Two Law Firms' Teamwork Keys Success

Walter J. Lack and Steven C. Shuman, partners in Engstrom, Lipscomb & Lack, specialists in complex business litigation, joined forces with Robert C. Baker and Daniel P. Leonard, of Baker, Silberberg & Keener, whose trial experience includes representing O.J. Simpson in the civil wrongful death case, to try a complicated business dispute between former business partners. Together they convinced the jury to award their clients a total of $32.4 million; $25.4 million in compensatory damages and $8 million in punitive damages. DeWald and Fitzpatrick v. Knyal, (SC04494).

Initially, Lack and Shuman represented both DeWald and Fitzpatrick on breach of an oral and written partnership agreement. Fitzpatrick, who had a long business and personal relationship with defendant Knyal, was instrumental in developing a novel loan-servicing concept that provided loans to fast food franchisees secured by the assets of the business. Knyal started his own corporation utilizing Fitzpatrick's concept and sought to further develop a commercially feasible loan product. In order to finance his business, Knyal created a limited partnership; DeWald invested $167,000 for a 16.7% interest in the business. Fitzpatrick agreed to go to work for Knyal based an oral promise of one-third of the equity of Knyal's ownership interest in the business.

Subsequently, when the business went public and become extremely profitable, Knyal tried to eliminate the interests of Fitzpatrick and DeWald by claiming no oral promise had been made to Fitzpatrick, and DeWald had signed a release barring his claims. "After the court's rulings on summary judgment motions, it became apparent that the theories of recovery for both plaintiffs and the evidence required would be different," Lack said, so "in order to give each plaintiff maximum potential recovery we thought it advisable to bring in other counsel." Even though there was no actual conflict of interest, Baker and Leonard substituted in as counsel for plaintiff DeWald just several days before trial.

Upon the conclusion of a four-week, highly contentious trial, the jury awarded DeWald "every nickel of what his percentage equated to in dollars and Fitzpatrick received approximately $10 million based upon the oral promise, and $1.5 million in punitive," Baker said.

Going to trial on breach of an oral agreement made Lack "very uneasy because juries are reluctant to award this kind of money without a written document." Shuman concurred, stating "With a relative lack of writings we knew we would have to convince a jury that people do make oral deals for large sums of money." "It affected the way we picked the jury and the people we were looking for," said Lack, so "we examined them extensively about their feelings, regarding conducting business orally and not in writing."

From an evidentiary standpoint, DeWald's case was easier because "he had a partnership agreement, writings from when the company went public, and the Securities and Exchange Commission filings proved to be Knyal's undoing," says Baker, who believed "Knyal tried to swindle him [DeWald] out of his interest in the company." In light of the myriad of transactions, Lack says, "it was a constant struggle to keep it simple." The central theme was one of credibility: "Do you believe our story or their story?" Lack said. "The jury didn't believe Knyal, they lost big time," Baker said.

Counsel for both plaintiffs agreed that the key to their success was calling Knyal as their first, albeit hostile, witness. "He [Knyal] had a meltdown on the stand, he admitted to at least three lies in his testimony, and he didn't even realize he was playing right into our hand," Lack said. The team agreed not to call any experts at trial. Their decision was based on "our belief that our clients were the best spokespersons for their case - they were truly experts in their field and knew their story better than anyone," Lack explained. Furthermore, "an expert might have conceded some point on cross-examination which the clients would never have conceded on the stand, so why undermine the clients' testimony?"

Although their backgrounds and trial experience are diverse, the two firms share a common thread. They both started and developed as insurance defense firms until 1990s,when they switched sides and began representing primarily plaintiffs. Engstrom, Lipscomb & Lack, which had only five lawyers when Shuman joined in 1976, "made a conscious decision to stop doing insurance defense with a few exceptions. The shift came as a result of our perceiving that opportunities for growth were on the plaintiffs side." The now-30-lawyer firm handles plaintiffs' mass toxic torts, insurance bad faith, catastrophic personal injury and wrongful death, aviation, and tobacco litigation, says Shuman. Shuman, who has been with the firm his entire career, attributes the firm's success to Lack's willingness to delegate responsibility, which enables lawyers to grow and develop.

