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Eric Borg v. 86th and 3rd Owner

January 26, 2012



By joint stipulation approved by the Court on October 5, 2011, the parties to this action discontinued the litigation with prejudice subsequent to the signing of a monetary settlement in the amount of $11.5 million, reached after voluntary mediation. After suffering a devastating injury in November 2007, the plaintiff, Eric Borg, retained the law firm of Barasch McGarry Salzman & Penson ("BMS&P") on February 20, 2008, and, represented by the firm, Borg filed a complaint in U.S. District Court for the Southern District of New York on June 30, 2008. Shortly thereafter, Borg discharged BMS&P on July 21, 2008. See Aff. of Dominique Penson & Michael Barasch in Supp. of Amended Mot. to Apportion Attys.' Fees ("Penson & Barasch Aff.") at 2--3 (May 20, 2011), ECF No. 80. Borg then hired the law firm Sacks and Sacks, LLP ("S&S") to represent him in the matter, with attorney compensation set at one-third of the ultimate recovery, see Retainer at 1, Exh. 1 to Penson & Barasch Aff., ECF No. 80-1, and S&S managed the case through settlement.*fn1 At the time of its discharge by Borg, BMS&P "declined to seek immediate compensation" based on an hourly rate for work performed and instead "elected to receive a share of the contingency fee, to be calculated based on the firm's proportionate share of work performed on the case." Id. at 3. After the parties finalized the settlement, BMS&P and S&S met to resolve the apportionment of fees, but they could not reach an agreement and determined that judicial intervention was necessary to end the dispute. Six months after the parties filed the stipulation of discontinuance, BMS&P filed a motion to apportion attorneys' fees seeking 20% of the $3,833,333.00 constituting the total of the contingency fee based on the settlement. See Mem. of Law in Supp. of Mot. to Apportion Attys.' Fees ("BMS&P Mem.") at 10 (May 19, 2011), ECF No. 78. That motion is now before the Court, and is opposed by S&S, which argues that BMS&P's work on the case constituted only 1% "of the meaningful" and 0% "of the challenging" legal work in this matter and that, accordingly, BMS&P should be awarded no more than 2.5% of the total attorneys' fees earned. Mem. of Law in Supp. of Sacks and Sacks' Application to Apportion Attys.' Fees ("S&S Opp.") at 1 (June 24, 2011), ECF No. 83.

After reviewing the parties' submissions as to the fee dispute, and for the reasons given below, the Court determines that, of the total $3,833,333.00 in attorneys' fees available here, S&S is entitled to $3,526,666.00 -roughly 92% of the attorneys' fee in this matter-and BMS&P is entitled to $306,667.00-roughly 8%-as fair compensation for their work performed on behalf of the plaintiff in the underlying case.


The case underlying this fee dispute stems from a devastating accident at a construction site that occurred on November 27, 2007. The two law firms that contest this motion dispute many facts relevant to the Court's inquiry here, but at least two central events are clear: First, the plaintiff, a steel laborer, suffered severe, traumatic brain injuries when struck on the head by a cinder block that fell more than fourteen stories from an overhanging scaffold at a construction site in the Bronx, New York. See Penson & Barasch Aff. at 2; Decl. in Supp. of Incoming Counsel Sacks and Sacks' Application for an Equitable Apportionment of Attys.' Fees ("First Sacks Decl.") at 1 (June 24, 2011), ECF No. 82. Second, the plaintiff settled his case with the defendants for $11,500,000.00, yielding a contingent attorneys' fee of $3,833,333.00. See Penson & Barasch Aff. at 3, 19; First Sacks Decl. at 1--2.

The firms have submitted declarations attesting to various factual events relating to each firm's representation of the plaintiff in this matter. The Court now summarizes the competing versions of events presented therein.

Retention of, and Investigation & Drafting of the Complaint by, BMS&P

In its filings related to the instant motion, BMS&P represents that on February 14, 2008, the firm received a phone call from the plaintiff's brother, Emil Borg, advising it that the plaintiff had been badly injured while working at a construction site. See Penson & Barasch Aff. at 5. Days later, both Borgs-Eric, the plaintiff, and Emil, his brother-and the plaintiff's girlfriend visited the office of BMS&P for a meeting. See id. The plaintiff informed the firm that he was interviewing several attorneys; several days later, he advised BMS&P that he had selected the firm to represent him. See id. On February 20, 2008, Dominique Penson traveled to Eric Borg's home in New Jersey to interview him about the case, collecting details about the accident, his injuries, and potential witnesses. See id.; see also Construction Worker Labor Law Intake, Exh. 2 to Penson & Barasch Aff., ECF No. 80-2. Penson met again with the plaintiff on April 2, 2008 to discuss Eric Borg's medical condition. See Penson & Barasch Aff. at 5; see also Eric Borg 4/2/08 - In Office [Notes], Exh. 3 to Penson & Barasch Aff., ECF 80-3.

