Sher Leff v. Pawa Law Group

2014 DNH 073

• Court: District Court, D. New Hampshire
• Decided: April 14, 2014
• Docket: 14-CV-026-SM
• Status: Published

Opinion

Sher Leff v . Pawa Law Group 14-CV-026-SM 4/14/14 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Sher Leff, LLP, Plaintiff/Counter-Defendant

v. Case N o . 14-cv-26-SM Opinion N o . 2014 DNH 073 Pawa Law Group, P.C., Defendant/Counter-Claimant

O R D E R

The parties, two law firms, entered into straight-forward

fee sharing arrangement, memorialized in a written contract.

Under the terms of that contract, Sher Leff was to receive 78%

and PAWA 22% of attorney’s fees recovered in an environmental

damage suit brought on behalf of the State of New Hampshire

against several manufacturers of gasoline containing MBTE (which

later found its way into the ground and groundwater). The fees

recovered in that litigation have been substantial - millions of

dollars - and are expected to be even more substantial in the

near future. This litigation arose after Sher Leff decided PAWA

was not entitled to its share of the recovered attorney’s fees

under the parties’ contract.

Background

Initially, New Hampshire’s Attorney General retained PAWA

and directed it to recommend additional litigation counsel to

assist in handling the case - specifically, a firm that was experienced in handling environmental litigation of this sort,

and one financially capable of supporting what was expected to be

an expensive undertaking. PAWA recommended Sher Leff, and the

Attorney General accepted that referral. As the litigation

proceeded, and named defendants began settling the cases,

recovered attorney’s fees were collected and paid into a

revolving account managed by Sher Leff under the terms of the

parties’ fee-sharing agreement. For a time, the recovered fees

were duly split between the two firms as agreed.

But, human nature being what it sometimes i s , as larger and

larger sums were recovered, Sher Leff decided that it might be

“unethical,” or at least a breach of the fee splitting agreement,

for it to continue to pay over the agreed upon 22% to PAWA and,

conversely, that it should, both ethically and contractually,

retain a much larger share. After all, Sher Leff seemingly

reasoned, it was pulling the laboring oar in the underlying

environmental litigation. Moreover, the fee-sharing agreement

contained language that incorporated by reference obligations

owed by counsel under the applicable Code of Professional

Responsibility. The Code, Sher Leff pointed out, precluded fee

splitting when the share paid to co-counsel did not reflect

proportional time, effort, or responsibility in carrying out the

legal work. N.H. R. Prof. Conduct 1.5. Because, in Sher Leff’s

evolving view, PAWA did not contribute 22% of the time and

2 effort, or assume 22% of the responsibility for the litigation,

Sher Leff just couldn’t bring itself to continue to disperse that

disproportionate amount to co-counsel (the co-counsel that

brought Sher Leff into the case in the first place).

With some urging by the Attorney General, the parties agreed

to arbitrate the dispute, such as it was. They entered into an

arbitration agreement and participated in a lengthy and costly

proceeding before three highly qualified arbitrators. The

arbitrators carefully considered the testimony offered, reams of

documents, argument by counsel, and written materials, before

concluding, in a comprehensive analytical opinion, that Sher

Leff’s position was untenable in every respect.

Discussion

A detailed review of the issues raised below and asserted

here on review is unnecessary and unwarranted. The thorough,

thoughtful, and well-supported decision of the arbitrators speaks

for itself. And, proceedings brought under the Federal

Arbitration Act to confirm, vacate, or modify an arbitration

award are summary in nature. C f . Air Line Pilots Ass’n Intern.

v . Aviation Assoc., Inc., 955 F.2d 9 0 , 92 (1st Cir. 1992). See

also Grant v . Houser, 2012 WL 975060, at *4 (5th Cir. 2012).

3 Suffice it to say that the arbitration panel found that the

fee agreement did not require proportionality as a condition to

PAWA’s entitlement to 22% and, even if it did, PAWA met the

proportionality condition espoused by Sher Leff. Consequently,

the arbitration panel concluded that PAWA is entitled to its full

share of the recovered fees. The arbitration panel also

concluded that PAWA was entitled to its attorney’s fees for

having been unnecessarily forced to arbitrate its rights and

interests under the parties’ fee-sharing agreement. To the

extent Sher Leff now claims the arbitrators did not have the

authority under the arbitration agreement to award those fees, it

is mistaken. The arbitrators construed the agreement to permit a

fee award, and the court agrees (interestingly, and

contradictorily, Sher Leff also sought an award of attorney’s

fees in the arbitration). Moreover, an award was plainly

warranted under applicable New Hampshire law.

Sher Leff’s claim that the arbitrators were without

jurisdiction because the final award was issued beyond the thirty

day period set in the applicable rules is also meritless, given

that that issue itself was subject to arbitration and the

arbitration panel properly resolved it against Sher Leff (Sher

Leff was properly held to have waived the period with respect to

supplemental attorney’s fees consideration, by its statements and

4 conduct, and it was hardly unreasonable for the arbitrators to so

conclude).

Conclusion

The arbitration award is confirmed in all respects. Sher

Leff’s Petition for Declaratory Judgment (see document n o . 1-1)

and its Motion to Strike (document n o . 10) are denied.1 PAWA’s

Motion to Confirm Arbitration Award (document n o . 3 ) is granted.

PAWA’s Motion for an Expedited Hearing (document n o . 1 2 ) , as well

as its motion to Confirm Inapplicability of Discovery Rules

(document n o . 1 3 ) , are denied as moot.

The Clerk of Court shall enter judgment in accordance with

this order and close the case.

SO ORDERED.

Steven J. McAuliffe United States District Judge April 14, 2014

cc: Gregory S . Clayton, Esq. Jon-Jamison Hill, Esq. Robert S . Chapman, Esq. Thomas J. Pappas, Esq. Robert D. Cultice, Esq. James F. Ogorchock, Esq.

1 At the hearing on March 2 1 , 2014, counsel for both parties agreed that their respective pleadings and filings, taken together, should be treated as “a motion to vacate and a motion to confirm” the arbitrators’ decision.