Opinion
00 Civ. 7968 (FM).
September 25, 2002
ORDER
In early March 2002, this personal injury action, arising under the Jones Act, was settled, with Plaintiff Robert Foppiano recovering the sum of $2 million from Defendant City of New York. Although Foppiano has received all of the money to which he is entitled, there is a dispute between Foppiano's present and former attorneys concerning the allocation between them of the contingent legal fee. Foppiano's original counsel was the law firm of Friedman James ("FJ"). That firm was later replaced by the firm of Schneider, Kleinick, Weitz, Damashek Shoot ("SKW"). Pursuant to a retainer agreement between Foppiano and SKW, counsel was entitled to one-third of Foppiano's net recovery as its contingent fee. FJ claims that it is entitled to one-half of that fee on the basis of its contributions to this case. SKW maintains that FJ's proportionate contribution was far less.
During a May 9, 2002 telephone conference, both firms agreed that I would decide the proper distribution of the contingent fee. The disputed funds were deposited into SKW's escrow account pending that determination.
Background
Foppiano was injured twice during the course of his employment as a deckhand on the John F. Kennedy, a ferry boat operated by the City of New York between lower Manhattan and Staten Island. Both accidents arose out of his operation of a defective lift-gate mechanism used to contain passengers and their cars while the vessel is underway. The first accident occurred on January 26 and the second on May 11, 1999. After the first accident, Foppiano returned to work. The second accident was far more serious and eventually led to Foppiano being awarded a disability pension by the City.
On March 19, 1999, Foppiano retained FJ to represent him in connection with the first accident. (Affidavit of Bernard D. Friedman, Esq., sworn to on May 28, 2002 ("Friedman Aff."), ¶ 3). FJ commenced a lawsuit against the City ("Action No. 1") only a few days later. (Id. ¶ 15). According to Bernard Friedman, Esq., one of the two attorneys at FJ, Action No. 1 was filed quickly to ensure that the City, which has no agency assigned to process seamen's maintenance and cure claims, would comply with its statutory obligations. (Id. ¶ 15). Action No. 1 was assigned to Judge Stein and referred to Magistrate Judge Peck for pretrial supervision. (Id.). Judge Peck set a July 23, 1999 cut off date for all nonmedical fact and expert discovery, and a September 24, 1999 cut-off date for all medical fact and expert discovery. See Foppiano v. City of New York, No. 99 Civ. 2150 (SHS)(AJP) (Docket No. 5).
At an August 3, 1999 pretrial conference, Mr. Friedman asked that the deadline for medical discovery be extended "until the end of the year" because Foppiano's medical condition was in flux. (Tr. at 4). Mr. Friedman also had written to the Court several days earlier to request leave to amend the complaint in Action No. 1 to incorporate allegations concerning the second accident. (Friedman Aff. Ex. 4). After some discussion, it was agreed that Action No. 1 would be discontinued without prejudice and that the discovery previously taken therein would constitute the "nonmedical fact-based discovery" when a second suit was filed. (Tr. at 8). The City further agreed that it would "work with" Mr. Friedman to ensure that Foppiano's medical expenses continued to be paid in the period between the suits. (Id.).
In early November 1999, Foppiano became concerned that no action arising out of his injuries was pending and began to consult with SKW. (See Affirmation of Clifford J. Stern, Esq., dated May 28, 2002 ("Stern Affirm."), ¶ 6). Ultimately, on January 12, 2000, he retained SKW, which sent FJ a "stop work" letter. (Id. ¶¶ 3, 6). Following its receipt of that letter, FJ permitted SKW to review, but not copy, its file. (Id. ¶ 7).
Because both SKW and FJ had been retained on a contingency basis, the allocation of fees was naturally of considerable concern to both the incoming and outgoing attorneys. After SKW refused a request to pay FJ one third of any eventual fee, the two firms agreed to disagree, with the Court being asked to resolve the allocation issue at the end of the litigation. (Id. ¶ 8). Once that understanding was reached, FJ turned its file over to SKW. (Id.).
