Brobeck, Phleger & Harrison v. Telex Corporation

602 F.2d 866 (1979)

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Nature of the Case

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Facts

D was involved in antitrust litigation against IBM. The District Court found that IBM had violated §2 of the Sherman Act and entered judgment for D in the amount of $259.5 million, plus costs and attorney's fees of.$ 1.2 million. The court also entered judgment in the sum of $21.9 million for IBM on its counterclaims against P for misappropriation of trade secrets and copyright infringement. The Tenth Circuit reversed the entire judgment that D had won. It reduced the judgment against D on IBM's counterclaim to $18.5 million and affirmed the district court's judgment as modified. To maximize D's chances for having its petition for certiorari granted, they decided to search for the best available lawyer. D settled on Lasky at the Brobeck (P) law firm. Lasky stated that, although he would want a retainer, it was the policy of P to determine fees after the services were performed. D wanted an agreement fixing fees in advance. P and D agreed to a retainer of $25,000.00 to be paid. If Writ of Certiorari is denied and no settlement has been effected in excess of the Counterclaim, then the $25,000.00 retainer shall be the total fee paid. If the case should be settled before a Petition for Writ of Certiorari is actually filed with the Clerk of the Supreme Court, then P would bill for its services to the date of settlement at an hourly rate of $ 125.00 per hour for the lawyers who have worked on the case; the total amount of such billing will be limited to not more than $100,000.00, against which the $25,000.00 retainer will be applied, but no portion of the retainer will be returned in any event. Once a Petition for Writ of Certiorari has been filed P would be entitled to the payment of an additional fee in the event of a recovery from IBM by way of settlement or judgment of its claims against IBM; and, such additional fee will be five percent (5%) of the first $100,000,000.00 gross of such recovery, undiminished by any recovery by IBM on its counterclaims or cross-claims. The maximum contingent fee to be paid is $5,000,000.00, provided that if recovery by D in less than $40,000,00.00 gross, the five percent (5%) shall be based on the net recovery, i. e., the recovery after deducting the credit to IBM by virtue of IBM's recovery on counterclaims or cross-claims, but the contingent fee shall not then be less than $1,000,000.00. D attached a set of hypothetical examples to its letter, and Lasky received the letter and replied that the different examples were correct but that the first example is applicable only to a situation where the petition for certiorari has been denied. D began settlement negotiations. To which P replied that it would be entitled to a fee of $ 1,000,000. Lasky prepared a reply brief to IBM's opposition to the petition for certiorari, and sent it to the Supreme Court for filing. D opened settlement discussions with IBM. On October 2 IBM officials became aware that the Supreme Court's decision on the petition was imminent. D and IBM agreed that IBM would release its counterclaim judgment against D in exchange for D's dismissal of its petition for certiorari. Lasky had the petition for certiorari withdrawn. TP sent a bill for $ 1,000,000. D refused to pay and P Brobeck filed its complaint. The district court granted P's motion for summary judgment. D appealed.