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After flooding attorneys with professional negligence suits for 14 years, Hilton Stein is awash in anguish of his own. New Jersey’s best-known malpractice maven, locked in litigation with former partners, has filed a bankruptcy petition and is taking a disability leave from the profession. Since he left Totowa, N.J.’s Stein, Thyne, LaGrotta, Roper & Twardowsky a year ago, Stein and four ex-partners have been pounding each other in Essex County Superior Court and arbitration with opposing claims for hundreds of thousands of dollars in receipts and capital contributions. They even fought over who should arbitrate the case. For a while, Stein put the dispute on hold by filing a petition under Chapter 11 of the bankruptcy code. The June 10 filing triggered an automatic stay of the state court proceedings, but on July 11, the former partners convinced U.S. Bankruptcy Court Judge Donald Steckroth to lift the stay. Stein is under court order not to comment, but lawyers familiar with the situation say he is suffering from exhaustion and has decided to resign from the bar temporarily and hand his clients to substitute counsel or a trustee. Christopher Carey, a partner in Morristown, N.J.’s Graham, Curtin & Sheridan who is defending lawyers in 10 suits brought by Stein, says new plaintiffs’ counsel have already come in. Says another attorney, who has been on Stein’s side in malpractice cases and does not want to be identified, “It’s a big mess and his friends hope he’s going to rebound, but you have to bet a lot of lawyers are rooting against him.” Little would be known about Stein’s woes if not for the Chapter 11 filing because Essex County Superior Court Judge Edmond Kirby sealed the record of the state proceedings and imposed a gag order on lawyers and parties. Documents in the bankruptcy matter shed some light on the dispute, however. The record also shows that the ability to identify causes of action against lawyers and pursue them doggedly — Stein’s forte since 1988 — doesn’t necessarily make someone good at managing his own business affairs. Word that Stein is taking a disability leave is particularly poignant, because it would be his second go-around with work-affecting health troubles. In the early 1980s, suffering from what he characterized as the disabling effect of drug abuse, Stein neglected clients, and the state Supreme Court suspended him from the practice of law for six months. Two years after his return in 1986, he started suing lawyers, a practice that made him a pariah at first but eventually was recognized as a respectable niche — respectable enough to earn him a place as the State Bar Association’s counsel in a supreme court review of the Affidavit of Merit Statute. In 1988, when he was on the talk-show circuit as a crusader for legal malpractice plaintiffs, Stein wrote a book called “How To Sue Your Lawyer.” PARTNERSHIP ON THE ROCKS Yet an incident of neglect in his own firm last year first brought public attention to Stein’s rocky relationship with the partners who are now his adversaries. The partnership, formed in 2001, brought Stein and associate Kenneth Thyne into a firm with the existing operation of Robyne LaGrotta, Angela Roper and Daria Twardowsky, who were also doing legal malpractice work. In April and May 2001, Stein reported to judges in several malpractice and fee dispute cases that his new firm had missed crucial deadlines, causing dismissal of some matters to the detriment of almost a dozen clients. The firm managed to get the cases back on track after Thyne blamed himself, certifying that a mental block caused by too much work had made him incapable of meeting deadlines. The judges ruled that the adversaries had not been harmed and that the errors had been caught in time, but Stein conceded it was an embarrassing incident for a firm in the business of exposing negligent lawyers. In private, the firm had already agreed to dissolve. But a fight over the proceeds of files broke out and each side justified its position by saying the other had violated the partnership agreement. The Nov. 13 pact, an exhibit in the bankruptcy case, had presumed that Stein would bring in a roster of existing malpractice cases, plus more in the future, for the other partners to help litigate and profit from. In return for that bonanza, the four other partners agreed to pay him $500,000, plus percentages of the firm’s billings each year. For five years, his minimum payment would be $200,000 a year, and the four partners would take care of support costs such as insurance. In a complaint filed last December in Essex County, Stein alleges that when the firm agreed to dissolve in mid-April 2001, the other partners tried to “hijack” his files by wooing his clients and bad-mouthing him. Even when they agreed to return 70 cases, they sent letters claiming attorneys’ liens on the files, interfering with his ability to represent the clients or find substitute counsel, he alleged. A June 13 certification by Roper in the bankruptcy matter tells a different story. She says the inventory of malpractice cases Stein brought to the firm turned out to be less valuable than originally thought. Indeed, Stein agreed to repay part of the $500,000 but later said he had spent it and couldn’t make the payment, Roper says in her certification. Roper says Stein filed the bankruptcy petition solely to stall the arbitration required in the partnership agreement for resolution of such disputes. “Mr. Stein has made it clear by his actions that he shall do anything to avoid resolution of these attorney’s liens in the forum he agreed to, namely arbitration before an individual selected by a majority of the members in his former law firm,” she says. The argument worked. After hearing from Kenneth Jurista of Millburn’s Wasserman, Jurista & Stoltz on the four partners’ behalf, Steckroth lifted the stay, putting the arbitration back on track. Because the state court and arbitration pleadings are sealed, the number of files in dispute and the value of the liens are not public. In the meantime, clients have apparently chosen which disputants they want as counsel, and those who elected to be represented by Stein are being referred to other lawyers. They include other tenants of the Bloomfield building where he rented space for a solo practice after a brief stay at the end of last year with Fairfield’s Sommer, Engelhart & Pescatore. Among the substitute counsel at that Bloomfield address, 317 Belleville Ave., are solo practitioners Steven Hershkowitz and Andrew Rubin. Those lawyers did not return calls. More about Stein’s cases is likely to be known after an Aug. 8 hearing before Kirby. Another possible topic, according to knowledgeable lawyers, is whether the filing of certifications in the bankruptcy violated Kirby’s gag order. The bankruptcy pleadings show the existence of a dispute over an alleged conflict by the arbitrator in the case, Mark Brancato, of Boonton’s McHugh & Brancato. Stein’s lawyer, Joseph Meyers, who heads a firm in Hackensack, argued that Brancato should be disqualified because he once referred a case to Roper and his clients include AIG, a malpractice insurance carrier Stein has sued. Roper, calling the disqualification effort frivolous, says Brancato never referred a case to her and that an arbitrator proposed by Stein also represented AIG. In his bankruptcy petition, Stein listed total personal property of $2,474,200, but most of it is clearly based on estimates of the value of his law practice. He estimated that his claims against his former partners and their clients were worth $1 million and that work in progress, contingent cases and referrals of his own were worth another $1 million He listed accounts receivable of $100,000, a checking account at Kearny Federal Bank worth $8,000 and household goods worth $5,000. He owns no real estate, according to the filing. On the debit side is $904,441, of which about $800,000 is owed to Hudson City Savings Bank. He also listed the four former partners’ claims at $1 million. And he listed claims of an undetermined value by at least four former malpractice clients whose cases are now being handled by his former partners. Those claims, he said, are subject to his attorney’s liens against the proceeds of any recoveries.

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