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With America under attack by terrorists, lawyers involved in the trial of a bitter, highly personal fee fight agreed the dispute was trivial in the wake of the horror and tragedy of the events of Sept. 11, and they resolved their disagreement. Houston plaintiffs’ lawyer John O’Quinn and former associate Kendall Montgomery agreed last Wednesday to settle the suit that Montgomery filed against O’Quinn seeking $105 million in unpaid fees and punitive damages. Terms aren’t confidential, but O’Quinn and two of Montgomery’s lawyers, Joseph Jamail and Ronald Krist, say they aren’t going to talk about them. “The misunderstanding between Kendall Montgomery and John O’Quinn has been resolved. Period. It is satisfactory to both John O’Quinn and Kendall Montgomery,” says Jamail, a partner in Jamail & Kolius of Houston. Jamail says a heartfelt comment by Krist on the morning of Sept. 11, shortly after lawyers on both sides agreed to let the jurors go home for the day because of the unfolding tragedy, prompted them to think hard about what’s important. Krist says he simply pointed out that America was under siege and the problems the lawyers were bringing to the courtroom pale in comparison to the tragedy swirling around everyone. “It brought perspective to what was going on in the courtroom,” says Jamail, who says that sometimes even a small thing can change the dynamics of a trial. “To think of the horrifying thing that people had to go through — the horror, the destruction, the terror — it was time to get this resolved,” O’Quinn says. The American crisis was undeniably the catalyst that ended the dispute, Krist says. He says no one was thinking settlement before then. The settlement comes a week after lawyers picked a jury in Montgomery v. O’Quinn, et al. The trial before 189th District Judge Jeff Work of Houston was expected to last at least a month. Opening arguments were Sept. 6, and Montgomery, the first live witness, was still giving direct testimony when the suit settled. The trial was attracting great interest in Houston’s legal community not only because of the amount of money at stake, but because it promised to reveal details of how O’Quinn runs his highly successful plaintiffs’ firm, O’Quinn & Laminack. Both sides were fielding large teams of A-list lawyers, and Krist and Ernest Cannon, O’Quinn’s lead trial lawyer, delivered their opening remarks to a standing-room-only crowd. Montgomery, who worked for O’Quinn from 1991 to 1999, alleged O’Quinn owed him at least $105 million in fees, based on a 25 percent share of the firm’s net fees from several large suits including the $17 billion settlement in Texas tobacco litigation. Montgomery testified on Sept. 6 that he and O’Quinn had a handshake agreement. O’Quinn says he agreed to pay Montgomery a $110,000 yearly salary, but bonuses were at his discretion. His lawyers also filed a counterclaim against Montgomery, alleging the associate breached his fiduciary duty to O’Quinn & Laminack by failing to disclose his investment in Christian Hill & Associates, a firm in Houston that primarily does workers’ compensation work. The case was more than a fee fight and a public airing of how O’Quinn does business — highly personal details of the lives of both O’Quinn and Montgomery were coming out at trial. For O’Quinn, it would have been details about his behavior while drinking. (He’s been sober for more than a year.) Montgomery alleged that he did so much work on the tobacco litigation and several other big suits because O’Quinn had a drinking problem and spent considerable time in rehabilitation centers from 1997 through 1999. Montgomery had to testify about an affair he had with a married lawyer while working on the tobacco litigation. Married with two children, he testified that he and his wife separated for a time after he told her about the relationship. In opening arguments, Krist said testimony would show Montgomery had to cover for O’Quinn in the tobacco litigation, and in other important suits, because of O’Quinn’s drinking problem. He said that even though O’Quinn paid Montgomery $7.5 million in 1999 for his work on Valores Corp., et al. v. McLane Co. Inc., a suit that settled shortly after a jury in San Antonio returned a $624.2 million verdict, that wasn’t enough. “It’s an awful lot of money, but not what we agreed to,” Krist said. The firm’s fee from that suit was $100.6 million, Krist said. He also told jurors that O’Quinn is paid $20 million a year from the tobacco fee, and Montgomery simply wants his share of the money — $70 million, calculated on a present-value