Donald Trump Claims Law Firm Treated Him Like a 'Cash Cow'

Anthony Lin

New York Law Journal

Real estate developer Donald J. Trump is claiming the Manhattan law firm that represented him in a lawsuit against an overcharging golf course contractor overcharged him.

Trump filed a legal malpractice suit against New York's Morrison Cohen last year in Westchester County Supreme Court, claiming the firm treated him like a "cash cow" and performed unnecessary work to generate higher bills. Justice Kenneth W. Rudolph permitted the case to move forward last month.

"I have dealt with a lot of lawyers and paid a lot of legal fees," Trump said in an interview Monday. "I have a Ph.D. in legal fees. I know when fees are fair and when they are not."

But Morrison Cohen chairman David Scherl said Trump believes he is entitled to a discount on a fair bill in a successful case because of who he is.

"That may be significant to some firms," said Scherl, "but not to us."

The firm has counterclaimed for $470,000 in legal fees it says remain unpaid. Trump, who said he has already paid Morrison Cohen $1 million in fees, is asking for $3 million in damages in his malpractice suit.

Morrison Cohen partner Y. David Scharf represented the Trump Briarcliff Manor Development company in a suit filed against a contractor hired to work on the Trump National Golf Club in Briarcliff Manor, N.Y. The suit claimed the contractor overcharged on a contract for earth-moving work and also walked off a separate contract for infrastructure work, causing the project to suffer a year's delay.

Rudolph, who also oversaw that case, awarded Trump around $2 million in damages for breach of the earth-moving contract, but only around $40,000 for the infrastructure contract. The judge also awarded Trump around $1.3 million in attorney fees.

In his malpractice suit, Trump maintains that Morrison Cohen should have advised against pursuing the infrastructure contract claims because it was foreseeable the legal costs incurred would far outstrip any recovery.

Trump said Monday the law firm was preoccupied with fees throughout the case.

"Ninety percent of the conversations I had with David Scharf were about legal fees, not the case," he said.

Trump also downplayed Scharf's contributions in the courtroom.

"We won the case because I'm a great witness," he said.

Scharf Tuesday said he stood by his work. It was necessary to address the infrastructure issues because they had been raised by the opposing side, he said. Scharf added that he was "disappointed and disheartened" to be in a collection dispute with Trump after the firm achieved "a great result." He said that Trump was aware from past representation of the firm's business model.

Scherl said Morrison Cohen aggressively goes after clients for unpaid legal fees, and the dispute with Trump is not the first to have landed in court. But he said the firm has an unusually high 95 percent realization rate on its bills, a fact which he said allows the firm to remain highly profitable while charging hourly rates substantially lower than those of large firms.

Scharf's work for Trump has brought the lawyer a measure of publicity in recent years. A 2004 profile in Crain's magazine described him as a confidante whom Trump frequently called at five in the morning. Trump said he thought Scharf had used his name to drum up business, adding that he would not recommend the firm.

But Scherl said Morrison Cohen could get along without Trump as a client, noting that investment banks that hired the firm to handle middle-market deal work found the firms' fees reasonable and paid "100 percent of their bills."

The suit is not the first time Trump has tangled with Morrison Cohen. The firm's co-founder, Robert S. Cohen, who left to start his own firm in 2003, represented Ivana Trump in her divorce from Mr. Trump.

"I beat him too," said Mr. Trump, referring to Ivana's unsuccessful attempt to circumvent a prenuptial agreement.

Mr. Trump is represented in his malpractice suit by Alfred Donnellan of Delbello Donnellan Weingarten & Wiederkehr in White Plains, N.Y. The situation is in flux, however, as Kevin J. Plunkett, who represented Morrison Cohen, recently joined the Delbello firm from the Westchester office of New York's Thacher Proffitt & Wood.