Suit claims Polsinelli agreed to flat-fee deal, then shifted work to a co-defendant's law firm
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A federal lawsuit claims that Polsinelli agreed to represent an online pharmacy and its CEO under a $14 million flat-fee arrangement, then shifted more and more of the work to a law firm representing a co-defendant.
Philidor RX Services and its former CEO Andrew Davenport filed the suit Nov. 5 in the Eastern District of Pennsylvania.
Law360 has coverage.
Philidor and Davenport hired Polsinelli and then-partner Jonathan N. Rosen in the beginning of 2016 to represent them in investigations by the U.S. Securities and Exchange Commission, the U.S. Congress and the U.S. Department of Justice, the suit says. Under the flat-fee arrangement, Philidor would pay $12 million and Davenport would pay $2 million.
Another Philidor employee hired Wilmer Cutler Pickering Hale and Dorr when he also became an investigation target. Philidor agreed to pay WilmerHale’s fees under an hourly arrangement. Davenport and the second employee would work together in a joint defense.
Both men were later indicted in an alleged kickback scheme.
“At this point,” the suit says, “Polsinelli and Rosen knew that they would now have to defend the criminal charges against Davenport through a likely trial. Polsinelli and Rosen also knew that their fee was capped. The flat-fee agreement was looking less and less lucrative.
“Polsinelli and Rosen also knew that WilmerHale’s fee was based on the hourly rates of its attorneys. The more work that WilmerHale did, the less it would cost Polsinelli in its lawyers’ time and the more money it would cost Philidor.
“As the representation went on, Polsinelli and Rosen pushed more and more work on to WilmerHale.”
The suit says WilmerHale was drafting “the vast majority” of court filings. In addition, Polsinelli sent work to document review firms rather than doing the work itself, charging Philidor for the “expert fees” and thereby reducing the money available for trial experts, the suit claims.
Polsinelli allegedly understaffed the May 2018 trial, allowing WilmerHale to do the bulk of the work. WilmerHale assigned at least four lawyers to each day of trial, while Polsinelli only brought two lawyers, according to the suit.
Davenport and the co-defendant were convicted on four counts that included honest services wire fraud and money laundering. They were each sentenced in November 2018 to a year and a day in prison.
The suit alleges breach of contract, unjust enrichment and mismanagement of litigation.
Polsinelli and Rosen did not immediately respond to the ABA Journal’s requests for comment.