basis. But Cannon told jurors that O’Quinn agreed to pay Montgomery a salary and discretionary bonuses, and Montgomery can’t prove O’Quinn promised to pay him a 25 percent share of fees. He said the affair that Montgomery had while working on the tobacco litigation is important because it goes to his credibility. “If a man’s wife can’t trust him, who can?” Cannon asked. Cannon acknowledged O’Quinn “stubbed his toe with drinking” but said, “It’s a sad, sad day that we are here casting stones at one another.” DIGNIFIED DISCUSSIONS The suit, which didn’t settle at a mediation on Labor Day, settled in about 90 minutes on the morning of Sept. 12, Jamail says. After Work sent the jurors home at midmorning on Sept. 11, O’Quinn, Krist and Jamail all say the destruction going on in New York, Washington, D.C., and Pennsylvania weighed heavily on their minds. O’Quinn says he went back to his office and sent everyone home to hug their families and put work out of their minds for the day. Jamail says he also sent his staff home that morning. Krist says he stayed at Jamail’s office until about noon, where the plaintiffs’ team worked on the witness schedule, and then went back to the firm he has with his two sons, Kevin and Scott. He says they turned on a television set in the conference room at the Krist Law Firm and watched news coverage until late in the afternoon. Jamail says he was particularly worried and upset about the events because his wife, Lee, was in Washington, D.C., for a charity event. Although she was able to reach him before he even left the courthouse on Sept. 11, he says she was staying at the Willard Hotel, located near the White House, and told him she saw American Flight 77 crash into the Pentagon. At about 10 p.m., Jamail says Ernest Cannon, O’Quinn’s lead trial lawyer, called him and suggested they get together to talk in the morning before trial. O’Quinn says he knew Cannon, of Ernest H. Cannon & Associates of Houston, was making the call. Jamail says he, Krist and Cannon met at his offices at about 8 a.m. and they telephoned O’Quinn, who was just getting out of the shower. Jamail says Montgomery was there, too, but in another room and not directly involved in the discussions. Jamail says the talks were professional. “No shouting, no screaming, no threats, just talk, dignified,” he says. With jurors arriving to hear testimony at 9 a.m., the lawyers went over to the courthouse and asked Work to give them about 30 to 45 minutes to discuss a matter. They came to terms in time to tell Work at about 9:45 a.m. they had reached a settlement, the three lawyers say. Cannon did not return a phone message by press time. Jamail and O’Quinn say the suit has been inaccurately characterized as a feud between the two of them. “I bear no bad feelings or envy or jealousy toward John and I know he bears no bad feelings, envy or jealousy toward me,” Jamail says. Before the trial started, O’Quinn said the litigation was based on a lie, greed and jealousy. He suggested it was greed on Montgomery’s part, but jealousy on the part of Jamail. But in an interview after the suit settled, O’Quinn says Jamail and Krist were the keys to resolving the dispute. “Sometimes, being trial lawyers, we get caught up in the heat of the situation,” says O’Quinn. While Jamail and O’Quinn were talking about each other in gentle instead of harsh terms on the afternoon of Sept. 12 — O’Quinn and Jamail insisted on a joint interview — Jamail and Krist have other litigation against O’Quinn. They and the rest of the plaintiffs’ team in Montgomery’s suit also represent Samuel Palermo and Benjamin Hall, two other former O’Quinn & Laminack lawyers also suing O’Quinn for money. Palermo, who practiced with O’Quinn from 1992 to 2001, alleges in the suit he filed in June that he was shortchanged on bonuses and subjected to abuse by O’Quinn. Hall, now of the Hall Law Firm, filed a motion to intervene in a franchise-fee suit in Hidalgo County that alleges O’Quinn failed to live up to terms of an oral employment agreement. He alleges he generated more than $112 million in four years in verdicts and settlement of suits he brought to the firm, but O’Quinn began to change the terms of their agreement, causing Hall to lose clients and forcing him to leave the firm. Lawyers for O’Quinn dispute the allegations in Palermo v. O’Quinn, et al. and in Hall’s motion to intervene in City of Mercedes v. Reata Industrial Gas, et al. Neither Krist nor Jamail would talk during an interview last week about the other suits. Krist says, “We’re not even looking toward that at this minute.”

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