On October 19, 2000, SKW refiled the FJ complaint under a new docket number ("Action No. 2"). (See Friedman Aff. Ex. 5). The complaint in Action No. 2 did not initially refer to the second accident because the attorney at the Office of Corporation Counsel representing the City took the position that the matter had to be restored to the calendar in its original form. Action No. 2 was assigned to Judge Kram, who granted Foppiano leave to file an amended complaint and referred all subsequent pretrial proceedings to me for supervision. See Foppiano v. City of New York, No. 00 Civ. 7968 (SWK)(FM) (Docket No. 3). At a June 6, 2001 conference, I authorized some limited additional discovery concerning liability and set September 18, 2001 as the cut-off date for medical expert discovery. Id. (Docket No. 8). For various reasons, this deadline was thereafter extended several times. Id. (Docket Nos. 9, 11, 16).
On February 11, and 25, 2002, I held a settlement conference, at the conclusion of which I recommended that Foppiano accept the sum of $1.75 million, plus a waiver of all applicable liens in satisfaction of his claims arising out of both accidents. (Stern Affirm. ¶ 23). Foppiano rejected that proposal, ultimately settling for $2 million and a waiver in early March 2002. (Id.).
FJ's Services
Prior to its discharge, FJ spent considerable time communicating with the City with regard to the payment of Foppiano's medical expenses. (Friedman Aff. ¶¶ 30, 31). FJ also referred Foppiano to a medical specialist. (Id. ¶ 14). To ensure that the bills for the specialists and others would be covered by the City, FJ commenced Action No. 1 in this District by the filing of a complaint on March 23, 1999. (Id. ¶ 15).
FJ had previously represented approximately ten other ferry crew members who had sustained similar lift-gate injuries. (Id. ¶ 9). As a consequence, Mr. Friedman did not believe that the City could seriously dispute its liability under the Jones Act. (Id. ¶ 11). In support of this view, he notes that the City never retained a liability expert in the course of litigating Foppiano's claims. (Id. ¶ 10). Nonetheless, in the course of its representation, FJ prepared and responded to requests for documents concerning both the City's liability and Foppiano's medical treatment and earnings. (Id. ¶ 30). In addition, FJ appeared at two conferences before Magistrate Judge Peck and defended Foppiano's half-day deposition, which addressed the details of both accidents. (Id. ¶¶ 18, 20). The parties' exchange of documents continued even after Judge Peck discontinued Action No. 1 in August 1999. (Id. ¶ 28).
At the time that FJ was discharged, it had incurred disbursements in the amount of $144.69, mostly to obtain medical records. (Id. ¶ 29). In his affidavit, Mr. Friedman suggests that his firm was "discharged before it would have been prudent to incur expenses for medical, vocational, economic or other experts." (Id.).
Not surprisingly, because it had been retained on a contingency basis, FJ did not keep any time records regarding its work on the Foppiano file. (Id. ¶ 6).
SKW's Services
After SKW was retained in early January 2000, there was some initial jockeying between the two firms as to what assurances FJ would require before relinquishing its file. (Stern Affirm. ¶¶ 7-8). During this period, SKW prepared and served an order to show cause to compel the turnover of the file, an effort which was later abandoned once Mr. Friedman signed a stipulation agreeing that the Court would allocate the fee at the close of Action No. 2. (Id. ¶ 8).
Like FJ, SKW engaged in protracted maintenance and cure negotiations with the City. (Id. ¶ 19 Ex. A). SKW had a markedly different view than FJ, however, concerning the issue of liability. On the very first day that it was retained, SKW brought a maritime expert, Terrance Gargan, into the case. (Id. ¶ 9). Gargan prepared a five-page report in which he concluded that the design and maintenance of the lift gate on the John F. Kennedy did not conform to "acceptable marine standards" and was the proximate cause of Foppiano's injuries. (Id. Ex. D). SKW also retained and had frequent meetings with Michael Kaufman, a mechanical engineer, who was retained to investigate the design of the lift gate. (Id. ¶ 10 Ex. E).
After commencing Action No. 2 using substantially the same complaint as in Action No. 1, SKW was granted leave to, and did in fact file an amended complaint which addressed both of the lift-gate accidents involving Foppiano. (Id. ¶ 11). Thereafter, to the extent it could, SKW reworked the case, serving its own pleadings and discovery requests, responding to the City's discovery requests, deposing five witnesses (and preparing to depose two others), and preparing its own expert witnesses for deposition. SKW also participated in five conferences with the Court. (Id. ¶¶ 12, 17, 18).
