Judge John Keenan
JS Barkats agreed to provide legal services to BE and its affiliates on a flat fee basis. They agreed to pay deferred fees of $250,000 if they raised capital through Barkats’ actions. Defendants obtained $4 million in financing. They have paid Barkats only $18,750. In March, they allegedly terminated Barkats’ engagement without cause. They did not respond to Barkats’ notice to arbitrate disputed fees. In its Sept. 2012, contract breach suit, Barkats alleged that in addition to its $250,000 fee, BE owed $236,310. The court compelled arbitration, deeming 22 NYCRR§137.6(b), the New York Fee Dispute Resolution Program Rule permitting an attorney to sue an unresponsive client, inapplicable. Part 137.1(b)(2) of 22 NYCRR states the rules do not apply if the disputed amount is "less than $1,000 or more than $50,000." Barkats seeks nearly $500,000. Noting minimal prejudice to Barkats, the court found defendants’ five-month delay in seeking arbitration did not constitute waiver. Other than the filing of a complaint, there has been no pretrial activity and no party incurred expenses related to depositions.