In reciting facts related to its follow-up interviews with prospective witnesses, BMS&P makes several representations regarding the actions of S&S prior to the plaintiff's retention of BMS&P-representations that, as the Court will discuss, S&S vehemently contests. BMS&P states that at Penson's New Jersey meeting with the plaintiff, the plaintiff gave her four signed witness statements from "employees who were at the work site" dated November 28, 2007. Penson & Barasch Aff. at 6; see also Witness Statements, Exh. 4 to Penson & Barasch Aff., ECF No. 80-4. According to BMS&P, at the New Jersey meeting the plaintiff informed Penson that the witness statements-along with "photographs of the accident site taken within several hours of the accident, and a 'donation' of $7,500 for Mr. Borg"-had been delivered by "the Sacks firm[,] . . . unbidden by Mr. Borg or his family," to the plaintiff's hospital room in the days following the accident. Penson & Barasch Aff. at 6. BMS&P reiterates in its filings that, "according to what Eric and Emil Borg told [the] firm," S&S had taken the photographs and conducted the witness interviews "not at the request of the Borgs or anyone else with authority to speak for Mr. Borg." Id.; see E-mail from Michael Barasch to Barry Salzman & Dom Penson dated Feb. 14, 2008 ("Barasch E-mail"), Exh. 5 to Penson & Barasch Aff., ECF No. 80-5.

In response, S&S submits the declaration of the plaintiff, who appears to affirm that his brother, Emil Borg, "gave Sacks and Sacks permission to conduct an investigation" in the days following the accident.*fn2 Aff. of Eric Borg ("Eric Borg Aff.") at 2, Exh. 1 to First Sacks Decl., ECF No. 82-1. According to Frank Torres, a witness to the accident, on November 27, 2007, Torres "contacted [S&S], who ha[d] represented many of [his] friends in the past, and asked them to meet [him] at the hospital to undertake an investigation for Mr. Borg." Aff. of Frank Torres ("Torres Aff.") at 1, Exh. B to Sur-Reply Mem. in Supp. of Sacks and Sacks' Application to Apportion Attys.' Fees ("S&S Sur-Reply"), ECF No. 89. Torres further represents that lawyers for S&S "informed [him] that they could not do any investigation without the consent of a family member [of Eric Borg]," and that Torres then introduced the lawyers to Emil Borg, "who gave them permission to conduct an investigation on behalf of Eric." Id. Emil Borg, the plaintiff's brother, confirms-in a one-sentence affidavit-that he gave such permission to S&S, see Aff. of Emil Borg ("Emil Borg Aff.") at 1, Exh. A to S&S Sur-Reply, and Kenneth Sacks attests to both Torres's initial contact on the night of the accident and Emil Borg's investigation authorization, see Decl. of Kenneth Sacks ("Second Sacks Decl.") at 1--2, Exh. C to S&S Sur-Reply. BMS&P refutes this account, suggesting that, given New York's Rules of Professional Conduct prohibit the solicitation of personal-injury plaintiffs so soon after an accident, "[n]o experienced attorney would fail" to confirm the requests of Torres and Emil Borg in writing. Reply Aff. of Dominique Penson ("Penson Reply Aff.") at 10 (July 22, 2011), ECF No. 85.

S&S describes its initial investigation as consisting of Kenneth Sacks and Mike Weir, an S&S associate, visiting the job site and interviewing various witnesses who related the facts of Eric Borg's accident. See First Sacks Decl. at 3. They also took photographs of the accident scene, and collected a replica of the cinder block that fell onto the plaintiff's head. See id. S&S represents that it then turned over the contents of its investigation to the plaintiff's family. See id. As for the $7,500 "donation" mentioned by BMS&P, S&S represents that Emil Borg informed Kenneth Sacks that the plaintiff's "fellow workers were creating a pool of funds to support him," and Kenneth Sacks then "made a donation as well." See S&S Sur-Reply at 2; see also Second Sacks Decl. at 2.

Despite eventually coming into possession of the photographs and witness statements taken by S&S, BMS&P conducted its own interviews of the four identified witnesses, and several more, because the firm had "no personal knowledge of the accuracy or authenticity" of the prior statements. See Penson & Barasch Aff. at 7. The firm made further inquiries and preparations as well: It "dispatched an investigator to the construction site to take photographs of the site"; sent claim letters to potential defendants; contacted S&S to receive materials related to its post-accident investigation; obtained the plaintiff's medical and employment records from various sources; sent the S&S-acquired witness statements and photographs to the Occupational Safety and Health Administration ("OSHA") in order to assist its investigation into the accident; and acquired the OSHA report when completed. See id. at 7--9.

