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A Manhattan law firm has been hit with a suit claiming some of its partners tried to extract almost $50 million in “gifts” and unearned fees from a longtime client, the 80-year-old widow of one of New York City’s largest real estate developers. In a suit filed Tuesday in Manhattan Supreme Court, Alice Lawrence, the widow of developer Sylvan Lawrence, who died in 1981, claims three partners at 26-lawyer Graubard Miller, which had represented her in a decades-long battle over her late husband’s estate, talked her into paying them $5 million in individual, taxable gifts, a practice they allegedly described as typical of longstanding attorney-client relationships. She claims they also took advantage of her poor health in January to get her to sign a new retainer agreement that would pay the firm a 40 percent contingent fee on work for which it had already been paid $18 million. Based on a recent settlement, the contingent fee would be worth $42 million. “If the 2005 Retainer Agreement were enforceable, the totality of the fees collected from Plaintiff in connection with Graubard’s legal representation would thus be over $67,000,000, an unconscionable and excessive amount as a matter of law,” the complaint states. Graubard Miller is seeking to enforce the retainer agreement in a proceeding before Manhattan Surrogate Renee Roth. Mark Zauderer of DLA Piper Rudnick Gray Cary, who represents Graubard Miller, said Ms. Lawrence’s suit against the firm is aimed at avoiding paying a “well-earned fee.” “The Graubard firm simply seeks to collect its fee from a very sophisticated, savvy person who has attained great wealth because of the firm’s efforts,” said Zauderer, who noted the firm had represented Ms. Lawrence for more than 20 years and through multiple litigations. Zauderer would not comment on whether the firm’s management was aware of the gifts paid to the individual partners. He said the issue was an internal one to the firm and said Ms. Lawrence was raising it as a “smokescreen” to divert attention from the firm’s legitimate claim for its fees. The three Graubard Miller partners who allegedly received personal gifts from Ms. Lawrence are C. Daniel Chill, the billing partner and main contact with Ms. Lawrence, Elaine M. Reich and Steven Mallis. Along with the firm, they are named as individual defendants in the suit. All the defendants are charged with unjust enrichment, breach of fiduciary duty and breach of the covenant of good faith and fair dealing. Ms. Lawrence, who is represented by Leslie D. Corwin of Greenberg Traurig, is seeking rescission of the new retainer agreement and the return of all fees previously paid to the firm and all gifts paid to the partners. The complaint also requests punitive damages and attorney fees. The suit against the lawyers is the latest twist in a decades-long fight over the lower Manhattan real estate empire built by Mr. Lawrence and his brother, Seymour Cohn. At the time of Mr. Lawrence’s death, the 12-million-square-foot portfolio was estimated to be worth $1 billion and included the office buildings at 100 William Street, 95 Wall Street and the former Port Authority building at 111 Eighth Avenue, among others. Ms. Lawrence, to whom her husband bequeathed 75 percent of his interest, retained Graubard Miller, then known as Graubard Moskovitz McGoldrick Dannett & Horowitz, in 1983 to represent her in matters relating to his estate. In particular, she initiated proceedings to have the real estate portfolio liquidated, an effort long opposed by Cohn, who died in 2003. Though $350 million from the estate was distributed through 2002, the litigation continued until a settlement was reached in May. That settlement was to pay Ms. Lawrence and other beneficiaries of Mr. Lawrence’s estate around $105 million. RETAINER AGREEMENT The retainer agreement providing for the contingent fee was memorialized in a Jan. 14 letter by Chill to Ms. Lawrence, whose signature appears in a space marked “accepted and agreed.” One provision of the agreement caps the firm’s legal bills to Ms. Lawrence at $1.2 million for the 2005 calendar year. The second provision states that “with respect to any monies distributed to the beneficiaries of the Estate of Sylvan Lawrence, the Graubard firm will be paid from your share of such monies 40 [percent] of the total distributed to the beneficiaries,” minus any other legal fees paid in 2005. Another provision stated that the same would apply to any monies received in a settlement with the estate of Cohn. Zauderer said the January agreement reflected the wishes of the client, whom he described as sophisticated. But the suit says Ms. Lawrence was in a weakened state when she assented to the letter, having undergone surgery the previous month. According to the complaint, Ms. Lawrence was in constant pain, for which she took medication. “This pain and the corresponding course of treatment resulted in Mrs. Lawrence being physically and emotionally distressed through the early part of 2005, often unable to perform everyday tasks,” the complaint alleges. According to the suit, Ms. Lawrence was actually seeking to reduce her legal expenses earlier this year. She claims Chill originally said the firm was seeking 50 percent of the total estate. She claims she also sought to exclude the other beneficiaries, her children, from the contingent fee. Chill allegedly told her the agreement would be revised so she would pay 40 percent of her share of the estate. BONUS REQUESTS Seth Rubenstein, a Brooklyn-based solo practitioner who is one of the city’s most experienced estate litigators, said contingent fees are not unheard of in such matters, but he said it is extremely unusual for such a fee agreement to be adopted near the end of a litigation, rather than at the onset. It is not clear from the complaint whether Ms. Lawrence and Graubard Miller may have discussed such a fee on previous occasions. The original 1983 retention agreement refers only to hourly charges then ranging from $55 for legal assistants to $195 for some partners. Noting that the surrogate courts have often expressed skepticism about contingent fee arrangements, Rubenstein said the Graubard Miller lawyers would probably need to demonstrate there was a strong need for the change to the fee arrangement. The fact that the client was an elderly woman would not be helpful there, he said. “That is the sort of thing that would make a surrogate very nervous,” he said. The personal payment allegedly came about after Chill visited Ms. Lawrence in her Connecticut home in December 1998. According to the complaint, he explained that he and his two partners were entitled to a bonus because of the favorable course of litigation. “Mr. Chill explained that this type of bonus payment was routinely made to attorneys based upon such service,” the complaint states. Rubenstein and a number of other lawyers said they had never heard of a case where individual partners received a bonus directly from the client separate from fees paid to the firm. Ms. Lawrence wrote personal checks to the three Graubard Miller partners. Chill received $2 million. Reich received $1.55 million and Mallis received $1.5 million. According to the suit, they specifically told her not to pay this money to the firm, but to each of them individually. Chill allegedly instructed her to denote the payment as a “gift” on each check’s memo line. The following April, Chill allegedly told Ms. Lawrence she would need to pay gift taxes on the bonuses to the three partners or else their bonus payments would be dramatically reduced. She then paid $2.7 million in gift taxes to the federal government. Chill was chief counsel to former state Assembly Speaker Stanley Steingut. He served for many years as chief counsel to the state’s Task Force on Demographic Research and Reapportionment. He has also represented Sheldon Silver, the current Assembly Speaker on redistricting issues. Reich and Mallis have also worked on those issues.

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