Boies Schiller, Kasowitz Fight Over Billionaire’s Unpaid Bill

Law firms Boies Schiller Flexner and Kasowitz Benson Torres are wrangling over nearly $1 million in fees—and how it affects the legal situation of Canadian billionaire Alex Shnaider, who’s refusing to pay them.

Boies Schiller is trying to collect a nearly seven-figure sum from the owner of metals trader and distributor Midland Resources Holding Ltd. Kasowitz claims its rival is wrongly withholding the industrialist’s legal files that are connected to another case it is handling for him that is heading to trial.

The fee dispute “could be resolved at any moment by Mr. Shnaider paying” up, Boies Schiller said in a filing this week in New York state court.

“Irrespective of the merits of any claim BSF (Boies) may have to unpaid legal fees, withholding discovery on the eve of trial will grievously harm BSF’s own former client,” the Kasowitz firm told the court in a separate filing last week.

Boies Schiller says Kasowitz has changed its position in the past year, and is not acquiescing to any demand from it to return the files.

Kasowitz did not respond to a request for comment.

Judge Debra James has scheduled a hearing for Oct. 29.

The squabble offers a glimpse into the sometimes fraught lawyer-client and law firm relationships.

Tussle With Former Partner

Shnaider is in a legal tug of war with a former partner in a business reselling private jets.

Shnaider, who recently dropped Boies Schiller in the matter, stopped paying invoices in full for the better part of a year and let his firm tab hit approximately $870,000, according to Boies Schiller’s court filing Tuesday, which was a response to a show cause order.

Boies Schiller placed a lien on Shnaider’s legal file in the case, which means it refuses to release the material until it gets paid.

Stance Questioned

Kasowitz argues Boies Schiller has no right to hold onto a former client’s legal files.

Kasowitz lawyer Michael Bowen asked the state court judge last week to order the legal files returned to assure that Shnaider is ready for a separate federal trial connected to the dispute that is scheduled in begin in December.

That was not Kasowitz’s stance as recently as last year in another matter, Boies partner Nicholas A. Gravante, Jr. told Bloomberg Law.

Last year, when Boies Schiller took over a different case—one that involved a window wall systems supplier for real estate projects—from Kasowitz, that firm declined to hand over client documents until it had received payment for $2.4 million in accumulated legal fees.

“That’s certainly a different story than the one they are telling now,” said Gravante. “We did not get the files until that client arrived at Kasowitz’s offices with a check in hand.”

Boies Schiller told Judge James that Shnaider never complained about the firm’s work quality and is acting “solely to get BSF’s files without paying the firm and circumvent his obligation to pay the fees he owes.”

Boies Schiller said that “the ability to retain the files as security for payment is critical here” since Shnaider maintains he is not a U.S. resident, and is not subject to the jurisdiction of American courts.

Shnaider was accused in a federal case of violating agreements with a former business partner, Eduard Slinin, to buy jets from Bombardier Inc., then later resell them at a profit to Slinin’s contacts in Russia and elsewhere.

Document Details

Slinin sued in February 2015 and Boies Schiller was hired to defend Shnaider, who lives in Ontario. But after disagreement arose over legal fees, a judge approved the firm’s request in September to withdraw from his representation.

The new set of legal documents detail the payment dispute and arrangements. Shnaider originally had agreed to pay an hourly rate of between $400 and $1,200 along with reasonable expenses.

The accumulation of unpaid legal fees, which ran over $200,000 some months, and expenses – and 9 percent interest – wound up with Shnaider owing the firm nearly $1 million.

The judge earlier encouraged the parties to reach a settlement and Boies Schiller urged that the overdue legal fees be placed in an escrow fund pending the outcome. But Shnaider did not agree.

“I’m waiting for any offer—other than a demand for the files,” Gravante said.