Law firm could get $3 million in coal case

Law firm could get $3 million in coal case

A Wheeling law firm that represented two sisters in a case of an invalid coal mining lease could end up reaping more than $3 million from the case following a decision by the state Supreme Court.

That’s about three times what Josephine Luther and the heirs of the late Mary Catherine Marks believes the Schrader Byrd and Companion firm is entitled to, according to their petition asking the court to reconsider their decision.

“At the heart of the instant case is the public’s confidence and trust in the legal profession and its ability to regulate itself,” the petition says.

“This appeal calls for lawyers to stand in the shoes of their clients when they propose, write and interpret fee agreements; otherwise, they will stand accused of being the proverbial ‘fox guarding the hen house.’”

The sisters argue they didn’t understand the terms of the fee agreement they had with the law firm. Based on settled law, they should have gotten the lion’s share of consideration by the court for that reason, they contend.

Their petition says the court should have considered whether the agreement was written and explained plainly enough for the sisters, two older housewives, to understand what they were agreeing to back in 1988.

The firm had done work for the sisters on a nearly 40-year-old lease they had with two companies that mined coal from their Boone County property.

The sisters said they’d been cheated by at least one of their brothers, who owned quarter-interests in the property. They said the brother signed them up without their consent and shortchanged them on coal royalty payments.

The firm received $1.05 million from the sisters after helping them win a $3.5 million settlement with Laxare Inc. and Cannelton Industries coal companies in 1998.

But the firm later said it was entitled to 30 percent of the settlement and the future royalties on coal mined from the land after negotiating a new lease for the sisters.

The clients say they believe the fee agreement only pertained to the lump sum settlement they received from the coal companies for damages.

In addition to the cut of the settlement, the clients maintain the law firm could stand to earn more than $2 million more in prior fees and estimated future coal royalties.

The petition says the firm already has received $292,665 in royalties and stands to make $1.6 million more based on a study of how much coal lies under the sisters’ land.

Ohio County Circuit Judge Martin Gaughan ruled that the firm’s fee arrangement, including the coal royalties, was reasonable. The Supreme Court, in a 3-2 decision last month, agreed.

Justices Spike Maynard and Brent Benjamin dissented. In his dissenting opinion, Maynard said the decision sets a bad precedent because it entangles lawyers in their clients’ business affairs.

He said the court should not encourage the kind of payment arrangement involved in the case because it damages the legal profession.

“May we never see the day when lawyers who negotiate leases on behalf of Wal-Mart receive compensation in the form of five percent of the store’s future earnings,” Maynard wrote.

Benjamin has not yet filed his dissent.

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