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John A. Streby Attorney at Law
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Writings and Articles by Mr. Streby

  1. 1. The Price of a Soul

“The Price of a Soul”
by John Streby
Recipient, Honorable Mention
2015 Michigan Bar Journal Short Story Competition


Dean Jeffreys, a 64-year-old partner with Marriner, Norgren, Abbey & Crane, calmly guided his Chrysler 300 through the heavy morning traffic on I-75. En route to one of the most important client meetings of a storied career, Jeffreys was joined by a fellow partner and a junior associate. Their client was Mark Borgstrom, counsel for the Millwrights Local 136 Pension Fund and the mastermind behind a $60,000,000 settlement he negotiated in a federal court lawsuit alleging malpractice against the fund’s financial advisors. The fund trustees agreed in advance to pay Borgstrom and his firm one third of any recovery, but four fund participants mounted an 11th-hour challenge to that fee, triggering a round of satellite litigation lasting longer than the original case. Despite Jeffreys’ take-charge optimism and his firm’s bench strength, he was dismayed by his client’s stubborn refusal to negotiate. Through it all, Borgstrom insisted that Judge Harrigan would ultimately uphold his $19,589,275.30 fee, a gamble that yesterday’s written ruling soundly vindicated. Notwithstanding such cause for celebration, the mood in Jeffreys’ car was somber, as the three lawyers girded for a fight.

Jeffreys reflected on his career. Neither borne nor having married into wealth, he clawed his way into the University of Michigan Law School with outstanding grades, a high LSAT score, and a stellar community service record. After graduating, he was hired by Albert Marriner, the brilliant megalomaniac who’d developed a three-man firm into a major regional presence.
Declining all invitations from other firms, Dean remained with Marriner & Co. for the duration, while building an incredible resumé. A perennial Super Lawyer™, he was in demand as a facilitator, mediator and arbitrator in high-stakes cases. Jeffreys helped procure the appointments of three state judges, sidetracked two more, and was a moving force behind several presidential nominations. His presidency of the State Bar of Michigan further enhanced his prestige—and the size of his Rolodex™. His standing was evident when he first appeared on the Borgstrom case in federal court before Judge Peter Harrigan, whose nomination he had supported. “What a privilege it is to have you here today, Mr. Jeffreys,” offered Harrigan, in contrast to the perfunctory greeting afforded his opponent, Charles Meinert, made all the more noticeable when he pronounced his name “Meanert.”

Jeffreys viewed the fee challenge as potentially the opening salvo of a mass movement to destroy the percentage system. Once the case is over, it’s easy to complain that a fee is too high, he mused. But clients never offer to pay more after their blunders damage the value of a case. And we don’t need social engineering by judges and juries who begrudge lawyers’ earnings.
The company line at Borgstrom’s firm was that Meinert and his clients were jealous interlopers, even though any reduction of the huge fee would go back to the fund, rather than the plaintiffs individually. Their objections rested on provisions in the Employee Retirement Income Security Act ERISA for short—aimed at protecting pension funds from overly generous dealings with such service providers as contractors, accountants, actuaries—and attorneys. The statutory scheme included fee-shifting authority that Meinert hoped would pay him handsomely if the court upheld his objections. Meinert recruited two well-credentialed expert witnesses who supported his theories of the case. But Jeffreys, supported by his own team of experts, shrewdly focused on the one pivotal question that an inexperienced judge such as Harrigan might embrace:

What is unreasonable about a fee of $19,589,756.30 when the recovery, after three years of litigation, is $60,000,000? Given that personal injury lawyers across the country had firmly established the 33.33% benchmark, that premise held visceral appeal. Judge Harrigan’s opinion focused largely on the trustees’ assent and the risks assumed by Borgstrom, while failing to cite a single word of expert testimony, and largely skirting the ethics issues raised by Meinert. Now, Jeffreys realized that his framing of the issues with stark simplicity—effective though it was in the trial court—yielded a ruling that might not travel well.

* * *

After a spirited round of handshakes and congratulations played out, Jeffreys got down to business. He proceeded with a structured, unemotional analysis of Judge Harrigan’s 37-page opinion. “Flaws and all, the ruling is defensible, but it won’t be any slam dunk. And if Meinert persuades the 6th Circuit that Harrigan shouldn’t have struck the jury demand, we’re looking at a whole new trial with six jurors who might just think you’re being rather greedy, to be blunt about it.” Clearly, Mark Borgstrom didn’t like what he was hearing, and continued pacing the floor of his firm’s well-tailored conference room to dissipate his manic energy while Jeffreys and the rest listened. “We fought too damn hard for this victory to let some appeals court in Cincinnati steal it away, ” he righteously proclaimed.

