Legal Malpractice

Fee Disputes in the Big Arena and Legal Malpractice

By (Andrew Lavoott Bluestone)

Today's New York Law Journal reports on a fee dispute.in an article by Susan Beck of The American Lawyer.  This, however is not a fee dispute one might see on a typical day in the fee dispute world.  Typically, those fee disputes are for sums less than $ 50,000.  Here, the client paid $ 5 million to Boies Schiller and the dispute is over an additional $ 5 million.  Besides those sums, the client paid Davis Polk an additional $ 7 million in fees before it ran out of money.

"In a lawsuit filed Oct. 1 in Manhattan Supreme Court, G.K. Las Vegas Limited Partnership is seeking to force Mr. Boies's firm, Boies Schiller & Flexner, to arbitrate a fee dispute before the American Arbitration Association and to place more than $5.04 million in disputed fees in escrow.

G.K. claims that it has already paid the firm $5 million and disputes its obligation to pay another $5.04 million. It alleges that Boies Schiller breached its agreement that Mr. Boies would serve as lead counsel and "shirked its professional responsibilities" to the client.

Justice Bernard J. Fried (See Profile) has ordered Boies Schiller to respond to G.K.'s petition to compel arbitration by Oct. 15. A hearing in G.K. Las Vegas Limited Partnership v. Boies Schiller & Flexner, 651632/2010, is scheduled for Oct. 19.

G.K. claims that Mr. Boies immediately turned over the matter to less experienced counsel and more junior associates. As a result of the lack of senior partner attention, G.K. in 2007 brought in Davis Polk & Wardwell, which billed more than $7.6 million, the complaint states.

By 2008 the client was running out of money and could no longer pay Davis Polk. Mr. Boies agreed to resume his role as lead counsel under a new fee arrangement. According to the complaint, the amended fee agreement "substantially increased" the success fee. A letter signed by Mr. Boies in November 2008 and included as an exhibit states the success fee would be modified to 10 percent of the total recovery.

Boies Schiller also agreed not to charge for its hourly billings, except for work handled in its Las Vegas office, which would continue to bill at 80 percent of normal rates, the letter said. According to the complaint, the new fee agreement did not deduct the $250,000 engagement fee from the success fee.

Despite the new arrangement, the complaint alleges Mr. Boies continued to neglect the Nevada action, skipping one mediation session and arriving four hours late for another. G.K. claims Mr. Boies lied to the parties attending the mediation by claiming he was stuck on the tarmac at Los Angeles airport when he was actually giving a live interview with CNN. The client turned to Davis Polk on short notice to make a summary judgment motion because Mr. Boies was not prepared, the complaint asserts.

Mr. Boies nevertheless was expected to be lead trial counsel."
 

Full post as published by New York Attorney Malpractice Blog on October 08, 2010 (boomark / email).