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December 21, 1984

Petition of ROSENMAN COLIN FREUND LEWIS & COHEN, for an Adjudication of its Rights in the Matter of JULIAN SHERRIER, Plaintiff, against BERNICE RICHARD, Defendant.

The opinion of the court was delivered by: SWEET


This action is yet another sequel to the affair of Bernice Richard ("Mrs. Richard") and Julian Sherrier ("Sherrier"). Petitioner Rosenman Colin Freund Lewis & Cohen ("Rosenman"), a large and well known New York law firm, brought this proceeding against Mrs. Richard to establish its attorney's lien and to recover fees allegedly owed Rosenman for its representation of Mrs. Richard in litigation brought against her by Sherrier. Rosenman now moves this court for an order striking all of the affirmative defenses presented by Mrs. Richard and for summary judgment in its favor. Mrs. Richard has cross-moved for an order dismissing Rosenman's petition. For the reasons set forth below, Rosenman's motion is granted in part and denied in part and Mrs. Richard's motion is denied.

 Prior Proceedings

 The prior proceedings and facts in the underlying controversy between Sherrier and Mrs. Richard are fully set out in this court's decision reported at 564 F. Supp. 448 (S.D.N.Y. 1983), ("the underlying action") and need not be repeated here. Rosenman commenced this proceeding on June 17, 1983, seeking an order determining that Mrs. Richard owed it $304,973.05 in fees arising out of Rosenman's representation of Mrs. Richard in the underlying action and enforcing both a statutory attorney's lien in that amount upon the judgment awarded Mrs. Richard and a retaining lien upon Mrs. Richard's papers presently in Rosenman's possession. After a time Mrs. Richard retained her present counsel, who succeeded prior counsel, who in turn had relieved Rosenman. On May 17, 1984 Mrs. Richard served an amended answer asserting ten affirmative defenses to the petition, claiming that there is no basis for a statutory lien and no proceeds to which a lien could attach. In addition, she contends that the court lacks personal and subject matter jurisdiction over this matter. Rosenman has now moved this court for an order striking these affirmative defenses and for judgment in its favor. Mrs. Richard in her cross-motion for an order dismissing Rosenman's petition asserts that Rosenman's claims must be dismissed because the fees sought are unconscionable.


 The following facts relating to this controversy are not in dispute except where noted. Rosenman has represented Mrs. Richard in various matters since at least 1972 and represented her deceased husband prior to that time. Mrs. Richard first approached Mal Barasch, a Rosenman partner ("Barasch"), in 1980 for aid in her dispute with Julian Sherrier. On October 7, 1980, Barasch and Mrs. Richard signed a retainer agreement ("the retainer letter") in which Mrs. Richard agreed to pay Rosenman's "normal time charges" for Rosenman's services on her behalf in connection with the Sherrier dispute and to reimburse Rosenman for any out of pocket disbursements incurred. The retainer letter provided that Rosenman would not participate in any settlement reached with Sherrier and expressly confirmed that either Rosenman or Mrs. Richard had the "absolute right" to terminate the representation "at any time."

 Over the next eighteen months Rosenman sent Mrs. Richard monthly bills listing charges incurred on the Sherrier matter. Actual litigation of the underlying action did not commence until June of 1982. At that time, Mrs. Richard was informed by Barasch and the Rosenman partner in charge of the litigation, Gerald Rosenberg, ("Rosenberg"), that the litigation would probably proceed at a cost of $7,000 to $10,000 per week. Mrs. Richard claims that she was told that the entire litigation would probably cost about $40,000 to $50,000. Rosenman contends that Mrs. Richard was repeatedly told that the litigation "probably would be very expensive."

 During the next month after expedited discovery was undertaken and during pendency of a preliminary injunction motion, almost $50,000 in legal fees were incurred. In a letter dated August 5, 1982 sent to Mrs. Richard along with her monthly bill, Barasch informed Mrs. Richard that the Rosenman bill for July services would be equally high, if not higher than the bill for June. Trial did not commence until October, by which time approximately $190,000 in fees had been incurred. Mrs. Richard contends that during this period she protested directly to Mr. Barasch to no avail about the amount of the charges, the number of lawyers assigned to the case, and the quality of work done.Total billings for services performed in the underlying litigation exceeded $350,000, of which approximately $305,000 remains unpaid and is the subject of this proceeding.

 After the trial in the underlying action had been completed and post trial briefs submitted and shortly after Mrs. Richard received a Rosenman bill dated February 9, 1983 in the amount of $305,543.05, she informed Barasch that she was displeased with the amount of the bill and wanted to replace Rosenman.Barasch asserts that Rosenman offered to continue its representation of Mrs. Richard through the entry of a judgment without charging her for those services and that Mrs. Richard opted to have Rosenman continue to represent her in the prejudgment stage.

 A judgment was entered in the underlying action on May 9, 1983. Rosenman contends that it performed $22,560 worth of services and incurred $1,200 worth of disbursements on Mrs. Richard's behalf between February and May of 1983 without billing her for those amounts. On May 10, 1983 Mrs. Richard told Rosenman that she would not pay her oustanding balance. Rosenman applied to this court for and was granted leave to withdraw as attorneys of record for Mrs. Richard on May 27, 1983. In her motion papers Mrs. Richard contends that she discharged Rosenman, although it is unclear at what point the alleged discharge took place.


 The threshold issue presented is whether this court has jurisdiction over this controversy. It is well settled that "[a] federal court may, in its discretion, exercise ancillary jurisdiction to hear fee disputes and lien claims between litigants and their attorneys when the dispute relates to the main action, regardless of the jurisdictional basis of the main action." Marrero v. Christiano, 575 F. Supp. 837, 839 (S.D.N.Y. 1983). See also National Equipment Rental, Ltd. v. Mercury Typesetting Co., 323 F.2d 784, 786 (2d Cir. 1963); Application of Kamerman, 278 F.2d 411, 413 (2d Cir. 1960). The courts' ancillary power extends to disputes that arise after the initial litigation is no longer before the court. See Application of Kamerman, supra, 278 F.2d 411 (underlying action dismissed prior to suit on lien). See also Grimes v. Chrysler Motors Corp., 565 F.2d 841 (2d Cir. 1977) (affirming lower court's decision to require deposit of settlement funds with court and supervise distribution of funds following attorney fee dispute affirmed). Because this court has jurisdiction over this action as ancillary to the underlying action, Mrs. Richard's first three affirmative defenses alleging lack of jurisdiction are dismissed.

 Motions to Dismiss

 The enforcability of Rosenman's attorneys liens depends preliminarily on the validity and enforceability of the retainer agreement. As a general rule, "a lawyer's compensation is governed by the express contract with a client and they are bound to its terms." Williamson v. John D. Quinn Corp., 537 F. Supp. 613, 616 (S.D.N.Y. 1982); New York Judiciary Law § 474 (McKinney 1983). Like any other contract, a retainer "is presumed to be fair until the contrary appears and will be enforced in the absence of fraud, deceit, ...

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