Mega law firm Quinn Emanuel Urquhart & Hedges has been hit with a legal malpractice lawsuit that claims the firm botched a $48.8 million settlement, even as the firm collected approximately $12 million in contingency fees on the deal.
Todd Kurtin hired Quinn Emanuel to represent him in the unwinding of his business relationships. Under the terms of the agreement, Quinn Emanual was to receive 50% of the settlement up to $20 million and 20% thereafter.
In four short months, the parties negotiated a settlement whereby Kurtin would receive $48.8 million in four payments. The first two payments were made, which resulted in Kurtin and Quinn Emanual each receiving about $12 million, but Kurtin’s former partner apparently defaulted on the remaining two payments.
Kurtin asked Quinn Emanual to enforce the settlement agreement. The firm apparently offered to do so on a reduced hourly basis, but not under the contingent agreement. Kurtin responded by suing the firm, claiming that they didn’t advise him of the meaning and ramifications of the settlement agreement.
It’s hard to know what to make of the suit since I don’t know what underlying advice was given. But, some issues stand out. First, when negotiating settlements with payment plans there is always a risk of default. It’s not clear what options were investigated to protect Kurtin or to disclose the risks to him, but that’s sure to be a focus of the case.
The second thing that is apparent is this is a question of what is the scope of the representation. What did the original fee agreement say about Quinn Emanual’s obligation to continue representing Kurtin in the collection proceedings? When can they withdraw? Are they obligated to collect the payments? etc.
The final quick thing is the effect of the sliding scale. I don’t know if it was planned this way, but the payments made essentially equal the $20 million under the fee agreement that Quinn Emanual had a 50% fee, and the uncollected amounts were due under the lower portion of the fee agreement. I have a hard time saying it’s okay for the firm to take the quick settlement under the high fee amount, but then end the representation when the work gets hard and the fee goes to a lower percentage.
An interesting set of facts all around.
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