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Court Trims Ex-Halliburton Lawyer's Look at Company's Legal Bills

Houston's 1st Court of Appeals has allowed a Louisiana lawyer a rare and detailed look at the outside counsel legal-defense costs paid by of one of Texas' biggest companies, Halliburton Energy Services Inc. The decision comes as part of a breach of contract suit the lawyer filed against the oil-field services giant.

Tony Buzbee, the Houston lawyer representing the Louisiana attorney in that breach of contract case, also represents thousands of other plaintiffs who have sued Halliburton Energy Services Inc. over the April 20, 2010, explosion of the Deepwater Horizon, which killed 11 workers and resulted in a massive oil spill from an undersea well off the Louisiana coast. And Buzbee, of The Buzbee Law Firm, will get a peek at how much the corporation spends on legal defense costs, too, he says.

The background is as follows,according to the 1st Court's Oct. 4 decision, In Re Halliburton Energy Services Inc. : Charles Lane worked in Halliburton Energy Services Inc.'s (HESI) legal department in New Orleans from 1980 until 2007, when HESI decided to close that office. Shortly before that office was closed, Lane alleges he met with Jim Bullock, then a HESI senior vice president and assistant general counsel, who informed him that HESI wanted to continue to use his legal services.

Bullock and Lane allegedly reached an oral agreement in which Lane promised to: partner with another experienced attorney; hire two associates so they could meet HESI's legal needs; open a legal office in New Orleans; lease the space of HESI's legal department; and handle all of HESI's "offshore cases, personal injury cases, worker's compensation cases, and routine legal matters." Lane also alleges Bullock promised him that HESI's "book of business" would be worth $1.4 to $2 million per year and that HESI "guaranteed that [Lane] would not experience a loss of income."

Lane formed Kraft Gatz Lane Benjamin (KGLB) and began handling cases for HESI. But after Bullock left HESI, the number of cases the company sent Lane "systematically began to decrease, both in volume and value." Lane also alleges that numerous cases that HESI had agreed to assign to Lane were assigned to other law firms.

Lane eventually filed Charles R. Lane v. Halliburton Energy Services Inc. on April 19, 2010, in Harris County, alleging breach of contract and fraud, among other things. In his original petition, Lane seeks damages "of sufficient amount to compensate [him] for [HESI's] wrongful conduct, including reliance and benefit-of-the-bargain damages."

In its May 24, 2010, original answer, HESI denied that any contract was made with Lane and also asserted that Lane's claims were barred by the Statute of Frauds. HESI also filed a counterclaim against Lane, claiming that "HESI provided certain confidential and privileged information to Lane," Lane "owed a fiduciary duty to HESI" and he "released confidential information" in the process of prosecuting his claims against HESI — allegations Lane denies in a response.

The 1st Court's opinion notes that, in Lane's first set of requests for production, herequested documents showing the cost of legal work "including both litigation and non-litigation matters, being sent to outside counsel or other law firms in the Louisiana and Gulf of Mexico regions for the past five years."

HESI objected to the request as overly broad and unduly burdensome.

Lane next requested "any and all" documents showing fees paid to any law firm, other than KGLB, for legal matters in Louisiana and the Gulf of Mexico region since July 1, 2007. HESI again objected to producing information "unrelated to the type of cases [Lane] claims were to be handled by him" — HESI's offshore, personal injury, worker's compensation and routine legal cases for Louisiana and the Gulf of Mexico region.

Lane moved to compel the production of documents, arguing they are "clearly relevant" to his claims, because he is "seeking compensatory damages equivalent to the benefit of his bargain under the agreement, which would include attorneys' fees for [HESI's] legal matters originating in Louisiana and the Gulf of Mexico region during the relevant time period."

During a motion-to-compel hearing, Judge Mike Engelhart of the 151st District Court told HESI that he was "probably going to give [Lane] most of the [requested] discovery just because I think it needs to be — it's based on the pleadings, as opposed to the merits of the claim." Engelhart urged the parties to meet and see if they could reach an agreement on what documents to produce.

When the parties were unable to come to a resolution, Lane informed Engelhart that he had narrowed his discovery request to "documents that show outside counsel fee information for matters related to offshore, longshoremen, automobile accident, and blowout claims originating in Louisiana and the Gulf of Mexico Region since July 1, 2007 to present" and requested that the court rule on the motion to compel.

On April 13, 2011, Engelhart ruled that HESI "shall produce all documents evidencing fees paid by [HESI] to outside law firms for legal matters originating in Louisiana and the Gulf of Mexico region since July 1, 2007 and through the trial of this case." HESI then filed a petition for writ of mandamus with the 1st Court.

HESI argued that Engelhart erred in granting the motion, arguingspecifically that the discovery compelled by the trial court was overbroad and permitted Lane to go on a "fishing expedition" and included documents beyond the "offshore cases, personal injury cases, worker's compensation cases and routine legal matters" pleaded by Lane, according to the opinion.

In its decision, the 1st Court agreed with HESI that the trial court's order was overbroad.

"The discovery ordered by the trial court was much broader even than Lane's original discovery request, as the trial court compelled production of 'all documents evidencing fees paid by [HESI] to outside law firms . . . .' " wrote Justice Evelyn Keyes, in an opinion joined by Justices Laura Carter Higley and Michael Massengale.

"We conditionally grant the petition for writ of mandamus and direct the trial court to amend its discovery order to the extent that it required HESI to produce broader discovery than that requested by Lane," Keyes wrote. [See the court's opinion in In Re Halliburton Energy Services Inc.]

Martin Siegel, a Houston appellate solo who represents Lane on appeal, is pleased with the ruling.

"We got what we wanted," Siegel says. "We never wanted more than what the court of appeals said we were going to get."

Lane, who became a New Orleans solo after Kraft Gatz Lane Benjamin closed, declines comment.

Bullock, who is now retired from the practice of law, says, "I gave a 200-page deposition, and beyond that, I don't want to risk saying anything that would prejudice anybody's position. Frankly, I wish I wasn't involved."

Shawn McCaskill, a shareholder in Dallas' Godwin Ronquillo who represents HESI on appeal,declines comment.

Unusual Position

Buzbee, who represents Lane in the trial court, says his client's discovery request puts him in an unusual position. Buzbee filed the case on Lane's behalf a day before the explosion of the Deepwater Horizon. He later began representing scores of plaintiffs who are pursuing damage claims against HESI in U.S. District Courts.

"I have thousands of cases from the Deepwater Horizon explosion where Halliburton is a defendant. One of the issues was, I have other litigation against Halliburton. And for this particular client, I need their defense fees, so I can prove my damages," Buzbee says.

Buzbee says he and Lane became acquainted when Lane still worked for HESI, because he often filed suits against Lane's former employer. They had never met in person before Lane called him to retain him for Lane's suit against HESI.

"The deal is that Mr. Lane's contract with Halliburton would have mandated them to hire Mr. Lane to defend them in that blowout. And, of course, at the same time the lawyer representing Mr. Lane is representing other clients in thousands of cases resulting from that blowout," says Buzbee.

"Long story short, both the judge and the appeals court said that I'm entitled to that information" in the motion to compel, Buzbee says. "And I won't share it with anyone else, and it will simply be used to prove my case."

 

John Council
Texas Lawyer
October 17, 2011