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New York-based mega-firm Weil Gotshal & Manges and the estate of the late corporate raider Victor Posner have reached a confidential settlement in litigation over allegations of unpaid legal fees and malpractice, ending an eight-year legal battle. Posner died last February at age 83. Since then, there has been ongoing — and unresolved — legal wrangling over the validity of his will in Miami-Dade Circuit Court. The litigation between him and Weil Gotshal started in May 1994, when Weil Gotshal slapped Posner with a lawsuit in Miami-Dade Circuit Court alleging that Posner owned $1.4 million in legal fees. Weil Gotshal had defended the Miami Beach investment tycoon in two securities lawsuits, with its work extending from June 1989 to February 1994. The firm allegedly peppered Posner with one invoice after another. Posner not only refused to pay his legal bill, but he turned around and sued the firm for legal malpractice. Some experts said the case represents a cautionary though extreme example of what often happens when a law firm sues a client for unpaid fees. According to studies conducted by Chicago-based Hinshaw & Culbertson, about 40 percent of all malpractice claims are related to a dispute over legal fees. Of the two cases in which Weil Gotshal represented Posner, one was an investor lawsuit against a Posner-owned company, DWG Corp. The other suit was filed by the Securities and Exchange Commission. The outcomes of the two cases were disastrous for Posner. In the first case, according to court filings, Posner lost control of DWG and paid a settlement in excess of $56 million to business associates and others who had accused him of plundering the company. In the second case, following a civil trial in 1994 pitting Posner against the SEC, U.S. District Judge Milton Pollack in New York found that Posner and his son, Steven, had committed securities violations, and barred them from ever serving as officers or directors of a public company. Posner also was hit with a $3.9 million fine. When Weil Gotshal submitted a bill for $1.4 million for its four years of legal work, Posner balked. Negotiations went nowhere. Then, just before the fee suit was to go to trial in 1995, Posner countersued for $140 million, alleging malpractice. Posner claimed that the Weil Gotshal attorney in New York who represented him had inaccurately promised a successful outcome and been counseled that securities laws did not empower a court to bar him for life. In comments made two years ago, one of Posner’s attorneys, Thomas G. Schultz, a partner at Ferrell Schultz Carter Zumpano & Fertel in Miami, said Weil Gotshal’s legal work for Posner “did not meet the standard of care.” But Robert M Klein, a partner with Stephens Lynn Klein in Miami, who represented the 1,000-lawyer Weil Gotshal, said Posner’s malpractice claim was motivated by his desire to avoid paying his legal bill. Despite the adverse result in the two securities cases, Weil Gotshal consistently denied that it committed legal malpractice. But with the main protagonist now deceased, the dispute appears to have been resolved. On Oct. 9, attorneys for Weil Gotshal and Posner’s estate filed a joint motion for court approval of the settlement agreement. A day later, on Oct. 10, Circuit Judge Gisela Cardonne Ely issued an order approving the settlement, according to the court docket. In the motion presented to Cardonne Ely, the two sides stated that they resolved their claims at mediation on Aug. 5. Former Miami-Dade Circuit Chief Judge Gerald T. Wetherington served as mediator in the case, according to court filings. The terms of the settlement were not disclosed. But the monetary demands had increased significantly in the years since the first lawsuit was filed in 1994. Due to interest on the unpaid legal bill, as of May 30, according to a filing in probate court following Posner’s death, Weil Gotshal’s claim had nearly doubled to $2.6 million. Attorneys on both sides declined to comment on the settlement — or even admit there had been a settlement. Stephen J. Dannhauser, Weil Gotshal’s chairman in New York, and Oscar R. Cantu, the managing partner of the firm’s Miami office, did not return calls for comment. This was not the first time Posner was sued after refusing to pay a legal bill. In 1989, Buchbinder & Elegant in Miami sued Posner in Miami-Dade Circuit Court for an unpaid legal bill. In 1991, the firm was awarded $1.65 million in fees, said Harris Buchbinder, a partner at Buchbinder & Elegant. Before Weil Gotshal filed suit for its unpaid legal bill, Posner’s refusal to pay the fees to the elite law firm received amused attention in the business press. In July 1994, syndicated business columnist Allan Sloan wrote: “For lawyer-haters, the case of Weil Gotshal & Manges vs. Posner is a delicious spectacle. A tough, savvy bunch of lawyers decided to lend their prestige and talent to a well-known corporate lowlife in return for fat fees. Then Posner stiffs them. Think of it as selling a piece of your soul and getting paid with a rubber check.”

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