Saturday, January 29, 2005

Parker v. McCaw (Cal. Ct. App. - January 29, 2004)

As I read this case, I was hoping that the lesson would be: "Dude, don't sleep with your clients." But the actual lesson is: "Dude, sleep with your clients!"

Okay, so it's actually a little more complicated than that. But not much! Gregory Parker is an attorney with a small firm in Santa Barbara (now called Seed Mackall) when he meets Wendy McCaw -- who's in the midst of divorcing Craig McCaw, of McCaw Cellular -- as she's buying a beachfront home in Santa Barbara. Wendy gets $500 million in the divorce, and Greg and Wendy, uh, "expand their relationship. " McCaw hires her stud not only as her attorney, but also as the COO of her various businesses. Then, a couple years later, Wendy makes Greg the President of the company, paying him $700,000 a year plus a boatload of option. Not bad for a small-firm Santa Barbara lawyer, eh?

About the same time that Greg inks the deal with Wendy for the options, Greg and Wendy split up. The value of Greg's options skyrocket, and eight months later, Wendy ain't so sure that her studboy's really worth all that moohlah. So she cans him. He asks for his severance pay under the agreement ($1.4 million) and his options, but Wendy says no. So he sues. And wins an arbitration award for $11.25 million. Not bad. Not bad at all.

Okay, Justice Gilbert vacates the award, so Greg doesn't actually get his payday -- at least yet, anyway. That's because Greg's lawyers, in my opinion, got bamboozled. One of the agreements that he's suing under says that disputes are to be decided by one arbitrator, whereas the other says that disputes are to be decided by three. The cases get consolidated, Wendy's lawyers ask for a three-arbitrator panel, but the trial court orders that they be conducted before only one. Greg lets it go -- and Wendy has preserved her objection by asking for a three-judge panel in the first place -- and the Court of Appeal holds that it should have been three rather than one. So the arbitration award in Greg's favor gets vacated.

Still, don't worry about Greg. Even if the Cal Supremes don't step in -- and I doubt they will -- Greg will still get another chance before a three-arbitrator panel. Given what the first arbitrator said about Wendy (let's just say: "not nice things"), that's presumably worth a fair bundle -- at least a hefty portion of the original $11.25 million award. Plus, if things go south, my sense is that Greg's may well have a pretty good malpractice claim against his first set of lawyers for messing up on the one/three arbitrator thing. (No idea if Greg's lawyers on appeal were associated with the arbitration, but they are Peter Bezek and Herb Fox.) So Greg's still sitting fairly pretty.

Speaking of pretty, if you want to know what it takes to get a $500 million babe in SB, take a look at Greg's picture, here. You be the judge. (Or perhaps, appropriately enough, assemble a three-judge panel.)

P.S. - What's with all these extensions -- even after "No further extension!" orders -- to Greg's appellate lawyers, including their withdrawal of the brief they initially filed (after all those extensions!)? Yikes.