Former top Trump diplomat settles legal fee fight for $1.1 million
April 10 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com, opens new tab)
The U.S. State Department has agreed to pay $1.1 million to settle a lawsuit over legal fees sought by a former top U.S. official who testified against President Donald Trump during his first impeachment.
Gordon Sondland, who served as Trump's ambassador to the European Union, accused the State Department in a 2021 lawsuit of violating an oral agreement to pay his legal bills, which he said were $1.8 million.
Sondland, a wealthy Republican donor and hotelier, testified to lawmakers about Trump's interactions with Ukraine in 2019, ahead of the 2020 U.S. presidential election. Sondland was fired in 2020.
Sondland was represented at the time of Trump's impeachment by a team from Paul Hastings, including Washington litigator Robert Luskin and another top partner Kwame Manley.
The then-Secretary of State Mike Pompeo had denied ever agreeing to pay Sondland's legal tab.
In January, Sondland's case seeking fees went to a bench trial in the U.S. Court of Federal Claims, but the sides reached a settlement before any final order. The State Department paid $1.1 million on March 31, records show.
The State Department did not immediately respond to a request for comment.
'Ambassador Sondland simply sought to hold the government accountable for the clear and unequivocal commitments made to him by former Secretary of State Pompeo and other State Department officials,' Sondland's attorney, Mark Barondess, said in a statement.
Barondess called the settlement "a rare example of the government being bound to an oral agreement." He said courts enforce such agreements "only under very strict conditions and are generally reluctant to do so unless the facts are unusually compelling."
At trial, Manley, who is Paul Hastings' global litigation head, testified that the work the firm did for Sondland was extensive and urgent.
'He knew he was not going to look to the yellow pages or to someone on TV to hire for this,' said Manley, who told the court that he bills at about $1,900 an hour now.
In congressional investigations and crisis management, Manley said, "you drop everything, you work 16 hours a day."
-- In other legal fee news, a U.S. bankruptcy judge on Wednesday rejected White & Case's $430,000 bill for less than two weeks of work in the bankruptcy of crypto company Terraform Labs, saying the law firm was never formally retained to represent Terraform's junior creditors.
U.S. Bankruptcy Judge Brendan Shannon, who is overseeing Terraform Labs' Chapter 11 filing, said during a Wednesday court hearing in Wilmington, Delaware, that lawyers must be formally retained and submit fee applications if they want to be paid from funds provided by a bankrupt company.
Terraform is the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets in 2022.
Spokespeople for White & Case, Terraform and Weil, Gotshal & Manges — which is representing Terraform Labs in the bankruptcy — did not immediately respond to requests for comment.
-- Brown Rudnick said Friday it will pay about $8 million to resolve a dispute over the law firm's bankruptcy work for exiled Chinese businessman Guo Wengui, who was convicted on fraud charges in the U.S. last year for stealing hundreds of millions of dollars from online followers.
Guo retained Brown Rudnick to represent him when he filed for personal bankruptcy in February 2022. Guo's bankruptcy case was turned over months later to a Chapter 11 trustee — Luc Despins of Paul Hastings — after creditors argued that Guo was hiding assets and not complying with court orders.
Despins said Friday that Guo's creditors had legal claims against Brown Rudnick over its advice and Guo's conduct in the early days of the bankruptcy. But a settlement was the best option, providing money for creditors without the risk or delay of litigation, according to the trustee.
Brown Rudnick said in a statement that it "unequivocally denies" the trustee's legal claims but was pleased to resolve the matter. The firm will return $948,000 that it received as a retainer payment and pay an additional $7 million, according to the settlement agreement.
A spokesperson for Paul Hastings did not immediately respond to a request for comment.
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