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Legal Ethics

Bank Battles Law Firm Over Ex-Lawyer’s Right to Millions in Contingent Fees

Posted Oct 19, 2009 6:07 PM CDT
By Martha Neil

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Can a former lawyer collect contingency fees for work he did while he was still a member of the bar? That is the central question in an Arkansas case that pits a bank that loaned ex-attorney Gene Cauley $13.9 million against his now-former law partners in a battle over millions of dollars in contingency fees.

In a lawsuit filed on Friday, Centennial Bank of Conway says the money should be applied against its loans. But attorney Skip Henry, who represents the Little Rock, Ark., firm now known as Carney Williams Bates Bozeman & Pulliam, says it can't pay Cauley any contingency fees because he's no longer a lawyer, reports Arkansas Business. He says Cauley is entitled only to an hourly rate payment in an amount to be determined by a court.

The firm contends that the contingent fees that Cauley would have earned should now be divided among the remaining partners. Henry also argues that any money due to Cauley should first be used to repay $9.3 million in client funds that he admitted stealing in a June 1 guilty plea to wire fraud and contempt of court in federal court in New York. He relinquished his law license a few weeks earlier.

At issue is some $30 million in contingent fees in 30 cases, of which Cauley allegedly is owed the lion's share, the publication reports.

Initially scheduled to be sentenced in September in the criminal case in Manhattan federal court, Cauley is now, it appears, likely to be sentenced in December.

Additional coverage:

ABAJournal.com: "Once Set for Life, Ark. Plaintiffs Lawyer Takes Plea in $9.3M Client Theft Case"

Arkansas Business: "Feds Scrutinizing Gene Cauley's Real Estate Dealings, Holdings"

Arkansas Business: "Cauley Asks for More Time to Raise Restitution"

Arkansas Business: "Sentencing Date for Gene Cauley Postponed Again"

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