Client Trumps Kasowitz Benson Suit For Fees With Claim For Billing Fraud

National Law Journal reported that Kasowitz Benson Torres, best known for name partner Marc Kasowitz’s representation of Donald Trump, has been sued by a corporate client for billing fraud, after the firm sued the client for over $1 million in unpaid fees.

Representation and Fee Suit

Patriot National, Inc., which is publicly-traded, and claims to be “one of the largest private employers in Broward County”, Florida, provides back-office functions to insurance companies. It hired the Kasowitz firm in 2016 to defend it against three federal court suits pertaining to stock sales. The firm also represented some of Patriot’s defendant directors in a shareholder derivative case in Delaware state court.

However, in February, 2017, Patriot informed Kasowitz Benson that it was going to hire different counsel, which would be approved by its insurance carrier, so that it could be reimbursed for attorney fees. The Kasowitz firm had never sought such approval.

The firm claims that it began working with new counsel, but also informed Patriot that it had placed a lien on the file for the federal court actions, because Patriot still owed it about $1 million for work it did in December 2016. Kasowitz Benson also stated that it had never agreed to condition payment for its services on an insurer’s reimbursement.

Patriot then paid that bill, and Kasowitz Benson waived its retaining lien and turned over its file, relying on Patriot to pay its remaining bills, which totaled $1.097 million.

However, Patriot didn’t pay, so Kasowitz Benson filed a collection lawsuit against it in May, 2017 for the $1.097 million.

The fee suit stated that its work for Patriot included opposing applications for temporary restraining orders and preliminary injunctions, conducting expedited discovery and reviewing tens of thousands of documents.

Malpractice Suit

Patriot countered by filing a suit against Kasowitz Benson on 6/30/17 in Broward County, Florida, alleging fraud, malpractice, breach of fiduciary duty, and breach of contract. It seeks “recoupment” of “approximately $2 million” that it paid the firm, plus expenses and damages.

The filing opens with a flourish, claiming that “Instead of receiving legal services commensurate with a law firm that represents the President of the United States, (Patriot) was subjected to fraudulent billings, malpractice and other egregious misconduct that has caused millions of dollars in damages.”

Patriot alleges that the firm’s invoices showed that that the amount of time the firm spent on tasks were unnecessary, duplicative, non-billable activities or “grossly excessive (and in some instances appear to be beyond what would be humanly possible).”
Among the examples it cites:

  • Kasowitz Benson spent “an inordinate and unreasonable amount of time researching basic hornbook legal principles” and drafting affirmative defenses that “were stricken in large part by the court…as being factually and legally deficient”, which prejudiced Patriot.
  • Kasowitz Benson billed 2.7 hours for an e-filing, which was a non-billable activity, five hours to “assist filing”, and an attorney charged more than 13 hours on one day for “cite-checking” and general help with filing”. (Note: per the engagement letter, hourly billing rates for attorneys ranged from $290 to $1,250.)
  • One biller brazenly claimed he billed 24 hours, i.e. every waking moment, to Patriot National on drafting tasks. Together, he and his like-minded Kasowitz colleagues billed Patriot National 154.4 hours for a single, non-trial, day.”
  • The firm billed more than 83 hours to assemble binders.
  • “One Kasowitz biller would routinely bill…for hours beyond that which is possible”, for example, “272.8 hours over a 17-day period (an average of 16 hours per day)”.

The suit claims that “given these fraudulent billing practices, it is no surprise that the law firm managed to bill its…client more than $3.4 million in attorneys’ fees and costs in less than a year.”

Patriot also alleges  that “by failing to become approved counsel for the inusrer providing coverage” to Patriot, “the law firm created a situation where replacement counsel was forced to redo substantial work, causing the client to incur significant—but entirely unnecessary—costs.”

Further, Patriot claims that when it “was required” to replace Kasowitz Benson with insurer-approved counsel to defend it in the securities suits (Cahill Gordon and Greenberg Traurig), the firm “improperly threatened to impose a lien on the files in an attempt to extract even more money from Patriot…despite the pendency of multiple cases in litigation with sensitive, court-imposed deadlines…”

Patriot accuses Kasowitz of “fraud, greed, extortion and other blatant misconduct”, which “represents everything that is wrong with the legal profession”.

Law Firm’s Response

Kasowitz Benson said in a statement:

“All of our billing was entirely appropriate, covering expedited motion practice and discovery in three cases in which we represented the company. Further, Patriot National never objected to any of our bills or work throughout our representation of it.”

It intends to fight the “frivolous” lawsuit: