Client Sues Kasowitz Firm for Alleged Billing Fraud, Cites Work for Trump
ALM Media
Updated
A former corporate client that Kasowitz Benson Torres earlier sued for unpaid legal fees is fighting back with a malpractice lawsuit alleging billing fraud, claiming it didn't receive legal services "commensurate with a law firm that represents the president of the United States."
Instead, the former client, insurance servicing company Patriot National Inc., said it was subjected to "fraudulent billings, malpractice and other egregious misconduct that has caused millions of dollars in damages."
For instance, Patriot said one firm biller recorded 24 hours of work for the client in a single day, and the firm collectively billed its client "more than 83 hours to assemble binders."
Although the underlying litigation had nothing to do with President Donald Trump, the malpractice lawsuit repeatedly refers to the firm's representation of the president, reflecting how opponents of the firm could seek to leverage Kasowitz's ties to the president against the firm in court.
In response to the suit, filed in Broward County, Florida, Kasowitz said in a statement that the claims are entirely without merit.
"All of our billing was entirely appropriate, covering expedited motion practice and discovery in three cases in which we represented the company. Further, Patriot National never objected to any of our bills or work throughout our representation of it," the firm said Tuesday, vowing to fight the "frivolous" suit.
Patriot, which provides back-office functions to insurance companies, hired Kasowitz last year for representation in three Manhattan federal court suits against the Florida-based company over the sale of securities.
Kasowitz also represented certain defendant directors in a shareholder derivative case in Delaware state court. Partner Kenneth David was the lead attorney for Patriot, according to court records.
But Kasowitz pulled out of the cases in early 2017 and filed its collection lawsuit against Patriot in late May in Manhattan Supreme Court, seeking $1.097 million in legal fees.
The firm's collection suit against Patriot said its work included opposing applications for temporary restraining orders and preliminary injunctions, conducting expedited discovery and reviewing tens of thousands of documents.
In early February, Patriot informed Kasowitz it had decided to hire a new lawyer, the firm said in court papers, adding Patriot confirmed that it had chosen to retain new counsel because its insurance carrier might be more likely to reimburse attorney fees.
Kasowitz said it had never agreed to condition payment for its services on an insurer's reimbursement. But it immediately began working with new counsel.
Kasowitz had unpaid invoices totaling about $1 million for work in December 2016, the firm said. In light of the unpaid bills, Kasowitz said it informed Patriot and incoming counsel of a lien on the legal file for the federal court actions.
Ultimately, Patriot paid the 2016 invoice and Kasowitz waived its retaining lien and turned over its file, based on the payment and its reliance that Patriot would pay the remaining bills, Kasowitz said. In the end, Patriot did not pay the remaining $1.097 million, the firm said.
Competing Claims
Patriot filed the Florida suit against the Kasowitz firm for fraud and malpractice less than two months after being sued, offering a very different view of the relationship.
Patriot said a review of the firm's invoices confirms that the amount of time the firm spent on tasks were unnecessary, duplicative, non-billable activities or "grossly excessive (and in some instances appear to be beyond what would be humanly possible)."
"One biller brazenly claimed he billed 24 hours, i.e. every waking moment, to Patriot National on drafting tasks. Together, he and his like-minded Kasowitz colleagues billed Patriot National 154.4 hours for a single, non-trial, day," Patriot said.
Given its practices, Patriot maintains, it's "no surprise that the law firm managed to bill its Fort Lauderdale client more than $3.4 million in attorneys' fees and costs in less than a year."
Furthermore, it says Kasowitz was aware it was not approved counsel by the company's insurer and "failed to take steps to become approved."
In contrast, Patriot's replacement litigation counsel, Cahill Gordon & Reindel and Greenberg Traurig, sought and obtained approval before they started work, said William Scherer, Patriot National's attorney in the malpractice suit and co-founder of 25-attorney Conrad & Scherer in Fort Lauderdale.
By failing to become approved counsel, Kasowitz "created a situation where replacement counsel was forced to redo substantial work, causing the client to incur significant but entirely unnecessary costs," Patriot said.
When it sought to bring on insurer-approved replacement counsel to handle the litigation, Patriot said, Kasowitz "attempted to hold the client's files hostage in the middle of intense, deadline-driven litigation until more payments were made."
Patriot said Kasowitz operated in "fraud, greed, extortion and other blatant misconduct."
The suit adds that any prospective client "would expect to get the type of top-flight representation that one would expect from the president's law firm."
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Christine Simmons writes about the New York legal community and the business of law. Contact her at csimmons@alm.com and on Twitter @chlsimmons
