Settlements: Sometimes A Good Thing.

The always intrepid Julie Kay gets to the bottom of the $4.9 million malpractice verdict against Becker & Poliakoff.

Apparently, Becker & Poliakoff stepped in to pursue malpractice claims against Ruden McClosky:

The roots of the discrimination case began when Young and 55 other plaintiffs sued BellSouth, alleging failure to promote blacks to management.

Their attorneys at Ruden McClosky settled the case for $1.6 million with BellSouth in 1997, according to an exhibit accompanying the malpractice lawsuit filed against Becker & Poliakoff on behalf of Young. Plaintiffs split $300,000, or about $5,000 each. The plaintiffs later learned the settlement agreement called for Ruden to receive $120,000 a year for four years, enter a consulting agreement with BellSouth and agree to file no employment cases against the company for a year.

Angered by that outcome, the plaintiffs hired Becker & Poliakoff to sue Ruden for malpractice and breach of fiduciary duty.

Ruden settled for $8 million in 2002, and the proceeds were distributed among 54 plaintiffs, according to memos that became part of the court record in Young’s malpractice case against Becker & Poliakoff. Carl Schuster, managing partner of Ruden McClosky, declined comment, citing a confidentiality agreement with all parties.

“We have been sworn to secrecy,” he said. “It’s bad enough that Becker & Poliakoff got hit with a $4.9 million judgment. We have a settlement agreement, and I could be sued for violating it by saying anything.”

So Becker's firm got involved in order to sue Ruden for malpractice, which settled for big money, and then itself got sued for malpractice.

A few things interested me about the story.

One -- B&P's alleged net worth:

Additionally, Palm Beach Gardens forensic economist Bernard Pettingil Jr. testified about Young’s projected wage losses at BellSouth. He estimated Becker & Poliakoff’s revenue for the last five years totaled $49 million per year. Zobel asked for Becker & Poliakoff’s total net worth, which the expert witness estimated to be $10 million.

They're only worth about 10 million, after taking in $49 million per year for the last five years?

Also, consider the settlement negotiations:

In mediation, Becker & Poliakoff offered to settle for $25,000, but Young walked out, Zobel said. A week later, the offer was raised to $100,000. In trial, it rose to $500,000. By closing arguments, Becker & Poliakoff offered $900,000, and Young turned them down, Zobel said in an interview.

Jurors awarded Young $4.9 million, including $4.5 million in punitive damages and $394,000 in lost wages on Sept. 16. The punitive damages are especially harsh for Becker & Poliakoff as malpractice insurance generally does not cover these types of damages.

25k at mediation?

I know it's hard to value punis for settlement purposes, but these are very experienced lawyers and they didn't evaluate and quantify this risk? Or if they did they couldn't bring themselves to offer more than $100k before trial?

I also like Alan's explanation of what went wrong:

“Apparently, the jury did not believe me, the supervising lawyer who no longer works for us and came from Mississippi to testify and the written documents that supported everything we said,” he said. “Instead, they believed a rogue lawyer who had been disbarred.”

Hmm, what exactly do you think that might mean?