From today’s NYLJ by Anthony Lin: Attorney loses case on summary judgment, and tells client that he is not obliged to handle appeal. Client, chemical company, hires Nathan Dershowitz to handle appeal, which he does. At appellate level, case settles for $ 250,000.
Client pays Dershowitz a contingent fee, and original attorney sues client for his contingent fee. Client inpleads Dershowitz on theory that he did not ascertain whether first attorney was due fees.
Result: Attorney 1 gets no fee, Legal mal against Dershowitz dismissed.
"A federal judge in Manhattan has ruled against a lawyer seeking to collect a contingent fee on a case he lost at the trial level but which his client settled after filing an appeal.
Lawyer Barry I. Fredericks represented Chemipal Ltd. in a 2003 suit against weight-loss company Slim-Fast, whose products Chemipal distributed in Israel. Israeli-based Chemipal, which agreed to pay Fredericks $40,000 and a 35 percent contingent fee, claimed Slim-Fast violated its contract with it by not providing adequate marketing and advertising support.
But a federal court in Delaware granted summary judgment to Slim-Fast. Fredericks declined to handle the appeal and Chemipal hired Nathan Z. Dershowitz of Dershowitz, Eiger & Adelson. After the appeal was filed, Chemipal accepted a $250,000 settlement offer.
Fredericks sued Chemipal last year, arguing that his contingent fee arrangement with the company applied to the settlement. But Southern District of New York Judge Gerard E. Lynch granted summary judgment to Chemipal last week, finding that, though Fredericks’ argument was plausible, New York law required an ambiguous retainer agreement to be read in favor of the client.
The agreement at issue specified the fees Fredericks would receive in the event of a successful result at the trial level. It also said Fredericks was not obligated to handle the appeal and his contingent fee would not be reduced by the costs necessary to defend a successful result on appeal. But the agreement was silent on the scenario that actually unfolded, with Chemipal losing at trial and recovering after its appeal.
Judge Lynch said Fredericks’ argument that the agreement limited his responsibility to the trial level but not his fee was "perfectly reasonable" and the parties would have been free to contract as such. But the judge said the agreement also was open to other interpretations.
"Chemipal’s argument that this was an unforeseen contingency, and that the agreement should be read as ending when the case was (temporarily) ‘lost’ is also not an impossible reading of the parties’ intentions," the judge wrote in Fredericks v. Chemipal, Ltd., 06 Civ. 966."