The Matthews Firm has sued Laminack, Pirtle & Martines and two clients they jointly represented, alleging Laminack, Pirtle and the clients refused to recognize The Matthews Firm’s interest in a contingent fee arising from a nearly $50 million judgment.
The plaintiff, a Houston firm that handles intellectual property work, brings breach of contract and quantum meruit causes of action against the defendants and seeks a declaratory judgment that it is entitled to a 22.5 percent fee in the underlying case.
Fred Hagans, who represents the plaintiff in The Matthews Firm v. Laminack, Pirtle & Martines, et al., says his client is entitled to about $10 million. “It was a very successful result,” Hagans, a partner in Houston’s Hagans Burdine Montgomery & Rustay, says about the judgment.
But Rick Laminack, a partner in Houston’s Laminack, Pirtle, says he’s surprised The Matthews Firm sued his firm and its clients over the contingent fee, since the underlying suit, Wellogix Inc. v. Accenture , is on appeal before the 5th U.S. Circuit Court of Appeals.
“The [Matthews Firm's] lawsuit is surprising given that we haven’t recovered one single penny; 22.5 percent of nothing is still nothing,” Laminack says.
“Suing the client and counsel at this particular time is very unfortunate because, as everyone involved knows, we are in a critical stage in our work in the appeal. A sideshow like this can only benefit Accenture,” Laminack says.
In its petition, filed in Harris County’s 164th District Court, The Matthews Firm alleges it made a good-faith effort to resolve the dispute by engaging in informal discussions and a mediation with Laminack, Pirtle and Houston companies Wellogix Inc. and Wellogix Technology Licensing LLC (WTL), but those efforts were not successful.
The Matthews Firm, formerly known as Matthews, Lawson & Bowick, alleges in its April 12 petition that Wellogix and WTL hired it in 2005 to do patent prosecution and trademark work for its software products, and to handle re-examination proceedings before the U.S. Patent and Trademark Office. [See the Matthews petition.]
In February 2009, The Matthews Firm alleges, Wellogix hired Laminack, Pirtle to pursue litigation against specific parties related to alleged improper use of some software. Wellogix’s contract with Laminack, Pirtle calls for 40 percent of any settlement or recovery made after litigation is filed against alleged improper users, and 45 percent if a notice of appeal is filed in the suits.
In September 2009, The Matthews Firm alleges it signed a joint representation agreement with Laminack, Pirtle, Wellogix and WTL for patent litigation against SAP America Inc. and Accenture, and the agreement called for the firms to equally share fees “whether or not” each firm’s “role, activity, volume of work, litigation, representation, or any other work for the clients related to this matter may be distinct or greater in scope than that of the other Firm.”
The Matthews Firm alleges it “worked diligently as co-counsel for Wellogix and WTL” but on Sept. 2, 2010, it received a written request from Wellogix and WTL to withdraw as their counsel in all IP litigation because SAP had filed a re-examination request on Wellogix and WTL patents, and they wanted The Matthews Firm to handle those proceedings only. The Matthews Firm alleges the written request said the decision for it to withdraw from the litigation was “based on concern of a conflict that could and would probably affect the successful conclusion of the aforesaid litigations.”
In the written request, Wellogix and WTL also informed The Matthews Firm it was “withdrawing our previous consent to the distribution agreement” with Laminack, Pirtle, and they planned to hire other counsel to participate in the litigation who would work for a contingent fee.
The Matthews Firm alleges that although it complied with the “directive” from Wellogix and WTL and withdrew as counsel in the Accenture and SAP litigation, “neither Wellogix nor WTL had good cause to discharge Matthews, and Matthews made clear that it did not agree with Wellogix’s and WTL’s decision.”
The suit against Accenture went to trial, and on May 20, 2011, U.S. District Judge Keith Ellison of the Southern District of Texas signed an amended final judgment awarding Wellogix a total of $49.9 million in damages, plus postjudgment interest, in Wellogix Inc. v. Accenture .
Because it was discharged “without cause,” The Matthews Firm alleges in its petition that it is entitled to collect “all fees due it as a result of any recovery or settlement” in the Wellogix Inc. v. Accenture litigation.
The Matthews Firm brings a breach of contract cause of action against the defendants on the ground they terminated the firm’s representation, refuse to recognize its fee interests and “unequivocally” communicated they will not pay any fees due to The Matthews Firm under the joint representation agreement contract “if and when Wellogix or WTL obtain any recoveries of settlements in the IP Litigation” — Wellogix Inc. v. Accenture.
The Matthews Firm also seeks a declaratory judgment that finds, in part, it is entitled to 22.5 percent of any settlement or recovery obtained by the defendants in Accenture , and is entitled to 20 percent of any settlement or recovery in “every past, present or future case” in related IP litigation, and 22.5 percent if a notice of appeal is filed.
Alternatively, The Matthews Firm brings a quantum meruit cause of action against the defendants. The firm seeks all damages arising out of the alleged breaches of the joint representation agreement, along with attorneys’ fees and costs.
J. Ike Epley, chief executive officer of Wellogix and manager of WTL, says he is “astounded” The Matthews Firm filed suit over fees in a case it “took no part in.”
Laminack declines to say if The Matthews Firm is entitled to any part of the fee.
“I am very comfortable letting a court decide what, if anything, Matthews is entitled to,” he says.