A New York state judge sided on Friday with Boies Schiller Flexner, declining to force the firm to turn over discovery documents to a former client, Russian-Canadian billionaire Alex Shnaider, who owes the firm a little shy of $1 million in legal fees.
Shnaider, now represented by Kasowitz Benson Torres, had submitted a petition in Manhattan state court on Wednesday looking for a temporary restraining order, and later an injunction. Shnaider’s petition effectively asked the court to order the return of his client file in an underlying lawsuit in New York federal court, which pits the billionaire against his former business partner in a venture to sell private jets.
A Boies Schiller team led by partners Nicholas Gravante Jr. and Karen Dyer had been defending Shnaider in the jet litigation for more than two years. But, in late August, the firm asked to withdraw from the case, citing “irreconcilable differences with Mr. Shnaider regarding the payment of BSF’s legal fees.”
At a hearing in Manhattan on Friday, Gravante told New York Supreme Court Justice Debra James that Shnaider owes Boies Schiller some $825,000 plus interest. In light of the unpaid fees, the firm has asserted a retaining lien on Shnaider’s client file that includes discovery material from the jet lawsuit. Otherwise, Gravante said, “the likelihood that we will recover our fees is almost nil.”
A trial is scheduled in the jet case for early December. The Kasowitz lawyers—who represent Shnaider in the underlying federal lawsuit and in the state court proceedings against Boies Schiller—have argued that with less than two months to go before that trial, Shnaider won’t be able to adequately mount a defense without the client file from Boies Schiller.
Kasowitz associate Michael Beck, who was in court representing Shnaider, told James that the file includes documents compiled in response to interrogatory requests and other discovery material. Not having access to the file, he said, deprives Shnaider’s legal team of important information relevant to his defense.
“We’ll go into this essentially blind,” Beck said.
Earlier in the hearing, James asked the two sides if they had discussed any sort of deal that might resolve the issue.
In response, Gravante said Boies Schiller would be willing to hand over the client file if Shnaider and his lawyers agreed to put the money he owes into an escrow account until the fee dispute is fully resolved. But Beck said his client wasn’t willing to make that kind of deal at this point.
The judge ultimately sided with Boies Schiller. James denied Shnaider’s request for a temporary restraining order, reasoning, in part, that such an order would typically be handed down to “maintain the status quo.” Here, however, Shnaider was looking for more than that, she said.
The decision was not a final resolution. The judge went on to set some additional deadlines—Boies Schiller would have until Oct. 23 to file a response opposing Shnaider’s petition and, if necessary, Shnaider could reply to that by Oct. 26. Another hearing was set for Oct. 29.
But James also indicated that she’d rather not have to hold further proceedings, imploring the two sides to resolve their dispute beforehand.
“I’d really urge the parties to craft some sort of compromise,” the judge said.