(Diego M. Radzinschi/ALM)
A real estate developer sued by Winston & Strawn for failing to pay legal fees has struck back, contending in proposed counterclaims that the law firm excessively billed and failed to live up to its engagement letter when star litigator Gerry Shargel spent little time on the case.
Winston & Strawn limited Shargel’s contributions “despite his express agreement to act as the responsible attorney on the matter” and “continued to overbill the matter with absentee leadership,” claims Ian Bruce Eichner, the founder of New York real estate development firm Continuum Co.
Winston & Strawn had represented Eichner, family members and their companies operating the Manhattan Club, a time-share hotel whose club owners complained it became extremely difficult and even impossible to reserve rooms.
The Eichners and the Manhattan Club were the subject of an investigation by the New York Attorney General’s Office and a subsequent lawsuit in Manhattan Supreme Court. Winston & Strawn represented them in the action until January, when Gibson, Dunn & Crutcher took over as defense counsel. The attorney general settled the case this month for $6.5 million.
Winston & Strawn in May sued their former clients, seeking $793,876 in unpaid legal fees arising out of the attorney general’s action. The firm said the Eichners regularly paid Winston & Strawn’s invoices for about a year and a half but abruptly stopped paying in May 2016.
But in proposed counterclaims filed Thursday, the Eichners contend Winston & Strawn failed to abide by their engagement agreements, as Shargel did not act as the lead attorney and Winston & Strawn performed unnecessary work.
Shargel delegated all of the responsibility over the matter “to a less experienced partner,” Kelly Librera, they argue.
From the start of Winston & Strawn’s representation in 2014 to May 2016, Shargel “only spent approximately 76 hours on the matter,” while the rest of the firm’s team spent 2,498 hours, the Eichners said, noting “critically, Mr. Shargel did not attend important meetings or participate in conference calls” with the Attorney General’s Office.
The Eichners also fault Winston & Strawn for unnecessarily staffing the legal team and assigning unnecessary tasks “that resulted in an exorbitant number of hours.” For example, 83 hours consisted of time “spent by multiple attorneys unnecessarily attending depositions that could have been conducted by a single attorney,” they said.
“Mr. Shargel’s failure to properly lead the representation of the defendants led to the unnecessary continuation of a matter that could have been resolved at an earlier stage and before the defendants incurred over $1 million in fees,” the Eichners argued.
They claim they objected to each of the invoices at issue “several times before payment was even due,” but Winston & Strawn ramped up its billing in 2016.
The Eichners switched lawyers in January. “Rather than spend unnecessary time and expense on fruitless motion and discovery practice, Gibson focused their efforts on negotiating an out-of-court resolution,” reaching a settlement on Aug. 16 with the Attorney General’s Office, they said.
Stephen Meister, the attorney for the Eichners in the fee dispute and founding partner of Meister Seelig & Fein, said, “We believe that the matter was improperly handled and overstaffed but nevertheless we hope the matter can be resolved amicably.”
Representatives of Winston & Strawn did not return messages seeking comment.
‘Ably and Competently’
In earlier court filings, Winston & Strawn said it performed significant work for the Eichners and their entities, including drafting and filing legal documents; representing them in interviews before the government; and handling discovery, among other tasks.
Winston & Strawn also notes its success, including applying for and obtaining multiple orders to show cause and a temporary restraining order enjoining the Attorney General’s Office from conducting examinations of various witnesses.
The firm said it successfully obtained an order from the Appellate Division staying a trial court’s decision.
“Winston ably and competently performed its services for defendants in compliance with the engagement agreements,” partner Martin Geagan, representing the firm in the fee disputes, said in the firm’s May complaint.
Addressing its invoices, Winston & Strawn had said it voluntarily and unilaterally wrote off many fees it was entitled to collect.
Further, the firm had said the Eichners did not cite any dissatisfaction with the quality of Winston & Strawn’s work as grounds for “their near-total failure” to pay the invoices in dispute and the Eichners continued to request the “same type of legal services” from Winston & Strawn without disputing their obligation to pay.