North Carolina Business Litigation Report

Business Court Resolves Dispute Among Lawyers Over Division Of Class Action Fee Pie

Yesterday, Judge Gale entered summary judgment against a North Carolina lawyer who claimed he was entitled to a greater share of a $3 million fee award to a group of plaintiffs' counsel in a series of settled class actions.  The opinion was in the case brought by the lawyer seeking an enhancement of his fee, Donald Dunn, against the lawyers who were his co-counsel, Henry Dart and Robert Zaytoun, in Dunn v. Dart.

The lawyers represented members of the communities living near an industrial plant in Apex, North Carolina at the time of an explosion there. Those families who were forced to evacuate their homes as a result of the explosion settled several class actions for payments of close to a total of $8 million.

A federal judge approving the settlement in the Eastern District also approved the $2.9 million fee award, which allocated $75,000 to Dunn.  Dunn then filed a separate action in North Carolina asserting that he had a side arrangement with his co-counsel to split one third of the fee 50/50 with them.  Dart walked from the fee award with $975,000 and Zaytoun with $670,000, aggrieving Dunn, who received only a paltry $75,000 for his work on the case.

Dunn presented emails speaking to the split, but Judge Gale ruled that the emails were insufficient to prove an agreement, and that they anticipated further negotiation over terms followed by a final written agreement.

The other basis for summary judgment against Dunn was North Carolina Rule of Professional Conduct 1.5, which says that lawyers from different firms may divide fees only if the client consents to the split, and the agreement is confirmed in writing.   Dunn had no evidence of such consent, and no written agreement (except for the found-to-be-inadequate emails).  Judge Gale said that the agreement was unenforceable without compliance with the Rule


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Mack Sperling
Brooks Pierce, LLP
2000 Renaissance Plaza
230 North Elm Street
Greensboro, NC 27401

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