Updated: A Valentine’s Day lawsuit accuses Morrison & Foerster of “egregious overbilling” after it was hired last May to help wind down several companies.
The Buzbee Law Firm in Houston filed the federal suit in Austin on behalf of five companies that are dissatisfied with Morrison & Foerster’s billing practices. The Texas Lawyer notes in its coverage of the suit that one of the plaintiffs is Firestar Diamond International, which is owned by a jewelry designer who has been accused of bank fraud by India’s Punjab National Bank.
The suit says Morrison & Foerster had promised “to execute this work efficiently and promptly and to keep their clients apprised of the work they were doing. However, MoFo did none of this.”
The suit says Morrison & Foerster “expended an exorbitant and excessive amount of time, primarily on matters that had little to do with winding down the entities.” Over a two-month span, the law firm had billed 669 hours of time by 34 different timekeepers at a cost of more than $484,000, the suit says.
The companies initially had retained a different law firm, but it did no meaningful work, the complaint says. After the companies hired and then fired Morrison & Foerster, a new law firm identified $27 million in claims that could have been asserted in a bankruptcy action. Those claims were “completely missed” by Morrison & Foerster, the lawsuit alleges.
The companies had paid a $30,000 retainer to Morrison & Foerster that was to be applied to the law firm’s bills after approval by the companies, the suit says. But Morrison & Foerster liquidated claims at “at a major discount,” so some of the funds could be sent to the law firm’s trust account and applied to the law firm’s bills, the suit claims.
Morrison & Foerster sent about $625,000 from liquidated claims to its trust account, which totaled more than $655,000 when combined with the retainer, the suit says.
After the companies asked Morrison & Foerster to provide current bills and an accounting, they learned the law firm “had unilaterally decided to pay itself” from the trust account funds, the suit says. After the companies asked for return of the money in the trust account, Morrison & Foerster took an additional $53,000 and eventually returned $117,304, the suit says.
The billing shows that Morrison & Foerster had grouped multiple tasks in one entry, making it “impossible to determine exactly what tasks were performed and the amount of time allegedly spent for such tasks,” the suit says.
“Further, MoFo routinely billed for duplicative assignments, inter-office conferences, emails among staff, each of whom appear to have billed for the same tasks. In sum, this was a billing feeding frenzy.”
The suit is Synergies Corp. v. Morrison Foerster. It alleges negligence, breach of fiduciary duty, fraud, theft and breach of contract.
A Morrison & Foerster spokesperson released this statement to the ABA Journal: “The complaint has no merit. We will be formally responding to the complaint and are confident that our conduct and work on this matter were proper and will be vindicated.”
Story updated at 12:39 p.m. to add statement from Morrison & Foerster.
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