Lack, who handles the gamut of complex litigation, says: "Part of the magic of doing this for a living is you sit back and imagine what you would need to hear to make up your mind - you have to put all the technical information out of your head." One of his accomplishments was representing an insurance carrier in a legal malpractice action against the law firm it had hired to represent its insured in a personal injury action. The law firm had failed to raise the affirmative defense to workers' compensation and the right to a set off. In the legal malpractice action, the trial court granted defendant law firm's motion for non-suit on the grounds there was no direct contractual privity between the insurer and the law firm. In Unigard Ins. Group v. O'Flaherty & Belgum 38 Cal.App 4^th 1229 (1995), the Court of Appeal reversed, and held for the first time in California that an insurance company can sue counsel it hires to defend its insured for legal malpractice, provided there is no coverage dispute and no conflict of interest, based upon the dual attorney-client relationship with both insurer and insured.

Charles G. Bakaly Jr., senior partner of Bakaly & Davies who has had several mediations with Lack, thinks Lack "is an outstanding trial lawyer. He's very good with juries. He is very practical. he makes realistic evaluations of his cases. And if he feels that settlement is appropriate, he does that if it's in the best interests of his client." Retired Court of Appeal Justice Edward Panelli, who mediates cases for JAMS in Los Angeles and San Jose and had mediated four cases with Lack, recalls that in one of the cases "there was an opportunity to settle for $150,000, it didn't settle and Lack got $17 million. He's obviously a very skilled lawyer-he's driven, very intense, and is really focused, almost like a fighter preparing for a fight. His drive and focus are probably what make him successful, but it's sometimes difficult to persuade him that there may be issues he hasn't seen. He's like a bulldog. It's difficult to get him to change his position because he's very confident and well prepared."

Baker, whose practice consists of business litigation on behalf of both plaintiff and defendant, toxic torts, medical malpractice defense, wrongful termination and catastrophic personal injury cases, first worked with Daniel P. Leonard during the O.J. Simpson civil trial. Leonard, then a partner with F. Lee Bailey of Bailey, Fishman & Leonard of Boston, had tried business disputes, product liability, medical malpractice, a civil murder and fraud cases all across the country. In 1984, Leonard and Bailey successfully defended the prime minister of the Bahamas in a Royal Commission of Inquiry, which accused the official of assisting Columbia drug dealers in transshipping drugs from the Bahamas into the United States. The prime minister was found not guilty, Leonard recalls.

During the O.J. Simpson civil trial, Leonard says he and Baker "developed a close relationship and were professionally compatible." With Leonard's experience representing plaintiffs, and the firm's resources, the two believed it was a good idea for Baker, Silberberg & Keener to do more plaintiff' work, including personal injury, business litigation and employment litigation. They agreed that Leonard would be in charge of the plaintiffs' cases and Leonard joined the firm as, Of Counsel in January 1998. "The majority of our plaintiffs' cases come from attorney referrals based on relationships I've developed over the years," says Leonard, who has tried cases in 35 states "pro hac vice." Leonard describes Baker as "an extremely skilled trial attorney who has the resources to prosecute these cases, which can involve thousands of man hours and tens of thousands of dollars in costs."

Baker, Silberberg believes in the team approach to all of its cases, with the larger exposure cases being tried by two attorneys. "Our working philosophy is we go after the other side with both hands and both feet-we feel we're good at trying cases, and we're not afraid to try cases," says Leonard. As for all the publicity in the O.J. Simpson case, Baker and Leonard made an effort to remain as professional as possible, refraining from talking to the press and making appearances on TV, Baker said. Leonard believes "in some respects it demeans the profession and legal arguments should be kept within the four walls of the courtroom." Although he has offers to become a commentator, Leonard says, "I'm not ready for that. I want to continue to be a lawyer, not an entertainer."

Baker says, "There are a lot of good plaintiff's firms out there, and we're one of them-we are known in the community for trying big lawsuits, we are a formidable adversary, and we don't take bad cases. Because of our reputation we can settle cases others can't."

Plaintiffs' lawyer Thomas V. Girardi, senior partner of Girardi and Keese, has high praise for Baker and Lack and their recent victory in the DeWald case. "It appears that there's good reason why both Robert Baker and Walter Lack are in the International Academy of Trial Lawyers, which is limited to the top 500 lawyers in the world, because they truly are terrific. As a matter of fact, if the organization were limited to two, they would probably be the two in it. I've never seen two lawyers who could cross-examine like Bob Baker and Walter Lack. Indeed, apparently it definitely showed in the DeWald case. They are so good. ... The two of them should not be allowed to try a case together." ----Mary Rahmes