When You Stiff A Biglaw Firm, They're Probably Going To Come After You

When You Stiff A Biglaw Firm, They're Probably Going To Come After You
Mar 2023

When You Stiff A Biglaw Firm, They're Probably Going To Come After You
Earlier this week, Biglaw firm White & Case filed an ~$8.3 million lawsuit against a former client, special purpose acquisition company Colonnade Acquisition Corp. II. The claim is for unpaid bills for three years of legal work.

Of all the bills to skip out on, it sure seems like skipping out on the legal bills is the surest way to invite litigation. As reported by Law.com:

According to White & Case's complaint filed in Manhattan Supreme Court, its former client, called Colonnade Acquisition Corp. II and referred to as CAC II, told the law firm for the first time in February that because it never successfully entered into "a business combination" with another company, after hiring White & Case to help it with such a transaction, "it was not required to pay White & Case anything for the prior three years of [legal] work."

Oh, so perhaps there's a contingency-type agreement that CAC II is relying on to get out of paying their lawyer fees? That seems a little atypical for a Biglaw firm, but they do say alternative fee arrangements are the future of the industry.

Oh wait, never mind.

But in its filing, White & Case cited two engagement letters entered into with CAC II in 2020 and 2021, respectively, while contending that the letters made it clear that legal-work billing would be based on "the amount of time spent on this matter by each lawyer or legal assistant that performs work," as opposed to any type of contingency based on a successful business combination for CAC II.

Plus there's this detail, from the complaint: "CAC II reflected White & Case's fees as current (as opposed to contingent) liabilities in its subsequent filings with the Securities and Exchange Commission, which constitutes an admission by CAC II that such fees were not contingent upon the closing of any business combination."

The timing of the lawsuit is critical too. According to the complaint, CAC II, a Cayman Islands exempted company, "has continued to take steps to cease operations, liquidate the assets in the trust account for distribution, and then dissolve without making any payment to White & Case." And if that happens, "White & Case will be irreparably harmed as it will have no means of recovering the over $8 million in work done on CAC II's behalf."

The complaint was filed in Manhattan Supreme Court and details claims for breach of contract and quantum meruit.

When You Stiff A Biglaw Firm, They're Probably Going To Come After You
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter @Kathryn1 or Mastodon @Kathryn1@mastodon.social.