Stuart Gordon, Gordon & Rees founding partner ()
SAN FRANCISCO — A San Jose arbitrator vindicated a team of East Bay attorneys this week, dismissing a former client’s malpractice accusations as mere Monday morning quarterbacking.
The Walsh Law Firm and Ramsey Law Group, two small firms based in Lafayette, Calif., are entitled to $260,000 for their work representing CrestPoint Solutions Inc., wrote retired Santa Clara Judge Read Ambler, a JAMS neutral. CrestPoint’s CEO had refused to pay, saying the attorneys did not consult him before agreeing to a paltry settlement in the company’s case against AT&T.
The Walsh and Ramsey Law attorneys sued CrestPoint, tapping Gordon & Rees partners Stuart Gordon and James Reilly to represent them during arbitration in San Jose. CrestPoint filed a counterclaim, accusing its former attorneys of malpractice.
But Ambler took the attorneys’ side on Monday, finding they had express authorization to settle the case with AT&T and issuing an interim award in their favor. He will issue a final opinion after hearing further oral arguments Aug. 8.
“Attorneys are given wide latitude in making tactical decisions and the law does not impose legal malpractice simply for making a judgment call in the heat of litigation,” Ambler wrote.
CrestPoint, an East Bay company that provides software and other services to data centers, enlisted Robert Bleicher of Walsh Law and Hussein Saffouri of Ramsey Law in its 2009 lawsuit against AT&T. The $3 million suit claimed AT&T never paid for work CrestPoint did to upgrade the phone and Internet service provider’s network.
As the case moved to arbitration in Atlanta, CrestPoint and the company’s counsel became increasingly anxious to settle in light of a host of evidentiary weaknesses in their case, Ambler noted. AT&T had been dissatisfied with CrestPoint’s work and faulted the company for missing deadlines, Ambler pointed out. Furthermore, CrestPoint’s lawyers were worried about the credibility of CEO and founder Fabomi Ojuola, who was described by the company’s former lawyer James Walsh as someone who would be a “terrific” and “charismatic” witness one minute, but had a tendency to go “off into the poppies” and make unsubstantiated statements, Ambler wrote.
Ojuola’s legal team also was concerned about cash payments the CEO made to an AT&T contract manager around the time of the project. There was evidence, Ambler wrote, that Ojuola secretly gave that individual, who had a significant role in the selection process, $40,000 in cash stuffed into several envelopes.
“The Walsh team justifiably believed that if these facts came out, AT&T would have a field day in the impending arbitration,” Ambler wrote.
Settlement negotiations heated up in April 2009, and Ojuola and his legal team offered to resolve the case for $650,000, according to the decision.
“All were in a good mood, and Mr. Ojuola insisted that he take everyone out to a Brazilian restaurant in Atlanta, Fogo de Chao,” Ambler wrote.
Bleicher testified that after receiving Ojuola’s authorization on the settlement, he said, “Fabomi, congratulations, you settled your case,” and put his hand on Ojuola’s shoulder.
Ojuola denies agreeing to the settlement. He later testified he had fired Bleicher and Saffouri prior to the completion of the negotiations, testimony Ambler called “unbelievable,” as it never came up in deposition or other documents during arbitration.
Ojuola declined comment, as did his attorney, Martin Sabelli.
Gordon, who represented the Walsh and Ramsey Law attorneys, said clients try all sorts of strategies to get out of paying their attorneys. “We see often that clients who don’t want to pay their final attorneys fees … tell their attorneys that they have a potential malpractice case,” he said. “That really causes lawyers a problem.”
Gordon estimates about 25 percent of his cases involve lawyers in that situation, though claiming a settlement wasn’t authorized is a fairly rare tactic. But malpractice threats don’t often succeed, he said, adding: “I think the judges and arbitrators are pretty good at seeing through that.”
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