Small New York Firm Wins Epic Fee Fight: Business of Law

A small Manhattan law firm won $44 million in attorney fees incurred in a dispute involving the heirs of Sylvan Lawrence, a wealthy commercial real estate developer.

Graubard Miller represented Lawrence’s widow, Alice, who had been battling her husband’s executor over disposition of the property since 1983.

By the end of 2004, the New York Court of Appeals said, Lawrence had paid Graubard “approximately $18 million in legal fees on an hourly basis.” After an apparent setback in the case, Lawrence and the firm agreed that Graubard would be paid 40 percent of any future recovery, although 2005 billings would continue to be quarterly, with a cap on fees.

Because of new evidence suggesting that the executor had engaged in “egregious self-dealing,” the case settled for more than $100 million. Graubard’s share under the 2004 agreement was $44 million, but Lawrence disagreed.

A referee hired for the ensuing litigation reduced the fee to $15.8 million; an appellate court, finding the contingency agreement to be unconscionable, ordered the use of an hourly rate.

The New York Court of Appeals, the state’s highest court, reversed on Oct. 28, rejecting the lower court’s “hindsight analysis of contingent fee agreements not unconscionable when made.” The court said engaging in that type of examination “is a dangerous business, especially when a determination of unconscionability is made solely on the basis that the size of the fee seems too high to be fair.”

The court also said that “it bears reemphasizing that Lawrence was no naïf. She was a competent and shrewd woman who made a business judgment that was reasonable at the time, but which turned out in retrospect to be disadvantageous, or at least less advantageous than it might have been.”

Daniel Kornstein, who represented Lawrence, said in an e-mail that “we are very disappointed” with the ruling.

The case is Lawrence v. Graubard Miller, No. 140, New York Court of Appeals.

Firm News

In Mexico DLA Merges, Baker & McKenzie Adds DLA Lawyers

DLA Piper LLP and Gallastegui y Lozano SC, or GyL, announced that they agreed to combine in Mexico City. Locally, the combined firm will adopt the name DLA Piper Gallastegui y Lozano.

The combined Mexican firm will have more than 23 lawyers. The GyL partners joining DLA Piper are Eduardo Gallastegui, business, telecommunications, pharmaceuticals and M&A; Gerardo Lozano, banking, finance, arbitration and maritime law; Maria Eugenia Rios, M&A, corporate, real estate and finance; Jorge Benejam, M&A, health care, corporate and banking; Gabriela Alana, real estate and finance; Marcelo Paramo, energy, oil and gas; and Cecilia Azar, arbitration and alternative dispute resolution.

Upon completion of the combination, Eduardo Gallastegui will assume the role of managing partner of DLA Piper Gallastegui y Lozano.

The combined firm will provide a range of services to clients based in Latin America and Mexico, as well as those from around the world doing business in the region.

“Expansion in Latin America continues to be an integral part of our global strategy and this is an important step in that process,” Roger Meltzer, co-chairman, Americas, of DLA Piper, said in a statement.

DLA Piper opened its Mexico City office in 2012.

Seven DLA Piper lawyers in Mexico City have, in the meantime, left to join Baker & McKenzie LLP.

Carlos Valencia and Tatiana Escribano are joining as partners in the corporate/M&A practice, while Miguel de Erice joins as a partner in the real estate and infrastructure practice. In addition, Luis Álvarez, Javier Zenteno, Gabriel Salinas and Karina Duyich are joining as associates.

Valencia focuses on cross-border mergers and acquisitions, restructuring and reorganizations and project financing. De Erice is involved in infrastructure projects and privatization processes, advising both the Mexican federal government and international companies. Escribano has advised foreign and domestic companies on negotiations, preparation of local and international agreements and contracts, transactions, restructurings and reorganizations and project financing.

A DLA Piper spokesman, Josh Epstein, said in an e-mail that the merger and the lawyer departures were “not connected.”

Epstein Becker Elects Three Shareholders -- All Are Women

Epstein Becker & Green PC has elected three new shareholders -- equity partners in the firm -- and all three are women.

Amy Dow, a member of the health-care and life-sciences practice, is based in the firm’s Chicago office. She primarily represents pharmaceutical, medical-device and biologics manufacturers in Food and Drug Administration regulatory, fraud and abuse, and transactional matters. Dow also provides health regulatory due diligence services to private-equity firms and other investors in life-sciences sector entities.

Susan Gross Sholinsky, a member of the labor and employment practice, is based in New York. She advises employers in all facets of the employment relationship, from pre-employment considerations and hiring to terminations and post-employment restrictions.

Linda Tiano, a member of the health-care and life-sciences practice, works in the firm’s New York and Washington offices. She has more than 30 years of experience serving clients in the health care industry in legal and executive capacities. Tiano has been an executive and general counsel of nonprofit and publicly traded health-care companies.

Last year approximately half of those promoted were women. Mark Lutes, the chair of the firm’s board, said in a statement that 21 percent of the firm’s equity ranks are women.

The firm also announced that four attorneys -- one of whom is a women -- were promoted to member, or non-equity partner.

(An earlier version of this story corrected the headline over the last item, which originally referred to the women elected shareholders as associates.)

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE