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Victor Sher and Scott Summy have sent the city of Santa Monica a bill for their team’s work on the city’s historic MTBE settlement, but 15 months later, they still haven’t been paid. Instead, they’ve had to get a lawyer of their own. After praising Sher and Summy’s work on the case, the city balked at legal fees of $66 million or more and decided to go to court. Sher and company hired Marshall Grossman, a well-known Los Angeles defense lawyer, to make sure they got their fees. Meanwhile the city, which initially hired a different attorney, switched to Morgan, Lewis & Bockius, the firm that opposed Sher — and the city itself — in the underlying litigation. Grossman protested that Morgan, Lewis had a clear conflict of interest, but Los Angeles County Superior Court Judge David Minning ruled that the firm’s internal screening mechanisms would be adequate to prevent any problems. Hiring one’s former opponent is unusual enough, but now the city has introduced an even more counterintuitive twist. The Morgan, Lewis team, led by Andrea Ordin, who represented Conoco in a separate settlement with the city, is trying to reduce the value of the MTBE settlement. Why would the city want less? The majority of the city’s settlement did not come in the form of real dollars but in the oil companies’ guarantee to build and operate a water treatment plant. In addition to the plant, the settlement included about $120 million in cash to pay legal fees and associated costs. “It’s more than enough to pay the lawyers everything they’re owed and fix all the city’s potholes,” said Grossman. Whatever the city doesn’t spend on lawyers, it gets to keep. According to their contract with the city, Sher and his team were due to be paid on a sliding scale of 10 to 25 percent of the value of the settlement. The attorneys initially claimed 25 percent of a figure to be established by a third party, but have since offered to settle for $66 million. Ordin and Morgan, Lewis partner David Halbreich question the lawyers’ agreement and the percentage of the deal they deserve. But more than anything, they question how much the water treatment plant is worth. The higher the valuation, the more the city owes in attorneys fees. The court put the value of the plant at $220.5 million, but an appraiser hired by the city at the time estimated between $240 million and $537 million. In a recent pretrial hearing, Morgan, Lewis suggested that the value of the deal should be measured not by how much it would cost to build and run the plant but, instead, on the presumably lower cost of buying clean water from elsewhere. Judge Minning has taken no action on the proposal. The Morgan, Lewis team defends Santa Monica’s fight with its former counsel as a responsible protection of taxpayer money. “Public funds,” Halbreich said, “shouldn’t be spent without seriously investigating all that is at the foundation of the request for fees.” Grossman protests that a deal’s a deal. “They can’t give up rights to deprive the lawyers,” he said. He further complains that the city is trying to force the plaintiff attorneys into submission by hiring a firm that would benefit in other cases by having a peek into the plaintiff attorneys’ tactics. Morgan, Lewis is facing off against Sher and Summy in MTBE litigation in New York’s Southern District. “They are trying to screw the lawyers any way they can,” said Grossman. Halbreich insists he’s merely representing a client intent on exercising its fiduciary duty. “It doesn’t behoove the city of Santa Monica to give the lawyers a windfall,” he said. Trial is set to open Aug. 1 in City of Santa Monica v. Baron & Budd, BC 315186, in Los Angeles County Superior Court.

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