The bad blood deepened last week between Washington-based Schertler & Onorato and its former client, UBS AG whistleblower Bradley Birkenfeld, with the firm filing a 47-page motion to dismiss calling Birkenfeld's legal malpractice allegations "vindictive and baseless."
The firm represented Birkenfeld, a former UBS banker, from mid-2006 through the summer of 2008. Birkenfeld cooperated with a federal investigation into allegations that UBS helped clients evade taxes and was given a $104 million whistleblower award from the U.S. Internal Revenue Service in August.
Birkenfeld sued Schertler for legal malpractice in District of Columbia Superior Court in late October, his third lawsuit against the firm since August 2011, claiming that they mishandled the whistleblower process and cost him a potentially larger award. The firm has fought back, saying that the claims are meritless and part of Birkenfeld's attempt to avoid paying fees owed to the firm.
In the motion to dismiss (PDF) filed December 4, Schertler noted that Birkenfeld voluntarily dismissed the last two lawsuits he filed against the firm and that complaints he filed with the Office of Bar Counsel had been dismissed. "Enough is enough," the firm, represented by Mark London of Washington's London & Mead, said.
Birkenfeld's lawyer, Christopher Hoge of Washington's Crowley, Hoge & Fein, said in an e-mail today that "there are definitely two sides to this story" and that they did not want to engage in a public relations battle. "Our response to the motion to dismiss will be filed in due course, and we will be addressing Schertler & Onorato's factual allegations and arguments in detail at that time," he said.
In moving for dismissal, Schertler argued first that Birkenfeld failed to bring his claims within the three-year statute of limitations. He should have known about any alleged wrongdoing when he fired the firm in the summer of 2008 or by the time the criminal case ultimately brought against him was resolved in August 2009, they said.
Even if the lawsuit wasn't time-barred, the firm argued, Birkenfeld failed to state a claim for attorney malpractice. Birkenfeld alleged that the firm misrepresented its expertise on federal whistleblower statutes, failed to warn him that he could be indicted once he came forward, and failed to turn over information to prosecutors detailing the full scope of his cooperation, among other things. Birkenfeld pleaded guilty to defrauding the United States and was sentenced in 2009 to 40 months in prison, a $30,000 fine and three years of probation.
The firm countered in its motion that they didn't breach any standard of care under the law; that they adequately represented Birkenfeld, citing his whistleblower award as proof; that Birkenfeld's voluntary guilty plea means he couldn't claim the firm's conduct caused him any harm; and that Birkenfeld wasn't entitled to the larger whistleblower award he claims he should have received in his complaint.
Although Birkenfeld voluntarily dismissed his previous claims against Schertler, the firm filed a counterclaim for fees that is still pending before the D.C. Attorney-Client Arbitration Board. The firm has claimed that, pursuant to a retainer agreement, they're owed 12.5 percent of the whistleblower award, or approximately $13 million. Firm name partner David Schertler has accused Birkenfeld of pursuing litigation in retaliation for the firm's efforts to collect those fees.
The case is before Superior Court Judge Judith Macaluso. A scheduling conference is scheduled for February 8.