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Schulte Roth Sues Investment Firm Over $2.8 Million in Unpaid Fees
The American Lawyer
July 30, 2009
A rough few months for Dallas-based Highland Capital Management, L.P., got worse on Monday when the investment firm's former lawyers at Schulte Roth & Zabel sued for nonpayment of $2.83 million in legal fees.
The New York Law Journal reports that Schulte filed a summons in state court in Manhattan on Monday seeking payment for unpaid bills dating back to June 2008. In a statement to the NYLJ, Highland slapped back at the firm.
"We believe Schulte Roth overbilled the firm and its funds for legal services," said a company spokesman. "Highland Capital has paid Schulte Roth nearly $1 million in good faith, and has made every effort to resolve this issue with them."
News of the fee dispute was first reported by Bloomberg.
Highland began winding down one of its main hedge funds that invested in mortgage securities and credit derivatives -- not the best investment these days -- earlier this year.
In July a group of investors who sunk about $50 million into the fund sued Highland in state court in Dallas, claiming that the company had misrepresented the fund's financial state. (Plaintiffs are represented by Grant & Eisenhofer.)
According to the New York Law Journal's Nate Raymond -- yes, Nate has defected to our sibling publication -- hedge funds are a "bread-and-butter clientele" for Schulte.
But while profits rose during the boom times, the spate of redemptions and fund closures caused by the economic crisis appears to have affected Schulte's bottom line. The firm posted flat gross revenues of $420 million last year and profits per partner fell 2.7 percent from 2007 to $2.3 million.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.
