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Houston-based Beirne, Maynard & Parsons lost a discovery dispute recently in its quest to obtain $1.2 million in unpaid legal fees for defending U.S. Silica in silicosis litigation. On July 18, a three-justice panel of the 6th Court of Appeals in Texarkana, Texas, denied the firm’s petition for writ of mandamus. In Re: Beirne, Maynard & Parsons sought an order to force 71st District Judge Bonnie Leggat Hagan of Harrison County to vacate her April order that the firm turn over some billing records to TIG Insurance Co. and Riverstone Claims Management. TIG insured U.S. Silica and Riverstone Claims handled TIG’s claims management. In the three-page per curiam opinion, the 6th Court also vacated a temporary stay of the proceedings. Martin Beirne, a founding partner in Beirne Maynard, refers questions about the appeal to Ernest Martin, a partner in Haynes and Boone in Dallas who represents the firm in the litigation. Beirne says firms file suits to collect unpaid fees all the time, and the dispute is “pretty much a run-of-the-mill case.” Martin says he may take the petition for writ of mandamus to the Texas Supreme Court. A defense attorney for TIG and Riverside Claims, Robert A. Shults, a shareholder in McFall, Breitbeil & Shults in Houston, declines comment on the 6th Court’s opinion. With the opinion, however, discovery can proceed in the underlying suit, Beirne, Maynard & Parsons v. Riverstone Claims Management, et al., which is filed in Hagan’s court in Marshall, Texas. In its fourth amended petition filed in June, Beirne Maynard alleges defendants TIG and Riverstone Claims failed to pay all of the legal fees the firm is owed for defense work on behalf of U.S. Silica. U.S. Silica is not a defendant in the suit. The 72-lawyer firm brings several causes of action against the defendants, including breach of contract, quantum meruit/unjust enrichment, and fraudulent/negligent misrepresentation, and it claims the defendants violated Chapters 541 and 542 of the Texas Insurance Code, which, respectively, prohibit unfair and deceptive trade practices, and provide for settlement of unfair claims. The firm seeks up to $10 million in actual damages and penalties under the Texas Insurance Code. In their Second Amended Answer, filed on July 3, the defendants deny the plaintiffs’ allegations and say the firm’s claim for damages is barred by several affirmative defenses, including the Statute of Frauds and the firm’s failure to submit invoices that met TIG’s billing guidelines for the silicosis litigation. In the answer, the defendants also bring counterclaims against Beirne Maynard alleging the firm engaged in several breaches of fiduciary duty and should forfeit all of the fees the defendants paid it on behalf of U.S. Silica. The defendants allege the firm submitted invoices that were “unreasonable and unnecessary,” violated §1.04 of the Texas Disciplinary Rules of Professional Conduct — which governs fees — and failed to follow billing guidelines. They bring breach of fiduciary duty, unjust enrichment and breach of contract claims against Beirne Maynard. The defendants allege the firm’s employees engaged in widespread improper and unreasonable billing practices, including but not limited to excessive time charges, overstaffing of attorney and support staff on legal projects, duplication of tasks by attorneys and legal support staff, billing at hourly rates that were not agreed to by the parties, improperly billing for nonbillable clerical work, and generally misrepresenting the nature, extent and cost of legal services rendered to U.S. Silica. Because of questions about the invoices, the defendants allege that beginning in January 2005, they began to withhold 30 percent of the money Beirne Maynard charged U.S. Silica until the invoices could be reviewed. The $1.2 million in dispute is the money withheld. Martin says the firm denies the allegations in the counterclaims. The firm’s position, he alleges, is that the billing guidelines required the defendants to raise questions about invoices in a timely manner, and that wasn’t done. In Beirne Maynard’s first amended answer to the counterclaims, filed on July 18, the firm denies the allegations and asserts several affirmative defenses. Among those defenses, the firm denies it owes any fiduciary duty to the defendants, argues the defendants’ claims are barred by the equitable doctrine of “unclean hands,” and states the claims are barred by statutes of limitations. Beirne Maynard seeks a take-nothing judgment on the counterclaims. In April, following a hearing on a motion to compel discovery filed by TIG and Riverstone Claims, Hagans ordered Beirne Maynard to provide discovery consisting of the billing records of six timekeepers, for a maximum of four days each, for each of the three years between 2004 and 2007. According to the judge’s order, the firm did not need to produce more than 275 files, and the firm could remove attorney-client information but would have to maintain a privilege log. The order gave TIG and Riverstone Claims only seven days to review the documents at a mutually agreeable location. Beirne Maynard sought relief from the order on the ground it misapplied Rule 196.7 of the Texas Rules of Civil Procedure by requiring the firm to allow an “entry onto its premises,” because it compelled an overbroad and burdensome fishing expedition for information, and required production of privileged documents. The 6th Court panel, consisting of Chief Justice Josh Morriss and Justices Jack Carter and Bailey Moseley, ruled that Hagans’ order does not violate Rule 196.7, because it allows inspection of the documents at the firm’s offices or elsewhere. The panel also found that Hagans’ order restricts the amount of discovery, so it is not overbroad, and also allows the firm to keep a privilege log to protect privileged documents. “We believe this order is within the discretion of the trial court,” the 6th Court wrote.

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