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Law firms hate to take clients to court for unpaid legal fees, but the politically savvy firm of Updike, Kelly & Spellacy is overcoming that distaste and suing some 60 airline pilots it represented in a five-year legal battle. Partner Bourke Spellacy said the suit was a last resort, after the pilots refused to take a multimillion-dollar post-trial settlement. “Any law firm would make a major effort not to do this. That’s why we initiated a mediation program.” Stubbornly, he said, most of the pilots refused settlements and ultimately lost everything in an appeal. “They snatched defeat from the jaws of victory,” Spellacy said. The original case started with the 1991 takeover of Pan Am airlines by Delta, which had previously assimilated National Airlines. The pilots union, known as the Air Line Pilots Association, was divided into two camps, based on these previous associations. Within Delta the two factions were former Pan Am “blues” and the ex-National Airlines “orange” pilots. The Delta pilots who sued ALPA were all “blues” who flew out of New York or Miami, including prominent members of the plaintiffs group who live in Connecticut and Massachusetts. They contended ALPA favored veterans of National and squeezed ex-Pan Am pilots out of lucrative jobs. The case culminated in a 17-day trial in a Manhattan U.S. District Court in 1996. There, the “blue” pilots won such a resounding victory that U.S. District Judge Jack B. Weinstein was urged to set aside the verdict, on grounds that its potential damages of $200 million would bankrupt the union. “I understand this union could be broken,” remarked Weinstein from the bench in July 1996. He subsequently overturned the jury verdict for the “blues,” who appealed and lost at the 2nd U.S. Circuit Court of Appeals. REINFORCEMENTS The West Hartford, Conn., lawyer originally retained by the first pilot plaintiffs is Scott M. Karsten, of Sack, Spector and Karsten. About three months after he was retained, in the fall of 1991, Karsten turned to the prominent Hartford, Conn., firm of Updike, Kelly & Spellacy. He had a letter agreement with 109 pilots based on a legal billing rate of $100 per hour (reduced from $175) with a $10 per year hourly increase and a 20 per cent contingency fee against any award. Karsten, of Glastonbury, Conn., entered into the agreement with Updike Kelly on Jan. 7, 1992, in which the Hartford firm agreed to assist in the representation on terms similar to Karsten’s terms with the pilots. The contingency was split, said Spellacy, with 8 percent to Karsten, 12 percent to Updike. Karsten was also assisted by Suzann Beckett, the daughter of pilot and lead plaintiff Stewart W. Beckett Jr., of Glastonbury. After the 1996 trial, in mediation of individual pilots’ cases, six took settlements that amounted to about $500,000 each, said Spellacy. If all had settled at that rate, they stood to make $40 million collectively, he said. The pilots paid lawyers’ fees of more than $500,000, but contend that Updike far exceeded a $500,000 estimate it allegedly projected. West Hartford labor and employment lawyer Leon M. Rosenblatt, representing the pilots, said Spellacy wasn’t present at the negotiations, and that the terms of the six settlements were always supposed to have remained confidential. In October 1999, Updike sued some 104 pilots for unpaid legal bills, alleging damages from a contractual breach or, in the alternative, damages under a quantum meruit theory, asking for payment of the value of work performed. The pilots countersued. They contend they never hired Updike, Kelly & Spellacy. If a contract exists, the pilots say, it is between Karsten and Updike only. They claim violations of the Connecticut Unfair Trade Practices Act, legal malpractice, and breach of contract. QUESTIONED CHARGES Furthermore, the pilots claim Updike improperly charged more than $200,000 for paralegal fees without any express authorization for those hours. The matter is currently pending before Judge Julia Aurigemma in the New Britain, Conn., Complex Litigation docket. On March 14, the judge denied motions for summary judgment on behalf of the pilots and last week suspended jury selection in the case to reconsider whether the case should be tried to a jury or as a bench trial. Updike, represented by Jeffrey L. Williams, of West Hartford’s Weinstein & Wisser, is seeking to have the case tried as a matter of contract interpretation and has argued that there are no fact questions for a jury. If the case goes to a jury, Rosenblatt said, he expects to examine the intricacies of client contracts and agreements between firms. The pilots’ legal ethics expert is William H. Clendenen Jr., of New Haven. Part of the pilots’ counterclaim is a demand for disgorgement of overpayments, partly on ground that Updike Kelly improperly held itself out as experienced in this type of complex labor union litigation. Spellacy said the pilots have not claimed the fees are unreasonable and have no expert slated to testify that the fees are excessive. “It’s an all-or-nothing argument,” he said. Rosenblatt said there is no claim the lawyers’ rates were unreasonable, but that multiple terms of the agreement were never followed and that charges were not authorized.

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