Baker & Hostetler LLP failed to advise a software company about problems with a securities purchase agreement and engaged in unethical and excessive billing, a lawsuit filed in California state court alleges.
Verb Technology Co. Inc. told Los Angeles Superior Court on Monday that Baker Hostetler served as legal counsel when it reached a securities purchase agreement governing the sale of company stock in 2019.
The firm reviewed and revised the agreement. It also advised Verb on the terms of the agreement but failed to advise it that a provision requiring the company to give notice to stock holders before closing on subsequent financing, the complaint says.
According to Verb, that provision made it impossible for Verb to make common securities transactions and caused it to incur significant costs when it subsequently entered into an overnight marketed public offering, and the value of its owned stock decreased.
Verb also alleges Baker Hostetler’s unethical billing including block billing and standardized time entries. The firm failed to provide timely invoices, and sometimes listed services up to six months after they were allegedly performed. It billed for significant amounts above agreed sums, and its fees were excessive, redundant, unnecessary, and unauthorized, the complaint says.
According to the complaint, Baker Hostetler charged $134,000 for a simple litigation matter, in which Verb’s total exposure was $200,000, that settled for $30,000 without significant assistance from the firm.
In another instance, the firm billed $40,000 for an attorney’s unauthorized travel from California to New York for a meeting with Verb’s underwriter, which could have been done over the phone, the complaint says.
Causes of Action: Legal malpractice; breach of fiduciary duty; breach of contract; Business & Professions Code.
Relief: Compensatory damages; punitive damages; declaratory relief; attorneys’ fees; costs.
Response: Baker Hostetler didn’t immediately respond to Bloomberg Law’s request for comment.
Attorneys: Daniel Sterrett of Woodland Hills, Calif., represents Verb.
The case is Verb Tech. Co. Inc. v. Baker & Hostetler LLP, Cal. Super. Ct., No. 21stcv18387, 5/17/21.
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