Articles Posted in Legal Fees

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The case involves a fee dispute between a law firm and its former clients. The law firm took the underlying case on a contingent fee basis. The law firm inserted the following provision in its engagement letter, which requires arbitration of any fee disputes:

4. FEE ON TERMINATION. If Client terminates Firm’s employment before, conclusion of the case without good cause, Client shall pay Firm a fee and expenses based on the fair and reasonable value of the services performed by Firm before termination. If any disagreement arises about the termination fee, the client may choose two persons from a service profession, and the firm may choose one person. The firm will be bound by a majority decision of the three persons as to a fair fee. If the Firm terminates the representation, then it shall receive no fee or expenses.

The plaintiff law firm was terminated after it had received settlement offers from the other parties in the underlying lawsuit. (It is likely the lawyers felt that they had been unfairly terminated where they had been on the brink of achieving a settlement for their client).

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This case and the opinions it has spawned proves that truth is stranger than fiction. The most recent opinion details the results of two trials and two appeals. The Appellate Court twice reversed trial court judgments that were incredibly lawyer friendly, that allowed the estate of a lawyer to retain funds that never belonged to the lawyer.

In 2006, Catherine Gombach deposited $504,889.29 in the trust account of her lawyer. Gombach was apparently attempting to protect some of her funds from creditor claims.

In 2010, Laurie began spending Gombach’s money and made improper withdrawals from the trust account. Gombach sued Laurie, who passed apparently passed away while the case was pending.

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Recently, the Illinois Appellate Court reversed a legal fee award because the lawyers who obtained the award failed to retain copies of their written timesheets after they entered the data into a computer program. Aliano v. Sears, Roebuck & Co., 2015 IL App (1st) 143367.

The plaintiff sought recovery under the Consumer Fraud Act alleging that Sears had wrongfully collected sales tax on the entire sale price of certain digital-to-analog converter boxes even though a portion of the price was subsidized by a federal program which provided coupons that were exempt from Illinois sales tax.

Plaintiff was unsuccessful in obtaining class certification and opted to go to trial. At trial, plaintiff prevailed and won a judgment of $3.10. Plaintiff then filed a fee petition seeking $252,402.08 in legal fees. The circuit court conducted a hearing on the petition for legal fees and awarded $157,813.53. Sears appealed. Opinion ¶ 3.

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The case at issue here, Tuggle Schiro & Lichtenberger, P.C., v. Country Preferred Insurance Company, 2015 IL App (4th) 141036-U is an unpublished opinion of the Illinois Appellate Court for the Fourth District.

The fee dispute arose out of an automobile accident case. The plaintiff, Carroll Watson, who was insured by County Preferred suffered injuries as a result of an automobile accident. Watson hired Tuggle Schiro & Lichtenberger (Tuggle) to represent him in the litigation. Watson also submitted medical bills to County Preferred, which made payments directly to medical providers. The medical payments made by County Preferred exhausted the policy’s $50,000 limit of medical payments.

The Tuggle firm obtained a settlement of $100,000 from the party that caused the auto accident. Additionally, the Tuggle firm obtained a payment of $150,000 from County Preferred on Watson’s uninsured motorist coverage. County Preferred asserted its right to take a credit of $50,000 for payments it made for medical payments for Watson.

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The case is captioned Illinois State Bar Association Mutual Insurance Company v. Thomas W. Burkhart, et al., 2015 IL App (4th) 140936-U.

An attorney, Thomas Burkhart, represented Robert and Elizabeth Wilson in a real estate transaction and related litigation. That litigation ultimately resulted in a jury verdict of $30,000 for the Wilsons. Opinion ¶ 9. The proceeds were deposited with the Bank of Edwardsville.

In 2005, trouble arose when Burkhart filed a motion in the state court case seeking $35,806.85 in legal fees, apparently $5,806.85 more than the amount of the jury verdict. The Wilsons responded with a counterclaim for negligence and legal malpractice. Burkhart tendered the defense of the claims to ISBA Mutual, which agreed to pay for Burkhart’s defense.

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Source: GOESEL v. BOLEY INTERNATIONAL (HK) LTD., Court of Appeals, 7th Circuit 2015 – Google Scholar

This case concerns an appeal by a law firm of a decision by the district court to reduce a contingent fee award.

The parties agreed to a contingent fee under which the lawyers would receive one-third of any award and the expenses would be covered by the clients.

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This case is captioned Bode & Grenier, LLC v. Carroll L. Knight.

Carroll Knight retained the law firm, Bode & Grenier, LLC, to assist it with litigation and regulatory matters arising out of an oil spill of 100,000 gallons of oil on Carroll Knight’s property in Toledo, Ohio. The lawyers agreed to represent Carroll Knight on an hourly fee basis. After two years of litigation, Carroll Knight fell behind on its legal bills and entered into an agreement with the law firm. The agreement contained three components: (a) a retention letter; (b) a Promissory Note obligating Carroll Knight to pay $300,00o in past due legal fees; and (c) a Confession of Judgment.

On May 2, 2008, the firm filed an obtained a Confession of Judgment in the amount of $302,500.

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Source: PARALLEL NETWORKS, LLC v. JENNER & BLOCK LLP, Tex: Court of Appeals, 5th Dist. 2015 – Google Scholar

This is a decision affirming an arbitrator’s award of legal fees to Jenner & Block. The case is a typical attorney-client fee dispute, but here the Court enforced the parties’ arbitration clause.

The fee dispute arose out of patent litigation handled by Jenner & Block for Parallel Networks. Jenner & Block ultimately withdrew from the litigation after locating successor counsel for Parallel Networks. Jenner & Block cited the client’s failure to pay invoices on a timely basis and its lack of economic resources to continue the litigation.

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Source: IN THE MATTER OF ESTATE OF AMUNDSON, 2015 ND 253 – ND: Supreme Court 2015 – Google Scholar

This appeal dealt with the issue of fees charged to probate estates. The North Dakota Supreme Court affirmed a judgement against a lawyer that he repay $95,000 in legal fees that were excessive.

After Donald Amundson passed away in 2011, two executors were appointed. Donald’s will provided that all of his property was to pass to the Donald G. Amundson Trust. The trial court found that one of the co-executors breached a fiduciary duty owed to the estate by paying John Widdel, Jr.’s fee bills without questioning them. The District Court ordered Widdel to repay $95,000 to the Estate.

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What is an attorney’s possessory lien? It is a lien that an attorney can use to block the client from access to the file. The attorney, however, cannot enforce the lien in court. In a recent unpublished decision the Illinois Appellate Court held that a law firm can assert a possessory lien over a computer database held by a document management firm. The case is captioned Cronin & Company, Ltd. v. Richie Capital Management, LLC., 2014 IL App (1st) 131892-U. Cronin is a law firm that represented Richie Capital (and other parties) in litigation, in which Richie Capital was attempting to recover investment losses incurred when it invested in a Ponzi scheme.

In 2012, Richie authorized Cronin to retain a third-party vendor, Flex Discovery, LLC (d/b/a Landmark Legal Solutions). Landmark was retained to provide a hosting program “that would enable attorneys to access electronic databases containing documents produced in connection with the subject litigation.” ¶ 4.

In January or February 2013, the attorney-client relationship broke down and was terminated. There was a dispute over legal fees between Cronin and Richie Capital. Cronin asked Landmark to “‘hibernate’ the database it was hosting (take it off-line), so it could not be accessed. Cronin claimed it was asserting a retaining lien over its former client’s litigation file, which it argued included the database.”  ¶ 5.

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