Firm that took Conour cases ordered to pay creditor $774K

Dave Stafford for www.theindianalawyer.com

A law firm that took over personal-injury cases as attorney William Conour’s practice was unraveling before his fraud conviction must pay a Conour creditor almost $775,000, a federal judge ruled.

Judge Tanya Walton Pratt of the U.S. District Court for the Southern District of Indiana, Indianapolis Division, this week ordered Ladendorf Law P.C. to pay fees to ACF 2006 Corp. from 11 cases in which the firm won settlements for former Conour clients. ACF had extended a line of credit on which the defunct Conour firm defaulted.

“(T)he Court finds that, based upon the quantum meruit division of the attorney’s fees and expenses in the Subject Cases, ACF is entitled to a judgment in that amount of $774,797.28, which constitutes the amount of fees and expenses to which the Conour Firm would have been entitled to under Indiana law,” Pratt wrote.

Timothy Devereux of Ladendorf Law said the firm plans to appeal the ruling in ACF 2006 Corp. v. Conour, 1:13-cv-01286. Devereux was lead plaintiff’s counsel in each of the cases that began while he practiced at the Conour firm and continued when clients followed him when he left for Ladendorf.

Pratt’s ruling “is simply not supported by the great weight of the evidence,” Devereux said in an interview. “The evidence is overwhelming about the amount of work that was done at the Ladendorf firm” compared to that done at the Conour firm.

“We feel very confident that if we were to appeal this – and we fully intend to – the evidence will support our position,” he said.

“The thing that frustrates us the most is that the principal Mr. Conour owed to (ACF predecessor) Advocate Capital was roughly $400,000, and he owes more than $300,000 in interest,” Devereux said. “We are being asked to pay interest that incurred through Mr. Conour’s nonpayment of a debt.”

Devereux said Ladendorf certainly owes something that would have been paid in fees to the Conour firm, and thus to ACF to satisfy a portion of the debt, but he said it’s nowhere near the amount the court ordered. He said the court misapplied quantum meruit analyses in determining the percentages of work done in several cases at the Conour firm, and also improperly ordered pre-judgment interest be paid on funds held in the firm’s IOLTA account.

“We want to make sure we don’t have to pay an unfair amount,” Devereux said.

An attorney for ACF at Nashville, Tennessee-based Bradley Arant Boult Cummings LLP did not immediately return a message seeking comment Wednesday.

The judgment is the largest civil award to date in the fallout from Conour’s conviction on a wire fraud charge for defrauding about 35 clients of nearly $7 million. Conour, 68, stole settlement proceeds he negotiated for clients and used their money to finance his lavish lifestyle. He’s serving a 10-year sentence in the Morgantown, West Virginia, Federal Correctional Institution and is under a court order to make restitution to his victims.

But that restitution order in Conour’s criminal case didn’t cover creditors such as ACF, which had extended Conour’s firm operating loans that secured an interest in collateral including revenue from fees on future personal injury suits. The loans became due in January 2012 – three months before federal authorities charged Conour with fraud. Conour defaulted.

“As of the date of the March 9, 2015 bench trial, ACF calculated the total amount of indebtedness owed by Mr. Conour and the Conour Firm to be approximately $750,000,” Pratt wrote.

A month before the loans became due, Devereux terminated his employment at the Conour firm and went to work at Ladendorf, and clients in 21 contingency-fee cases followed him, according to the record. Only six of the cases were resolved without recovery, and ACF waived its claims on four cases, leaving 11 from which Pratt ordered fees be paid to ACF.

Pratt’s order summarizes the nature of each case, settlement amount and attorney fees. The cases yielded total settlements of just over $6.45 million and attorney fees of about $2.55 million. In aggregate, the court concluded that about 30 percent of attorney fees from these cases were owed to the Conour firm for ACF’s benefit.

The order makes determinations in each case of the percentage of work that could be allocated to the Conour firm and the Ladendorf firm. Devereux said some of these were reasonably decided, but others weren’t.

Meanwhile, Pratt also wrote in the order that several fee arrangements in the cases appeared to violate Rule 1.5 of the Indiana Rules of Professional Conduct, because various parties agreed to a straight-percentage fee-sharing split on cases that had been referred to the Conour firm.

ACF initially named Indianapolis firm Cohen & Malad LLP as a defendant in the suit, but the firm was dismissed.

Several of Conour’s victims also attempted to intervene in the suit in an effort to obtain some form of compensation, but the court rejected those motions. Victims also have no claim against Conour’s former legal malpractice carrier, which last year won recession of coverage.