Quinn Emanuel Urquhart Oliver & Hedges has been hit with a malpractice lawsuit that claims the firm botched a $48.8 million settlement even as it took in some $12 million in contingency fees.
Former client Todd Kurtin, a one-time principal at the real estate concern SunCal Cos., filed the claim earlier this month in Los Angeles Superior Court. In his complaint, Kurtin accuses Quinn Emanuel of negligence for failing to advise him of "the meaning and ramifications of all terms of the settlement agreement" he reached with a former business partner, Bruce Elieff, that unwound their co-ventures.
Under the 2005 settlement, Kurtin was to receive his payout in four installments, but, according to the complaint, wound up getting only two payments and is still owed nearly $23 million not including interest. Kurtin is pursuing claims against Elieff for reneging on the settlement agreement.
The complaint against Quinn Emanuel highlights how -- as a result of a contingency agreement that essentially guaranteed Quinn Emanuel half of any amount recovered up to $20 million and 20 percent thereafter -- the firm has received approximately $12 million in fees for representing Kurtin. That amount is equal to what Kurtin himself has gotten to date from the settlement, which was reached a little more than four months after Quinn Emanuel took on the case.
Kurtin could not be reached for comment. Paul Kennerson, an attorney at San Diego-based Kennerson & Grant who is representing Kurtin in the malpractice claim, says, "The case is what it is. You can get the allegations from the pleadings. I don't think it is appropriate for me to comment any further."
Los Angeles-based Quinn Emanuel is known for its high-stakes litigation work on behalf of such clients as Mattel, Northrop Grumman and Shell Oil Co. Earlier this year, firm co-founder and managing partner John Quinn won a jury decision establishing Mattel Inc.'s rights to the Bratz doll line, which was brought to market by another toy company.
But the firm is also known for taking on lucrative contingency matters that has helped propel its overall revenue and profits in recent years. For 2007, the law firm, which has more than 400 lawyers in six offices, reported profits per partners at $3.01 million and revenue of $384.5 million.
In an interview earlier this year with The Recorder, an Am Law Daily sibling publication, Quinn said, "[Firm margins] always have been very good, and since we get a fair amount of contingency fee income, the amount that we generate per hour tends be a lot better than hourly cases."
Kurtin hired Quinn Emanuel in April 2005 on a contingency basis to represent him in lawsuits against Elieff in California and Delaware. The two men were partners in SunCal Cos. and other entities. According to its Web site, SunCal controls more than 250,000 residential lots and 10 million square feet of commercial space in various stages of development.
The lawsuits between Kurtin and Elieff included claims and cross-claims of conversion, embezzlement, fraud and breach of fiduciary duty related to more than three dozen development projects and associated entities.
Despite the incendiary allegations from both sides, the parties were able to reach a settlement. Under its terms, Kurtin gave up his stake in certain entities and as a result was to receive four payments over a 17-month period totaling $48.8 million.
An initial payment of $21 million, which Quinn Emanuel essentially split with Kurtin, was received. But, according to court documents, a payment due June 30, 2006, of $13.1 million, as well as an additional payment outlined in the settlement agreement, was never sent.
A public relations representative at SunCal Cos. did not return calls seeking comment. In an interview in March with the Orange County Register, a company executive said that Kurtin's suit was without merit and that the company had previously met all its obligations to him.
SunCal, like other real estate development companies, has been hit hard by the downturn in the economy. The company has been plagued with cash flow issues and has had to back out of several projects. Lehman Brothers Holding Inc. was a major backer of the company.
Kurtin initially retained Quinn Emanuel again to try to enforce the settlement agreement through arbitration. The firm even offered up the services of litigation partners Ken Chiate, Jeff McFarland and Bruce Van Dalsem at its "half-rate" of $300 per hour. According to the amended engagement agreement, those partners usually bill out at between $650 and $775.
The discounted rate didn't buy loyalty. Not only is Quinn Emanuel no longer representing Kurtin in the case against Elieff and SunCal, but also on Dec. 8, he brought the malpractice suit against the firm.
Quinn Emanuel partner Ken Chiate declined to comment on the firm's relationship with Kurtin because he is a former client.
But Chiate added, "It is our opinion that the lawsuit is totally without merit. It reflects someone who is unhappy and has decided to exercise his right to seek remedies which we believe are totally inappropriate and will be defeated at trial."
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Posted by: ytspxiwz dglrsz | February 26, 2009 at 04:07 AM