Law Firms

Lawyers argue over apportionment after $1M verdict in BigLaw malpractice case

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Lawyers were arguing over how to apportion damages and fees after jurors awarded more than $1 million on Wednesday in a malpractice suit against Alston & Bird.

Jurors in Atlanta found that Alston & Bird was partially at fault for work that allegedly helped a corporate manager who paid himself $1.5 million and left the company, reports. Prior stories on the trial are here and here.

The plaintiff was the company, Hatcher Management Holdings. The manager who left was Maury Hatcher.

The suit claimed that a family ballot had named Maury Hatcher’s two younger brothers as co-managers when Maury Hatcher announced his resignation in January 2009. Yet then-Alston & Bird partner Jack Sawyer helped Maury Hatcher write a cease-and-desist letter, and helped shield corporate financial records from other family members, the suit alleged.

The suit also claimed Sawyer had drafted a management agreement for the company in 2000 that allowed Maury Hatcher to hide his salary.

Sawyer testified that he was retained to draft the operating agreement for the company, and he occasionally provided legal advice after that, without any complaints, according to the coverage. He drafted the cease-and-desist letter to allow time to resolve the management dispute, he said.

When he drafted the operating agreement, Sawyer said, he didn’t know the relative value of the shares, so it’s misguided to suggest he was trying to hide details on member shares. He also disagreed that the agreement had allowed Maury Hatcher to decide on his own compensation.

The plaintiffs had offered testimony from Mercer University legal ethics professor David Hricik, who said Sawyer should have determined whom he was representing after Maury Hatcher decided to leave the company.

“The one you clearly don’t communicate with is Maury … who’s trying to get leverage out of the files,” Hricik said.

Hatcher Management Holdings and several Hatcher family members had previously sued Maury Hatcher, who didn’t show up for the trial. The court in that prior trial entered a default judgment against Maury Hatcher for more than $4 million.

Jurors in the new trial found Alston & Bird was 32 percent at fault, Maury Hatcher was 60 percent at fault (though he wasn’t a defendant), and the plaintiff company itself was 8 percent at fault, according to Jurors found no willful misconduct on the part of the law firm, but did find bad faith and awarded nearly $1.1 million in attorney fees.

Lawyers for the company on Thursday said that the damages award should be reduced only by 8 percent, the company’s portion of fault. They said Alston should for responsible for reduced damages of more than $950,000, along with the total award of attorney fees, for a total of $2.05 million.

A lawyer for Alston & Bird, meanwhile, argued that the firm was responsible only for 32 percent of the verdict and for only 32 percent of the fees, for a total of about $680,000.

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