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Nasty Florida Fight Over Litigation Funding Pops Up in Texas Court

J.B. Harris

J.B. Harris

Two Florida lawyers already battling in court in their home state are now embroiled in a fee dispute in a Houston court.

In the Florida case filed last summer, Coral Gables attorney J.B. Harris alleged former co-counsel, Phillip T. Howard of Tallahassee “usurped” a portfolio of tobacco cases potentially worth millions of dollars.

Harris claimed the attorneys reached an agreement in 2017 for Howard to finance the cases and pay Harris a $225,000 salary with benefits and, in exchange, Howard would keep 80 percent of the fees from the litigation.

Now the same 2017 agreement has come up again in new litigation in Texas, but the tables have turned.

This time, Howard and his firm sued Harris and his firm, Howard & Associates, over the 2017 fee-sharing agreement, said Friday's petition filed in Harris County’s 127th District Court.

The agreement split cases into three categories with different fees for each: The first was a 50-50 split between the pair, the second was a 60-40 split with Howard getting more and the third was an 80-20 split with Howard getting more. Most of the cases fell into the 80-20 category, the petition said.

In April 2018, the litigation investment fund Virage Capital Management entered a settlement agreement with Howard and Harris. That said Howard would no longer have to pay advance case expenses, and Harris would get a greater share of fees under the lawyers’ previous agreement. Now the split would be 60-40 with Harris getting more.

The petition said Howard agreed to pay Harris $302,000 in 12 monthly payments. Howard took a loan from Virage for those funds plus some for expenses in unrelated cases. Virage sent the monthly payments straight to Harris, yet Howard remained ultimately responsible for the money, the petition said. The last monthly payment was due April 1.

To get the $302,000 Virage loan, both lawyers agreed to give Virage a security to perfect a lien on the tobacco cases, the petition said. Virage placed a lien on Howard’s 40 percent share of gross fees from those cases. Harris was supposed to be using his best efforts to get an award in the cases, the petition said.

A multimillion-dollar verdict was delivered in one of the cases in February. Now that the cases seemed to be producing fees, Harris allegedly “concocted a bizarre interpretation” of the agreement, saying Howard and Virage’s rights in his cases would expire May 1. Virage replied to Harris that Howard’s interests in the fees never expired under the agreement.

“It has become clear that Harris does not intend to abide by the plain language of the settlement agreement he struck, trying instead to re-trade the deal through contract constructions entirely divorced from reality,” said the petition.

Howard and his firm are asking the court for a declaratory judgment on the settlement agreement, including the 60-40 split, and the lack of any expiration date of Howard’s interests. Howard also seeks to recover costs, attorney fees and expenses.

The Florida lawsuit claimed Harris brought his former co-counsel a portfolio of about 150 Engle progeny cases resulting from a landmark Florida Supreme Court decision disbanding a statewide smoker class action against the nation’s largest cigarette manufacturers.

The lawsuit claimed Howard lacked the funds to finance the venture and used the potentially valuable litigation portfolio to leverage millions in loans without Harris’ consent.

Harris also filed a complaint against Howard with the Florida Bar.

Harris said in an interview that he denies all of the allegations in Howard’s lawsuit in Texas.

“It’s a frivolous lawsuit, and I’m going to seek sanctions against him,” he said.

The fee-sharing agreement is “totally unenforceable,” Harris said, because attorney disciplinary rules state a client must approve of lawyers’ fee-sharing agreements, which didn't happen. He said he worked with Howard as co-counsel from January to November 2018 when Howard’s firm collapsed, then Virage “bailed him out” and agreed to pay Harris for his work as co-counsel. Harris said he agreed “under duress” because he hadn’t been paid in months and was living with the help of friends and family. His suit in Florida alleges Howard “usurped” a portfolio of tobacco cases.

“He promised me something that ended up being too good to be true: He offered a lucrative salary and benefits, which I wasn’t earning at the time — I was simply trying to finance and prosecute very expensive tobacco cases out of my own pocket,” Harris said. “He then stole my case list, went around the country using it as collateral to bilk creditors out of their money, including Virage, and now he’s trying to enforce a provision in the agreement in which I agreed to divide with him the fees.”

Howard didn’t respond to a call or email seeking comment. His attorney, Ashish Mahendru of Houston’s Mahendru PC, didn’t reply to email seeking comment.

 

Read More:

'Everything Went to Hell': Coral Gables Attorney Sues Former Co-Counsel Over Tobacco Cases