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Hausfeld Battles Ex-Partners Over Fees
Ex-Cohen Milstein rainmaker wants millions for work done before being booted, and is in a bitter battle over the firm's antitrust portfolio
Legal Times
January 23, 2009
Michael Hausfeld
Image: Stacey Cramp / Legal Times
When the partners at Cohen, Milstein, Hausfeld & Toll voted to jettison Michael Hausfeld from their firm in November, they didn't dwell much on the price tag attached to their decision.
Yes, Hausfeld was probably their best-known partner. And yes, as one of Washington, D.C.'s top antitrust litigators, he would probably carry off a number of clients. But as senior partner Steve Toll puts it, "There was no financial weighing back and forth."
"Our view was that if Hausfeld left, and every case that came with Hausfeld went with Hausfeld, the firm would not be hurt financially," Toll says, "because all the work the firm had done thus far would belong to us."
Two-and-a-half months later, Hausfeld is doing his best to scuttle that assumption by laying claim to potentially millions of dollars in fees for work he did before his exit. His former partners, who have tweaked their firm's name to Cohen Milstein Sellers & Toll, are calling the moves a desperate squeeze.
It's impossible to peg exactly how much money Hausfeld is demanding, because the fees in many of the class actions have yet to be determined. Hausfeld himself prefers not to discuss any specifics of the situation, except to say that by ousting him, he believes his old partners officially dissolved their firm. "As a result, there is a dispute as to who is entitled to what and how much," he says.
According to federal court documents filed by Cohen Milstein in California, however, Hausfeld LLP "has claimed fees and expenses in virtually all of Cohen Milstein's cases, regardless of whether Mr. Hausfeld or any of the attorneys at his firm ever worked on those cases." Toll says the total could reach "tens of millions of dollars" -- though he adds he is confident that the partnership agreement Hausfeld signed will keep him from collecting any of the money.
The financial hardball is, not surprisingly, playing a part in the increasingly nasty custody battle over Cohen Milstein's antitrust portfolio. Hausfeld LLP has now replaced Cohen Milstein as co-lead counsel in a dozen antitrust class actions, and the two firms are sharing the role in another pair of cases.
Cohen Milstein lost court challenges to keep its lead status in four of those cases, and is continuing to battle for it in two more. In the scuffles, Hausfeld has laid into Cohen Milstein's finances, alleging in court filings this month that the firm was heavily in debt and in arrears on its litigation expenses. Cohen Milstein countered its finances were fine; its only problem had been Hausfeld's own unsuccessful attempts to stop up its revenue.
Of course, much of the controversy in court has also centered on which firm now has the legal chops to lead the class actions. When he departed Cohen Milstein, Hausfeld took along 17 of its antitrust lawyers, leaving the firm with just 12 in the practice area.
Toll says they are still handling more than 30 antitrust cases of their own. But in court, Hausfeld has derided the practice as a stump of its former self, arguing that his firm should get bumped up to co-lead even in cases where its lawyers have billed fewer hours. In some instances, that difference is stark. In a class action about rail surcharges before the U.S. District Court for the District of Columbia, Hausfeld logged 53.5 hours, versus 836.5 for Benjamin Brown from Cohen Milstein.
Hausfeld points out that Cohen Milstein has tried to do the same thing in cases where they have billed fewer hours. That argument, though, is beside the point, he says.
"There's nobody at [Cohen Milstein] who had the trial experience or the success either in trials or in settlements that I have had," Hausfeld says. "So it's a matter in putting forward the relative credentials, not just a pure accumulation of time."
