Attorney Faces Second Loss in $600,000 Dispute with Clients Over Discovery Costs

I'm blogging several times a day about products liability for Law.com. Occasionally I cross-post an excerpt of a blog I find interesting:

The Mississippi Supreme Court has ruled against a plaintiffs' attorney for the second time in a dispute with two former clients over who owes money for discovery undertaken on the behalf of all plaintiffs in the massive federal diet-drug litigation.

Herbert Lee Jr. represented 13 plaintiffs who settled their claims that they were injured by taking diet drugs for around $32 million, according a recent opinion by Justice David Chandler. Lee agreed that six percent of the “gross amount of recovery” of each of his clients would be paid for the discovery materials generated in the diet-drug multidistrict litigation in the Eastern District of Pennsylvania.

Lee, however, billed the $1.92 million MDL fee to the plaintiffs. The federal court ordered one-third of all “common benefit fees” refunded.

Plaintiffs Gloria Thompson, who was paid $7.4 million in her settlement, and Deborah Dixon, who was paid $3.1 million, sued Lee, arguing that he had failed to refund their portion of the MDL fee and that his attorney fee exceeded their contingency agreements by 5 percent. Lee retained 45 percent of the MDL refund and refunded each of his 13 clients 1/13th of the remaining 55 percent.

When the case got to the Mississippi Supreme Court for the first time, the court upheld the plaintiff's victory in the trial court on the MDL fee. The Supreme Court said that the federal court required the MDL fee to be paid by attorneys and that Lee “erroneously had billed the MDL fee to his clients.”

During trial on remand, the jury found that Lee breached his 40 percent contingency fee contracts with his clients by charging them 45 percent. Still, the panel returned a verdict for Lee, finding that the plaintiffs had ratified a 45-percent fee by signing their settlements free from intimidation, coercion or fraud. Still, the trial judge determined that Lee owed plaintiff Thompson $420,000 and plaintiff Dixon $180,000 for the MDL fee.

During Lee's second appeal to the Mississippi Supreme Court, the court rejected Lee's arguments that the plaintiffs “fabricated that the original contingency-fee agreements provided for a 40-percent fee,” not a 45-percent fee as he claims. The plaintiffs contended at trial that Lee forged retainer agreements providing for a 45 percent fee.