between a law firm and one of its attorneys concerning the division of a contingent fee that is earned after the attorney leaves the firm does not violate Maryland Rule 19-305.6(a), provided that the agreement endeavors to make a reasonable forecast of what a likely quantum meruit division of fees would have been. In the absence of such an agreement, the parties’ respective shares would be determined by principles of quantum meruit. But to determine its quantum meruit share, the firm would have to sue the client and the departing lawyer to establish the reasonable value of the services that it provided to the client. Lawyers should be encouraged to enter into agreements to resolve these kinds of potential disputes in advance and to avoid unseemly bickering over fees.

In this case, a law firm and one of its attorneys entered into an agreement concerning the division of a contingent fee that was generated after the attorney left the firm and was engaged by a client whom she had represented while she was at the firm. The agreement calls for the division of fees based on a sliding scale. The agreement compares the amount of time in which the firm was responsible for the client and the amount of time in which the attorney was responsible for the client. Then it uses those factors as a surrogate for the parties’ respective contributions to the outcome. The agreement does not purport to restrict the right of the attorney to practice law or prohibit the attorney from representing the firm’s clients. Nor does it limit the freedom of clients to choose to use the attorney’s services. And it does not penalize the attorney by requiring the forfeiture of a right that has already been earned. The Appellate Court of Maryland held that this agreement did not violate Maryland Rule 19-305.6(a) on its face or as applied to the facts of this case. The circuit court did not err upholding the enforceability of the agreement in this case.

Pre-judgment interest

Pre-judgment interest compensates judgment creditors for their inability to use the funds that should have been in their hands before the entry of judgment. Pre-judgment interest is available as a matter of right when the obligation to pay and the amount due is certain, definite, and liquidated by a specific date prior to judgment such that the effect of the debtor’s withholding payment was to deprive the creditor the use of a fixed amount as of a known date.

In this case, a lawyer received certain, definite, and liquidated settlement payments on discrete dates. She was contractually obligated to remit a certain, definite, and liquidated percentage of those payments to her former firm, but failed to do so. Hence, the firm was entitled to pre-judgment interest, as a matter of right, on each payment that she failed to make. The pre-judgment interest ran from the date on which each payment became due until the date of the judgment. The circuit court erred in denying the firm’s request for pre-judgment interest.

The attorney joined the firm in 2011 after a career as an Assistant United States Attorney. The parties had entered into a "prenuptial" agreement governing departure.

At issue

The Barker cases settled in principle on April 3, 2015. Less than two months later, on May 29, 2015, Ms. Bennett gave Ashcraft four weeks’ notice that she was resigning from the firm. She left on June 26, 2015. When she left, Mr. Barker chose to terminate his relationship with Ashcraft and to retain Ms. Bennett.

On September 2, 2015, the parties to the Barker cases, including Mr. Barker, entered into a written settlement agreement. The agreement obligated the defendants to pay between $25 million and $35 million to the United States and the State of Georgia, on a quarterly basis, over five years. At the time of the settlement, Ashcraft had advanced over $700,000.00 in legal fees and over $300,000.00 in costs.

Pursuant to the settlement agreement in the Barker cases, Mr. Barker would receive over $5,000,000.00, which was subject to a contingent fee of over $2,000,000.00. The settlement agreement also awarded Mr. Barker $675,000.00 in statutory attorneys’ fees. Ms. Bennett asserts that, as a result of her efforts after she left the firm, Mr. Barker’s share of the recovery increased from $3,750,000.00 to over $5,000,000.00. Ms. Bennett received the first installment of the settlement payments on September 3, 2015, the day after the settlement agreement was signed, and less than three months after she left the firm.

And

Before Ms. Bennett joined Ashcraft in 2011, the firm had entered into a joint venture with another firm to represent Robert Whipple in a case under the False Claims Act: United States ex rel. Whipple v. Chattanooga-Hamilton Cnty. Hosp. Auth., No. 3-11- 0206 (M.D. Tenn.). After Ms. Bennett joined the firm, she worked on the Whipple case. Following her departure from Ashcraft, Ms. Bennett continued to represent Mr. Whipple until his case settled in the summer of 2016. The settlement generated about $160,000.00 in fees.

Enforceability

we conclude that the Prenuptial Agreement is not unenforceable on its face—i.e., that it is not facially invalid. We are persuaded by the 1989 MSBA ethics opinion, which approved an agreement with a sliding-scale formula, much like Ashcraft’s—one in which the division of fees is “based upon a combination of the length of time that the case was in the law firm prior to the attorney’s termination and the period of time in which the fee is realized after the attorney has left the firm.” MSBA Ethics Comm., Formal Op. 1989-29. We are also persuaded by the 1991 District of Columbia ethics opinion, which approved an agreement that seems almost identical to Ashcraft’s—one in which the “[f]ees ultimately realized are divided on a percentage basis which varies according to the length of time the case was handled by the firm and the length of time it was handled separately by the departing lawyer.” D.C. Ethics Comm., Formal Op. 221. We are persuaded as well by the Michigan Court of Appeals’ decision in McCroskey, which upheld an agreement under which the departing attorney received “a ratable proportion of a given fee on the basis of the stage of the litigation at the time of departure.” McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d at 828-29.

The unanimous opinion was authored by Judge Arthur. (Mike Frisch)

October 30, 2023 in Billable Hours, Law Firms | Permalink | Comments (0)