Texas Law Firm Hit With Overbilling Lawsuit
Austin, TX (Law Firm Newswire) May 6, 2019 – A Federal lawsuit was recently filed against Morrison & Foerster by one of its clients that alleged the firm engaged in “egregious” overbilling, among other things. The plaintiffs in the lawsuit are Firestar Diamond International and its owner, jewelry designer Nirav Modi, Synergies Corporation, AVD Trading and Firestar Group LLC. The lawsuit was filed in the United States District Court for the Western District of Texas and alleges breach of fiduciary duty, negligence, fraud, breach of contract and theft.
The lawsuit alleges that Morrison & Foerster was initially hired to sell various companies and their assets in order to dismantle the companies. The lawsuit stated that the firm “expended an exorbitant and excessive amount of time, primarily on matters that had little to do with winding down the entities. In the course of two months, [the firm] had 34 different timekeepers bill 669 hours at a cost of $484,321.39.” Thereafter, when the final bill was presented to the plaintiffs, the firm’s services were terminated. However, after termination, Morrison & Foerster then transferred $53,000 of the plaintiff’s assets held in Morrison & Foerster’s trust account to itself, without notifying the plaintiffs with an explanation of the transfer.
The plaintiffs allege that Morrison & Foerster focused on minor issues in order to bill the plaintiffs more, instead of winding down the various companies and selling assets. Also, the plaintiffs allege that the law firm failed to make $17 million in bankruptcy claims that was spotted by the plaintiffs’ new lawyers. Finally, the plaintiffs allege that the law firm unilaterally paid its exorbitant fees from money obtained by the sale of plaintiffs’ assets, something that was never agreed upon by the plaintiffs.
Plaintiffs have alleged actual damages of more than $1.5 million, plus punitive damages, attorneys fees and fee disgorgement. In a comment on the decision, Gregory D. Jordan, a business litigation attorney with the Law Offices of Gregory D. Jordan in Austin, Texas, who is not involved with the case, stated that, “Law firms must be very careful with client’s money kept in the firm’s trust accounts. Frequent and clear communication between the law firm and the client about expectations and actions is the best practice to prevent these types of lawsuits.”