BMS&P also details its additional efforts in this matter. The firm represents that it retained "an experienced certified site safety manager[] to serve as an expert on the case." Id. at 10. The firm also conducted "extensive legal research" in order to "prepare [the] drafting [of] the complaint, and for an eventual summary judgment motion," identifying "some 17 labor law cases [the firm] believed would be important in an eventual summary judgment motion." Id. at 11. And the firm "analyzed the issue of where to bring suit on Mr. Borg's behalf," researching the question of venue for propriety and for strategic purposes related to the impending litigation. Id. at 12--13. Finally, BMS&P prepared and filed the initial complaint in this matter in federal court and served it upon all defendants. See id. at 14--17. BMS&P, however, does not provide an estimate of the hours it expended on the case through filing of the complaint, as "[b]ecause [BMS&P] represented Mr. Borg pursuant to a contingency fee agreement, it did not keep time records for work performed in the case." Id. at 4.

S&S takes issue with BMS&P's characterization of its own work leading up to the filing of the complaint. Kenneth Sacks contends that BMS&P's claim to have conducted extensive legal research "cannot possibly be true," as the firm's "eight-page complaint contains straightforward, garden-variety claims that any lawyer reasonably experienced in cases like Mr. Borg's could draft in, at most, a couple of hours, without needing to perform any real research." First Sacks Decl. at 4. In addition, Kenneth Sacks claims that when S&S took over the case, "there was no evidence of 'extensive' research in the file," and it contends that BMS&P's initial complaint "neglected to include" various live claims on behalf of the plaintiff. See id. Kenneth Sacks states in his declaration that "virtually all" of BMS&P's pre-filing work "could have been performed by paralegals or other non-lawyers," id., and S&S argues that the entirety of BMS&P's work could not have taken more than fifteen hours, see S&S Opp. at 3.

Discharge of BMS&P & Retention of S&S

Shortly after the filing of the complaint, the plaintiff discharged BMS&P. BMS&P represents that when the plaintiff informed the firm of his decision, he explained that it resulted in part from members of his union and S&S itself "urging him to reconsider his decision not to hire" S&S. Penson & Barasch Aff. at 17. The firm asserts that the plaintiff told it that S&S had "done many good things for [the plaintiff's] union" and that "perhaps he had been too hard on [S&S] when he turned away the firm" initially. Id. at 17--18. BMS&P also represents that the plaintiff informed it that S&S "had told him that [BMS&P] had made a mistake in bringing the case in federal court[] rather than state court." Id. at 18.

The submissions of S&S directly contradict BMS&P's account of its dismissal by the plaintiff. S&S submits the affidavit of Eric Borg, in which he attests that "[t]he statements attributed to me by Mr. Barasch and Ms. Penson" in the BMS&P Mem. and the Penson & Barasch Aff., including "the allegation that Sacks and Sacks strong armed me into choosing their firm," are "complete lies." Eric Borg. Aff. at 1. He further states that "[t]he reason that I fired Mr. Barasch and Ms. Penson is because they were unable to answer any questions that I had, and filed in Federal Court without my permission." Eric Borg Aff. at 1. And S&S further represents that "[n]o one from the Sacks firm had any contact with anyone from Mr. Borg's family for seven months until Mr. Borg discharged the Barasch firm." S&S Sur-Reply at 2.

In its Reply Affirmation, BMS&P disputes S&S's account. Penson represents that she "personally discussed the venue issue with Mr. Borg prior to filing suit in federal court," and that she explained her firm's reasons for choosing federal court and, afterward, "Mr. Borg voiced no opposition to bringing the case in federal court." Penson Reply Aff. at 8. Penson also reiterates that "after discharging [BMS&P], [the plaintiff] did tell [her] that Kenneth Sacks told him [BMS&P] had erred in bringing the action in federal court[ and] that the case should have been brought in Bronx County." Id. BMS&P also suggests that S&S's version of events-that, entirely properly and at the request of the plaintiff's family, it conducted an initial investigation and turned over the results, but was not chosen by the plaintiff to represent him-"is, in a word, incredible." Id. at 11. The plaintiff, Penson contends, "would not have spurned [S&S] first, hired another firm, and then done his due diligence, leading him back to [S&S]." Id. Penson argues that, therefore, "[t]he only reasonable inference is that Eric Borg spurned [S&S] because its investigation was unauthorized and its solicitation of him at the hospital ...

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