Business of Law

Sued for Alleged Unpaid $359K Legal Bill, Client Pursues Counterclaim Seeking $628K Refund

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A suit filed by Constantine Cannon seeking $359,000 plus interest and punitive damages for work performed for a client family and its real estate business has put the law firm in peril not only of being out-of-pocket for the $359,000 but having to return another $628,000.

In a counterclaim that has gotten a green light to proceed from a state-court judge, the Howard Parnes family says it was “vastly overcharged” by the New York and Washington, D.C., boutique and should be reimbursed for $628,000 in excessive fees already paid, the New York Law Journal reports in an article reprinted in New York Lawyer (reg. req.).

The counterclaim alleges that the firm charged its client for unnecessary, duplicative work and overcharged for work that could have been done at considerably lower cost. For example, a Constantine associate allegedly spent more than eight hours preparing a tax document, at an hourly billable rate of $300, that could have been prepared by a clerk for a “small fraction” of the associate’s fee.

Manhattan Supreme Court Justice Carol Edmead found there was a sufficient legal and factual basis to support the disgorgement counterclaim. However, the judge rejected another counterclaim which had argued that Constantine Cannon should not be permitted to collect its stated account because the law firm did not obtain a signed engagement letter.

Case law establishes that it would be unfair to permit a client to avoid paying a legitimate debt, if proven, simply because the firm violated retainer rules, the judge held.

Lawyers for both sides declined to comment on the decision.

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