Monday, December 27, 2010

Schwartz wants to keep money

Richard Schwartz fired more rounds at attorney Philip Thomas and his client Shirley Douglas in U.S. District Court and U.S. Bankruptcy Court recently. Ms. Douglas sued Mr. Schwartz over a $500,000 settlement gone awry. Ms. Douglas suffered injuries in an automobile collision. Mr. Schwartz negotiated a $500,000 settlement with the insurance company on her behalf. However, Ms. Douglas filed Chapter 13 bankruptcy before the settlement took place. Mr. Schwartz hired attorney Vann Leonard to apply to the bankruptcy court for his contract fee of $172,414 and deposit the remainder of the settlement with the bankruptcy court.

The bankruptcy trustee, Ms. Douglas, and Mr. Schwartz all allege Mr. Leonard kept the remaining $327,585 and didn't submit it to the bankruptcy court. The trustee filed suit against Mr. Schwartz and Mr. Leonard in bankruptcy court on November 19, 2010 and Mr. Thomas filed suit against Mr. Schwartz and Mr. Leonard in Hinds County District Circuit Court on October 15, 2010 but the action was removed to U.S. District Court on November 19, 2010.

Mr. Schwartz filed a response to Mr. Thomas's partial motion for summary judgment on December 17. Mr. Schwartz claims no partnership existed between he and Mr. Leonard and thus he should not be responsible for his alleged conversion of her settlement. Mr. Schwartz states the bankruptcy court approved the payment of his fee. Ms. Douglas approved of the use of Mr. Leonard. Mr. Schwartz further asks the court to allow discovery to proceed if there is some question about the nature of the relationship between the two shysters. Mr. Schwartz wants to depose everyone and obtain all records. Mr. Schwartz again states he is entitled to his fee, performed the work required for the fee, and the court approved the payment of his fee.

Mr. Thomas filed a short response on December 23. Mr. Thoma's argument is simple and direct: Leonard "stole" his client's settlement. Schwartz "admitted" he hired Leonard. Schwartz is thus liable for the entire $500,000. Mr. Thomas argues the court should disgorge Mr. Schwartz's fee as the attorney received $172,414 and his client received nothing (Editorial note by KF here: While Mr. Schwartz enjoys his sizable fee, Ms. Douglas has her wages garnished every two weeks.). Mr. Thomas posits no discovery is needed because the material facts are not in dispute. Mr. Thomas however, neglects to mention (and one wonders why) a discovery order was issued in the Bankruptcy court action. Mr. Schwartz is already thus having his discovery albeit in another forum but on the same matter.

Meanwhile, Mr. Schwartz filed a cross-claim (page 12) against Mr. Leonard in bankruptcy court. Mr. Schwartz sued Mr. Leonard for any damages he suffers if Ms. Douglas prevails in her lawsuits against him. Mr. Douglas filed a motion in bankruptcy courtasking the court to take back Mr. Schwartz's fee and deposit it in the bankruptcy estate. Mr. Schwartz responded and said sorry, this same court approved the fee. He also asked the court to stay the lawsuit, claiming the one filed by Mr. Thomas was filed first and the trustee's action is duplicative. One suspects the trustee will argue all the actions should be consolidated. Mr. Leonard filed an answer on December 10. Mr. Leonard just went through the complaint and said "deny", "deny", "deny" or its her fault. Mr. Leonard is represented by attorney Joe Holloman, the King of Plea Bargains. A hearing has been set for January 7, 2010.


Anonymous said...


Anonymous said...

There is obviously something going on here that has not yet surfaced in the pleadings. I cannot imagine an attorney stupid enough to retain money intended for the trustee or to believe that the plaintiff would sit back and do nothing.

Gentile Lawyer said...

It would be news if Schwartz actually stepped up and took responsibility. Through his fraudulent asbestos and phen fen cases, and numerous former clients who've sued him, schwartz's modus operandi is always the same: claim ignorance and blame someone else.

And yet his pathological greed goes unchecked by authorities, while he one call that's all the way to the bank

Anonymous said...

this might be his waterloo; long past due.

