The District of Columbia Court of Appeals handed a win to a litigation outsourcing company late last week, affirming a $6.9 million judgment in a fee dispute with a former client.
In an August 30 opinion (PDF), a three-judge appellate panel found that the contract between litigation outsourcing company eLawForum Corp., now called Drystone Capital Corp., and Unocal Corp., which is now a subsidiary of Chevron Corp., was "unambiguous" about what Unocal owed eLawForum for its services. Unocal had argued that the contract wasn't clear.
A lead attorney for eLawForum, L. Palmer Foret of Ashcraft & Gerel in Rockville, Md., said today that he hoped the court's decision would bring a "long-awaited" end to the dispute. Washington solo practitioner Alfred Belcuore served as co-lead counsel for eLawForum. A Chevron spokesman, Kent Robertson, said in an email that, "[w]hile we respectfully disagree with the Court's decision, Unocal is considering its options." Chevron was represented by DLA Piper.
According to court filings, eLawForum connected Unocal with outside counsel at now-defunct law firm Howrey in 2004. Unocal agreed to pay Howrey a fixed fee of $15 million to handle several hundred environmental matters. eLawForum's fee was based on the money Unocal likely saved by using eLawForum's bidding process instead of independently arranging outside counsel.
In 2005, Unocal ended the contract with Howrey shortly after it was acquired by Chevron. Unocal had been paying eLawForum in installments and claimed that based on the work Howrey actually ended up doing, it only owed eLawForum $3.1 million. Since Unocal had already paid eLawForum $4.6 million, the company argued that eLawForum should pay back the difference. eLawForum maintained that the $6.9 million fee was a fixed amount in their contract.
The companies sued each other in District of Columbia Superior Court and Judge Alfred Irving granted eLawForum summary judgment in June 2011. Unocal appealed and a three-judge panel heard arguments in May. Judges Anna Blackburne-Rigsby and Corinne Beckwith and Senior Judge Warren King heard the case.
Foret said that if there was any lesson learned from the case for litigation outsourcing companies such as his client, it's to beware of installment payment plans. By not requiring a lump sum, he said, his client opened the door to fee disputes.
"It was very rewarding to receive the opinion," he said. "The court did an excellent job getting it out quickly and they analyzed the issues very well."