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Troubled Corporate Client Creates Headaches for Four Unpaid Law Firms

Posted Jul 29, 2009 8:27 AM CST
By Debra Cassens Weiss

Four law firms are claiming that one financially troubled company has failed to pay millions of dollars in legal fees.

One of the firms, Morgan, Lewis & Bockius, claims in a lawsuit that it is owed $2.5 million in fees, the New York Law Journal reports.

The defendant, Home Solutions of America Inc., specializes in restoring homes after disasters. It has been delisted from the Nasdaq Stock Exchange and is selling its core assets. In June, its former chairman, Michael McGrath, pleaded guilty to mail and wire fraud and money laundering in connection with another company, U.S. Mortgage Corp., for which he served as president, the New York Law Journal says.

Home Solutions argued in the Morgan Lewis case that the law firm knew of the company’s difficult financial condition and the risk of nonpayment. But the law firm defending Home Solutions, New Jersey-based Riker, Danzig, Scherer, Hyland & Perretti, now says it is owed $60,000 for its legal work. A Manhattan judge has granted Riker Danzig’s request to withdraw from the suit.

Two other law firms—Fulbright & Jaworski and Hallett & Perrin—are seeking permission to withdraw from their defense of Home Solutions in two other cases, a class action and a derivative suit, the story says.

Comments

1.

B. McLeod
Jul 29, 2009 1:58 PM CST

Morgan, Lewis doesn’t really need the money, I’m sure.  It’s not like they’ve fallen on hard times.

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2.

Kalifornia Arnold
Jul 31, 2009 9:21 AM CST

Home Solutions solution to their economic problems is simple-cheat and defraud people and don’t pay your attorneys (or anyone else)

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3.

Mike
Jul 31, 2009 9:32 AM CST

McLeod, are you kidding me?  You must be a government hack, or a unionist, to contend that a creditor who performed services doesn’t “need” the monies it is owed.  News flash for the looters and moochers of the legal profession—-this is a cash flow business and a FOR profit enterprise.  It’s exactly what keeps the doors open.  Grow up already.

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4.

NotATroll
Jul 31, 2009 9:56 AM CST

Mike, don’t feed the trolls.

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5.

B. McLeod
Jul 31, 2009 10:02 AM CST

Not much of a “cash flow business,” I’d say, where they let the tab go to $2.5 Million before deciding to do something about it.  More of a “cash flew” business.  These BigLaw guys could stand to sharpen the ol’ pencil a bit (after all, they have an office in Pencil-vania).

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6.

CodePink
Jul 31, 2009 1:48 PM CST

It is no secret that big corporations use law firms and other service suppliers as a “float vehicle” when they can get away with it.  The bigger the corporation and the more services they require means that they have the power to delay payment.  The bigger the corporation, the more likelihood that they will use and abuse their power in this manner.  While they may feel that they are getting something for nothing, that interest free loan costs them plenty.  There is nothing more expensive than demoralizing the troops who are fighting your battles.  However large a company or law firm is, at the end of day success is built on the foundation of personal relationships and mutual respect.  Part of that respect includes paying your bills 30 days net.  The economy goes up and down but one thing remains constant: the fabulous arrogance of Corporate America which consistently delivers work to armies of litigators worldwide.  They always pay eventually.  And they always need a litigator.

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