Anonymous said...

"Mr. Schwartz claims no partnership existed between he and Mr. Leonard"

It's dangerous to comment on a legal matter w/out having all the facts, but it seems the big question is, whose attorney was Leonard: Schwartz's, or Douglas's?

(And btw, there is no such animal as Hinds County District Court, is there?)

Kingfish said...

Changed. Thanks. It happens.

Anonymous said...

His 'waterloo' will be when those wild ass kids of his that he has never, ever corrected clean him out. Oh, yeah, guess he'll blame that on his wife....

Anonymous said...

Wonder if Ms. Douglas would have had to file bankruptcy had they gotten the settlement in a timely manner? Sounds like she had no chance to negotiate with her creditors. Perhaps, the insurance company wanted to use her financial straits ( or put her in financial straits) to make her more amenable to a reduced settlement.
It seems to me that Schwartz, despite my disdain for him , and aside from the fact the contingency seems an outrageous percentage) is not the culprit ( unless he didn't act in a timely manner on Ms. Douglas' behalf), but Mr. Leonard is, for certain, a scoundrel and the insurance company may well be equally reprehensible.
Something is systemically wrong with the contingency fee system and with the lack of penalties for insurance companies who fail to negotiate in good faith so as to pressure clients to settle. I'm sure the insurance company knew in the first month exactly how much they were liable to pay.

Anonymous said...


not necessarily; i recall again that vxbg atty duggan 20 yrs ago, who associated an atty with spotty ethics who ended up stealing the settmt; duggan was held liable as much as the thief.

Anonymous said...

where is the money? does van leonard still have it? everyone is quick to try to allocate fault....but why not just go get the cash from Van Leonard?

Anonymous said...

8:26- don't know how it could be the wife's fault as Neither of them are raising those wild ass- misdirected - not in the real world kids! The Nannies are!

Anonymous said...

I'm having a little trouble with the reasoning of many of the posts here.

Let me start by saying that I in NO way am a fan of Richard Schwartz (or any of the other scumbag plaintiff lawyers, for that matter). They have, single-handedly, fomented enough litigation to where they have transformed an otherwise noble profession into just an ordinary for-profit business.

That being said, my questions are this: Irrespective of what you think of Schwartz personally, as well as the amount of his contingency fee, I don't understand the reasoning behind Schwartz being responsible for the actions of someone he "hired." ("Hired being the operative word here. Unless I misunderstood the way in which KF used this term, I assume he was hired by Schwartz to perform a service for him.) I could understand liability arising out of Schwartz being in partnership with Leonard or if Leonard had been an actual employee of Schwartz (vicarious liability), but my impression of the current arrangement is that Leonard would be considered to be, at best, an independent contractor.

For example, let's say I paid (hired) an Orthodontist to correct my child's teeth, and let's say that Orthodontist was negligent and made a mess of my child's mouth. Under the reasoning of the posts above, if I were to sue that Orthodontist for negligence, wouldn't I have to include myself as a co-defendant? I mean, wouldn't I also be liable for the actions of the person I hired to perform the work?

Again, I'm not trying to be provocative here. I just get the impression that many of the posters have enough disdain for Schwartz, personally, that they are using that as the reason to want their pound of flesh. I've lived long enough to know there's 2 sides to every story, so someone please explain it to me if I'm wrong.

Sammy said...

Please lighten up on mr. Schwartz. He suffers from severe hypertension already. It's so bad that a nurse has to stop by every afternoon to check his blood pressure.

Curt Crowley said...

323, in your example, no you would not be responsible for your child's damages. However, a lawyer's duties are a little different.

If I am handling a case for a client, and I use another lawyer to perform some of the work, then I am responsible for any acts or omissions by the other lawyer.

Anonymous said...

Oh please. Former VP Cheney had a serious heart condition and that didnt stop liberals from hammering him daily for years. And still doesnt. If Richard S has such bad health, then he needs to retire and get out of the kitchen.

Anonymous said...

Duggins v. Guardianship of Washington, 632 So. 2d 420 (Miss. 1993).

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