The NY Appellate Division, First Department has called a retainer agreement “unconscionable,” and has reduced an estate’s legal bills from 44 million dollars to what is predicted to be by the winning side’s attorney, close to 3 million dollars. The subject in the appeal is the $44 million legal fee claimed by Graubard Miller under a retainer agreement signed by Alice Lawrence in 2005. Ms. Lawrence was married to commercial real estate mogul Sylvan Lawrence, and was the main beneficiary of her husband’s one billion dollar estate at the time of his death in 1981. She fought for 20 years with the executor of her husband’s estate in an effort to gain control of her husband’s holdings, a battle in which she was represented by Graubard Miller.
After being billed for a staggering amount of almost $20 million by the Graubard firm at an hourly rate, Alice Lawrence decided to sign a revised retainer agreement in 2005, with the hope of reducing her legal costs. The new agreement provided for a 40 percent contingency to the Graubard firm. Within four months, Alice Lawrence’s case settled for $111 million, with the resulting fee from her agreed upon retainer agreement totaling $44 million to be paid to Graubard Miller. Ms. Lawrence refused to pay this fee, and that refusal has become the topic of the current appeal. Ms. Lawrence died in 2008 so her estate is currently pursuing this legal battle.
The Appellate Division, First Department took the estate’s side in the matter and unanimously ruled that the retainer agreement was “both procedurally and substantively unconscionable.” The court further stated that the evidence “show[ed] that the widow believed that under the contingency arrangement, she would receive the ‘lion’s share’ of any recovery.” Further, the court reinstated the original fee agreement, which holds Ms. Lawrence responsible for the firm’s work at an hourly rate which attorney Daniel Kornstein, counsel for the estate, estimates could be as much as $3 million (including interest).
The Graubard firm plans to appeal this decision to the New York Court of Appeals.
