Contracts

Law Firm Seeks 12.5 Percent Share of Ex-Banker Birkenfeld's $104M IRS Whistleblower Award


A Washington, D.C., law firm retained by Bradley Birkenfeld to help him tell U.S. authorities how a Swiss bank was aiding Americans in evading taxes is now seeking a 12.5 percent of his $104 million whistleblower award from the Internal Revenue Service.

The former employee of UBS AG, the biggest bank in Switzerland, fired Schertler & Onorato in 2008 and retained another law firm, Kohn, Kohn & Colapinto, to help him pursue the award, reports Bloomberg.

A 2007 retainer letter from the Schertler firm outlines the 12.5 percent contingent fee and imposes an $80,000 hourly cap on its fee. However, the Kohn firm contends that a second 2008 retainer letter signed by Birkenfeld after he was arrested (he was subsequently convicted and got federal time for his role in helping wealthy Americans evade taxes by putting assets in secret Swiss accounts) supersedes the first. It provides for a $50,000 retainer advance.

“There is no evidence that your firm performed any work on that claim or that your firm perfected the claim as required by either the statute or IRS regulations governing the whistleblower reward program,” said attorney David C. Colapinto in a 2010 letter to the Schertler firm on Birkenfeld’s behalf.

However, the law firm refused to relinquish the claim, as Colapinto sought in the letter, and a federal judge put the fee dispute in arbitration before the IRS whistleblower award was announced.

“It is indisputable that Schertler & Onorato communicated directly with the IRS Whistleblower Office and followed the explicit instructions received from that office on how to properly register Mr. Birkenfeld as a whistleblower,” said the law firm in an email to Bloomberg. The Shertler firm said it also advised Birkenfeld on pursuing his whistleblower claim.

Meanwhile, Birkenfeld filed a malpractice suit, pro se, against his former counsel in superior court in Washington, D.C., in 2011, as well as a federal lawsuit contending that the Schertler firm failed to protect his free speech and due process rights when he was told by a prosecutor, shortly after his arrest, that he couldn’t meet with U.S. Senate or Securities and Exchange Commission investigators.

In response, the firm filed a counterclaim that is still pending. Birkenfeld has voluntarily dismissed his side of the superior court suit, and a federal judge dismissed the other case and said a District of Columbia Bar’s attorney-client arbitration board should determine the fee issue. He ordered the Kohn firm to put any whistleblower payments it receives into a trust account and segregate both 12.5 percent and $77,024, the news agency recounts.

The Kohn firm has not publicly revealed how much of an attorney fee it expects to receive in the whistleblower case.

Additional coverage:

ABAJournal.com: “Ex-Banker Birkenfeld Gets $104M for UBS Case Cooperation; May Be Biggest US Whistleblower Award”

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