Punter-Spencer v. Irving

Background

Monet Punter-Spencer’s personal-injury action settled in September 2020 for $1,250,000. She had first been represented by Schulman Blitz, LLP, which was permitted to withdraw in December 2019. Sobo & Sobo, LLP then represented her through the settlement.

The total contingent legal fee was one-third of the settlement, or $416,666.67. The firms agreed that Schulman Blitz would retain a lien on the net legal fees, with the court to decide the allocation if they could not agree. Schulman Blitz claimed 95% of the fee, while Sobo & Sobo argued for a 60%-40% division in its favor.

Evidence and legal standard

The court held a remote hearing on January 27, 2021 and considered affidavits, supporting documents, and witness testimony. Under New York law, when the client has no financial interest in the fee dispute, an outgoing lawyer may receive a percentage based on the proportion of work performed on the case as a whole. The court considered the time and labor spent, the actual work performed, the difficulty of the matter, the skills required, the lawyers’ experience, and the effectiveness of their work in resolving the case.

Schulman Blitz represented Punter-Spencer for about 31 months, recorded approximately 630 hours, conducted ten depositions, participated in two mediations, and performed most of the discovery work. Sobo & Sobo represented her for about eight months, defended three or possibly four depositions, participated in one mediation, and estimated that it spent about 100 hours. Sobo & Sobo did not keep detailed time records.

Ruling

Judge Stewart D. Aaron found that Schulman Blitz’s contribution was much greater under most measures of actual work. But the court also found that Sobo & Sobo’s work was more effective from a results perspective because it took the case through the final mediation and obtained the $1,250,000 settlement. The court also gave Sobo & Sobo credit for taking on a difficult client and achieving the settlement during the COVID-19 pandemic.

The court concluded that awarding Sobo & Sobo only 5% would not adequately compensate it, and that awarding Schulman Blitz nearly the entire fee would not appropriately account for its late withdrawal. The court therefore ruled that Schulman Blitz would receive 80% and Sobo & Sobo 20% of the contingent fee. It directed Sobo & Sobo to remit $333,333.34 to Schulman Blitz within ten days after entry of the order.