A Buffalo civil rights attorney who obtained a $750,000 settlement in a racial discrimination case may be denied compensation because of a dispute over whether she had an improper retainer agreement with her client.

Western District Magistrate Judge Jeremiah McCarthy (See Profile) said he could not separate the retainer agreement from a standard contingency agreement that entitled Prathima Reddy to one-third of the award and denied in its entirety her request for attorney fees.

Reddy, who has a boutique firm devoted to civil rights and concentrates on employment discrimination cases, represented Dr. Gwendolyn Cole-Hoover, who had been a physician at a state prison near Buffalo. Cole-Hoover, who is black, accused several officials at the prison of creating a racially hostile environment and improperly disciplining her.

Records show that Reddy got into the case after three other attorneys who had represented Cole-Hoover either withdrew or were discharged. Reddy contends that her client agreed to pay a $50,000 retainer as a minimum fee in addition to the standard contingency.

But McCarthy said in Cole-Hoover v. DOCCS, 02-cv-00826, that the $50,000, which was never paid, was not a minimum fee but an impermissible “non-refundable retainer” that rendered the entire fee agreement, including the agreement that Reddy would receive one-third of any award, invalid.

Reddy said she will move for attorney fees in quantum meruit, which would entitle her to fair and reasonable compensation for her services.

“It is unfortunate that something like this would arise after a positive outcome was achieved,” Reddy said. “She has paid zero dollars, but she had an important case and needed to be represented.”

Cole-Hoover is currently pro se.