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A New York attorney’s quest to pry what he says is his share of an $84.3 million legal fee from his former partners remains alive as a result of a judge’s ruling last week. Albany Supreme Court Justice Louis C. Benza, sitting in the Commercial Division, held in Conolly v. Thuillez, 1538-02, that even though the lawyer, H. Neal Conolly, resigned from what was then Thuillez, Ford, Gold & Conolly shortly before the firm obtained a major tobacco case, there remains a question of whether the lawyer was involved in a “work in progress.” If he was, Conolly may be entitled to a share of the fees that his former firm collected for helping New York secure a $25 billion settlement from the tobacco industry in 1998. The battle between Conolly and his former partners recalls a smoldering dispute over the propriety of the legal fees, which amount to roughly $13,000 an hour. Six firms, including the politically connected Thuillez partnership, received a total of $625 million in fees for their role in negotiating the tobacco settlement. Thuillez Ford has had close ties to the Pataki administration and the administration of then New York Attorney General Dennis C. Vacco. The amount struck Justice Charles E. Ramos of Manhattan Supreme Court as potentially “excessive and therefore unethical.” He ordered a sua sponte inquiry, only to be unanimously reversed in 2003 by the Appellate Division, 1st Department (see State v. Philip Morris, NYLJ, Aug. 1, 2003). Conolly left Thuillez Ford to become executive director of the State Insurance Fund on May 15, 1997, about a month before the law firm was chosen by the state to represent its interests in the tobacco litigation. He now practices in Columbia County. Conolly contends that four years later, when the firm received its fee, he contacted former partner Dale Thuillez to inquire about his share, only to be told that he was due nothing at all. Thuillez, according to court papers, contended that because Conolly had resigned he was entitled to nothing more than the $150,000 he accepted for his interest in the partnership when he left. Last week’s ruling by Benza stemmed from competing motions filed on behalf of Conolly and the firm, which is now known as Thuillez, Ford, Gold, Johnson & Butler. Benza addressed two main issues: one regarding the effective date of Conolly’s resignation and another on whether the tobacco litigation was a work in progress. Conolly denied that he had resigned from the firm upon accepting a full-time position with the State Insurance Fund and insists his partnership status was intact when the firm landed the tobacco litigation job in June 1997. Benza, however, found that Conolly’s own actions, including his under-oath disclosures to a state ethics panel, contradict that claim. The court noted that Conolly, in a mandatory financial disclosure filed with the state Ethics Commission, said he resigned from Thuillez Ford on May 15, 1997. In a July 8, 1997, letter to a client, he said that he was winding up his affairs at the firm, the judge noted. That letter was written on the firm’s new stationary, which did not include Conolly as a name partner, and was signed “of counsel.” “This acknowledgment by plaintiff of his role in the firm is a manifestation at the time of the execution of the letter that he was no longer a partner,” Benza wrote. The court found that Conolly had resigned on May 15, 1997, causing a dissolution of Thuillez, Ford, Gold & Conolly. He awarded the firm summary judgment on that issue. Benza said it is less clear whether the tobacco litigation was a work in progress and left that issue for a jury to decide. Although records show that Thuillez Ford was not even interviewed for the litigation until after Conolly left, Conolly contends he was instrumental in helping procure the contract and then, later, in preparing the fee application. “Plaintiff’s allegations are supported by ethics disclosure, wherein he reported that he was entitled to funds due to works in progress,” Benza wrote. “As such, the determination of whether these actions relative to the tobacco litigation, if established, are sufficient to arise to a work in progress must await resolution by the fact-finder.” Conolly is represented by Randall J. Ezick of Featherstonhaugh, Wiley, Clyne & Cordo in Albany. James T. Potter of Hinman Straub in Albany represents Thuillez Ford. While the fees generated by the tobacco litigation were controversial, as a percentage of the total settlement they were relatively modest. Six firms had sought up to $1.75 billion for their work, but after a hearing an arbitration panel awarded $625 million. Three New York-based firms shared $281.1 million, with Schneider, Kleinick, Weitz & Damashek and Sullivan Block McGrath & Cannavo receiving $98.4 each and Thuillez Ford $84.3 million. In addition, three national firms split $343.8 million. They were Ness, Motley, Loadhoalt, Richardson & Poole of Charleston, S.C.; the Scruggs Firm of Pascagoula, Miss.; and Hagens & Berman of Seattle.

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