AUSTIN, Texas (Legal Newsline) – An international law firm sued over allegations of "egregious overbilling" while representing a number of companies in the process of liquidating assets argues the complaint has no merit.
Plaintiffs Synergies Corp., Nirav Modi Inc., Firestar Diamond International Inc., AVD Trading Inc. and Firestar Group Inc. filed suit in the U.S. District Court for the Western District of Texas at Austin on Feb. 14 alleging that defendant Morrison Foerster not only overbilled but also failed to properly manage the liquidation of the companies.
But the law firm, which has offices in the U.S., Asia and Europe, said it will stand its ground against the complaint.
“The complaint has no merit," a spokesman for the firm told Legal Newsline. "We will be formally responding to the complaint and are confident that our conduct and work on this matter were proper and will be vindicated.”
The plaintiffs, all linked and involved in financial services, decided in early 2018 to wind down the firms.
After retaining another firm that, according to the complaint did no "meaningful work," the owners appointed a Texas-based management team to oversee the winding down of the companies.
Morrison Foerster, also known as MoFo, was retained in late May 2018 to "wind down and dissolve the plaintiffs, liquidate the assets of the plaintiffs and distribute the proceeds to the owners of the companies," the complaint states.
The law firm "promised to execute this work efficiently and promptly, and to keep their clients apprised of the work they were doing," the suit states.
"However, MoFo did none of this," the plaintiffs claim, adding the allegation that the law firm liquidated certain assets at a discount, transferred funds to the client trust account, then spent time on issues unrelated to the liquidation process.
"In the course of two months, MoFo had 34 different timekeepers bill 669 hours at a cost of $484,321.39," the complaint states.
After its services were terminated, the plaintiffs allege the law firm "deducted an additional $53,000 from plaintiffs' funds," though the balance was returned.
"A review of the work done makes it clear that MoFo’s primary concern was actually liquidating claims (at a major discount) so that plaintiffs' funds could be sent to MoFo’s trust account, which could then be used to pay MoFo’s exorbitant bills," according to the complaint.
The plaintiffs allege one negotiation in which MoFo agreed to sell some of the plaintiffs' property to a Miami jeweler, following which $260,000 was wired to the client trust account. The plaintiffs claim the law firm did not consult with them on this deal, and did not provide details on the assets or the sale price.