Hoist By Their Own Petard

A recent, but growing, phenomenon is clients suing their lawyers. The most recent such case is of particular interest and not some little entertainment value. DataTern, Inc. et al. v. Foley & Lardner LLP

As near as can be determined from the case pleadings, the Plaintiffs retained Foley & Lardner to undertake enforcement of their patent. Foley & Lardner then filed and began prosecuting a suit on behalf of the Plaintiffs. There was no written retainer agreement, but the Plaintiffs alleged – in their Original Complaint – an oral agreement whereunder Foley & Lardner would bill “reasonable hourly rates.” Foley & Lardner admitted the existence of an agreement to bill at “hourly rates” (note the absence of the word “reasonable”).

During the course of the litigation, the Plaintiffs apparently retained a second law firm, allegedly working on a contingency fee basis, to continue prosecution of the infringement action. Foley & Lardner claims it sought permission of the Plaintiffs to withdraw from the case, but that this request was denied. Subsequently, the patent infringement case appears to have been settled. At this point, there were approximately $1.5M in outstanding, unpaid invoices from Foley & Lardner.

Not content to let sleeping dogs lie, the Plaintiffs sued Foley & Lardner for breach of contract, alleging damages “which exceed $1,000,000.00.” Foley & Lardner answered with counterclaims, seeking payment for the value of its services in an unspecified amount.

In response, the Plaintiffs – this is where it becomes entertaining – filed an Answer to the Counterclaims DENYING THE EXISTENCE OF A CONTRACT BETWEEN THE PARTIES.

Without wishing to comment on the merits of the case, we can’t wait to see how the Plaintiffs proceed in their efforts to prove that Foley & Lardner breached a contract the existence of which the Plaintiffs now deny.

THE LESSONS TO BE LEARNED: (1) Retainer agreements should always be in writing; and (2) threatening to sue, or suing, your lawyers as a means of avoiding payment of outstanding invoices – a not uncommon tactic – may not always be the best course of action.