It is my practice to set aside time for a settlement conference in every case assigned to me for pretrial supervision. I further require the parties to make detailed written submissions in advance of the conference. In preparation for the settlement conference in this case, SKW researched whether the City could be bound by the determination of its Medical Board that Foppiano was entitled to retire on a disability pension as a result of a work-related injury. (Id. ¶ 22 Ex. G). As noted above, SKW advised Foppiano not to settle for $1.75 million at the conference, a decision that proved to be correct when the City enhanced its offer by $250,000 shortly after the settlement conference.
Like FJ, SKW is a firm primarily engaged in contingent fee litigation and, therefore, does not keep detailed time records. (Id. ¶ 3). Unlike FJ, SKW maintains computerized records which document the items of work that it performs and generally track the progress of a case. (Id.). The computerized records produced concerning SKW's representation of Foppiano reflect SKW's extensive pretrial preparation. (Id. Ex. A). Although most of this work was undertaken by Clifford J. Stern, SKW indicates that the case would have been tried by either Harvey Weitz or Ivan Schneider, two attorneys who have an established track record of recovering substantial verdicts in personal injury matters. (Id. ¶ 23).
Discussion
Under New York law, when a client has no financial interest in the outcome of a fee dispute, the outgoing attorney may elect to receive a fixed amount determined on a quantum meruit basis at the time of discharge or "a contingent percentage fee based on the proportionate share of the work performed on the whole case." Lai Ling Cheng v. Modansky Leasing Co., 539 N.E.2d 570, 572 (1989). "In assessing each firm's proportionate contribution, [the court should] focus on the time and labor spent by each, the actual work performed, the difficulty of the questions involved, the skills required to handle the matter, the attorney's skills and experience, and the effectiveness of counsel in bringing the matter to resolution." Buchta v. Union-Endicott Centr. Sch. Dist., 745 N.Y.S.2d 143, 145 (3d Dep't 2002) (internal quotations and citations omitted).
The law firms in this case both have extensive experience in the personal injury area and assigned the work to knowledgeable attorneys. The key issue therefore is: how much work did each firm perform and how effective was that work?
In Buchta, the plaintiff engaged three law firms over the life of a personal injury suit. The first firm conducted an initial investigation and filed a notice of claim; the second firm conducted all discovery and filed a note of issue; the third firm, through its vigorous pursuit of the claim, achieved a significant settlement after the plaintiff's condition worsened. 745 N.Y.S.2d at 145. On these facts, the Third Department determined that the three firms should receive, respectively, 10, 25 and 65 percent of the total fee for their proportionate contributions to the success of the case. This allocation suggests that FJ, which commenced this suit against the City and participated in some of the discovery, is entitled to at least ten but no more than thirty-five percent of the total contingent fee in this case.
Perhaps inevitably in this sort of "zero sum" game, both firms have criticized aspects of each other's work. For example, FJ suggests that SKW engaged in needless discovery and focused unnecessarily on the question of liability in an effort "to generate inflated hours in support of [its] fee petition." (Friedman Aff. ¶ 11). SKW, in turn, suggests that Mr. Friedman certified that nonmedical discovery had been completed even though "he never deposed any liability witnesses from the City, . . . never took photographs of the subject gates or accident site, . . . never took statements of any witnesses, . . . and never retained any liability or medical experts." (Stern Affirm. ¶ 7).
My review of the SKW computerized records does not confirm FJ's assertion that Mr. Stern and his colleagues engaged in certain discovery simply to increase SKW's proportion of the ultimate contingency fee. Indeed, at the very outset of its formal relationship with Foppiano, SKW retained Mr. Gargan, an expert whose fee of nearly $3,000 was a disbursement, and therefore a debit against the attorney's fees that SKW might eventually earn. (See id. Ex. B). While the City may, in fact, have been unlikely to contest liability in light of its past practices, in the absence of a stipulation to that effect, SKW had reason to be concerned about its ability to prove this essential aspect of its case. Moreover, the sizeable sum that the City eventually paid Foppiano probably reflects, at least to some degree, its knowledge that SKW was well prepared to litigate.
I also am mindful that FJ had served as counsel for less than three months after Foppiano's second, more serious injury. Scientific precision is, of course, impossible in determining how to allocate a contingency fee. Nonetheless, when all of the relevant factors are considered, I believe that it is appropriate to award FJ twenty-five percent and SKW seventy-five percent of the net contingency fee. FJ is also entitled to be reimbursed for its $144.69 in disbursements. SKW is therefore directed to remit to FJ within ten days $144.69 plus a sum equal to twenty-five percent of the remaining balance in SKW's escrow account.
SO ORDERED.