TC firm sues another over fees

TRAVERSE CITY – A dispute over ethical treatment of a client has pitted two area law firms against one another and it looks to be headed to trial.

Smith & Johnson, Attorneys, P.C. is suing Traverse Legal, PLC and C. Enrico Schaefer over fees it claims it is entitled to for a case Schaefer settled earlier this year.

Schaefer was the primary attorney for the client while employed by Smith & Johnson. In early 2005, however, he left the firm to start his own firm, Traverse Legal.

Schaefer said he has paid in excess of $120,000 in split fees to Smith & Johnson for cases that he settled since he left the firm. However, in this case, Schaefer is refusing to split the attorney fee ($108,000) due to what he says was unethical treatment of the client.

When an attorney leaves a law firm, an ethical mandate requires clients be notified and given a choice of counsel. In this case, the client had two choices; stay with Schaefer or choose someone else at Smith & Johnson. It was noted in court documents that the client had no relationship with anyone else at Smith & Johnson at the time of Schaefer's departure.

According to Schaefer, a letter he co-signed with Smith & Johnson that alerted the client of his departure and the right to choose counsel was apparently thrown away. Court documents show that such a letter was sent to the client a month later. But this was after the client decided to quit the case over frustration with what she perceived as lack of communication from her legal representatives, according to court documents filed by Schaefer.

"They conspired against their own client to deny choice of counsel," said Schaefer. He added he did not contact the client directly to discuss his departure as he expected that a joint letter would be sent shortly.

Marcia Proctor of Proctor Legal Consulting, PLLC, who's defending Smith & Johnson, has a different take on the case.

She says that Schaefer, while employed at Smith & Johnson, was "assigned certain personal injury cases that had been prepared and positioned for excellent results and only needed continued negotiation with certain insurers to achieve those results for our clients. The file in question was transferred to Schaefer who at the time desired to depart our employment, but continue to serve 'of counsel' to Smith & Johnson, Attorneys, P.C. on our letterhead.

"As in all cases, the client's interest always came first," Proctor continued. "They were well served and received a fair settlement. However, Schaefer decided to unilaterally take a portion of the legal fees without notice or the agreement of Smith & Johnson. He also refused to forward any of the fees to Smith & Johnson."

Smith & Johnson requested that the entire $108,000 in attorney fees received be escrowed. In a court hearing on July 5, 13th Circuit Court Judge Philip Rodgers ordered that an additional $5,000 be added to the already $45,000 being held in escrow pending the resolution of the case.

Schaefer is filing a grievance with the Attorney Grievance Commission of Michigan, an agency of the Michigan Supreme Court, which determines professional misconduct. According to the commission, an attorney will review the Request for Investigation. If an investigation is justified, there is a multi-step process ending with closing of the matter, or issuance of an admonishment to the attorney named in the grievance, probation, or filing of formal charges. The entire process can take six months to a year.

As of press time, no trial date had been set.

Christopher Bzdok of Olson, Bzdok & Howard, P.C. is representing Schaefer and Traverse Legal. He referred any questions about the case to Schaefer.