“Mark, that’s a chance we took when we . . . when you opted for trial,” replied Jeffreys. “Meinert’s crew took a real pasting, so an appeal is guaranteed. Frankly, a good appellate lawyer could cut Harrigan’s simplistic analysis into shreds in his sleep! We went for broke with Harrigan and didn’t concede a thing, but if the case was tried like that to a jury, those six good citizens would haul us upside down. ” “And if my Aunt Matilda had testicles, she’d be my Uncle Matt,” Borgstrom responded, still in motion. “Don’t get hung up on what-ifs and maybes. We got the jury demand stricken, thanks to your diligent work. I didn’t build this firm from an old farmhouse to what it is today by playing giveaway litigation!” “Mark, you’re making me nervous. Would you please sit down?” Borgstrom demonstratively pulled the leather executive chair back several feet from the marble-inlaid conference tablebefore he complied. “We don’t play giveaway either; that’s why you hired us,” Dean explained. “We all hoped for an airtight opinion that knocked Meinert’s arguments down like dominoes, but we didn’t get it, and just two judges on the Court of Appeals could take our win away. Candidly, I doubt that Harrigan really understood the case—there were a lot of issues he barely addressed.” “That’s why we need strong ammunition like sanctions to motivate Meinert to fold,” Borgstrom shot back. “Mark, we hashed that out at the start. Rule 11 requires a motion right out of the chute. We agreed it was a long shot and might antagonize Harrigan.” “That was then, this is now,” Borgstrom began. “I know you don’t like being second-guessed by corporate counsel, but with $19,000,000 at stake, I’ll take advice wherever I can get it. What about Section 1927?” Borgstrom was referring to 1928 U.S.C. §1927, an 1813 statute that allowed a court to shift attorney fees to opposing counsel who “multiplies the proceedings…. vexatiously.” Jeffreys drew a deep breath. “We’ve talked about that every few months since the start, and I’ve said this over and over: We pitched just as many hardballs as they did!” Borgstrom had been fidgeting in his chair, and alighted to speak. “I know all that! All I want is for them to walk away! There’s two million reasons for Meinert and his partners to fold, cause that’s what they’ve cost me, and Harrigan might hit them for a big piece of that!” Jeffreys struggled to contain his frustration. “If you’re going to stand, me too. Two million includes what you’ve owed us since the end of the trial. Since you bring it up, we’ve got some

real concerns about our invoices going unpaid. We’re carrying over $500,000 on our books, and Al Marriner’s been on my tail for months.” “Dean, what with all the hours we’ve spent meeting with your people, answering interrogatories, attending depositions, then three weeks in trial —our cash flow is in the toilet! If Meinert appeals, he’ll move for a stay of disbursement, and if Harrigan agrees, we’ll be running on fumes for another two years! If that happens, Chapter 11 may be our only option! Bankruptcy counsel tells me that if we land there, the payment to you would be a voidable preference, so you’d have to cough it back to the trustee. I hate to sound like some horse trader, but I doubt that
you’d be eager to pay a $500,000 refund.” Voidable preference─a term of art in bankruptcy practice that denoted a significant payment made on the eve of filing, usually to an insider or favored creditor, and repugnant to the goal of equal treatment of all creditors.
Jeffreys scowled. “Don’t forget that you signed a personal guarantee, Mark.” “Yes, but I haven’t drawn a salary in some time, and my assets are all joint with my wife, or in various trusts,” Borgstrom replied. “All this talk about Chapter 11 and fee disgorgement—I don’t like the tone of the conversation, Mark. Before I signed on, you assured me that you could afford $350 an hour even if Harrigan cut the $19,000,000 down to nothing. Now you’re crying poverty, and considering that you just
returned from a trip to Ireland, according to your secretary…” A slow shake of the head completed the sentence.
“When we get paid, Dean, you’ll get paid, too, as soon as the 10-day hold on disbursement from the court escrow account runs out—unless Meinert gets a stay from Harrigan or the 6th Circuit. Then we’re in the same boat!” “Like Hell we are,” said Jeffreys, straining to hold his temper. “An hourly fee means just that—we get paid win, lose or draw!” Borgstrom sought to quell the tension. “This is nothing personal against you, or your firm, or the work you’ve done. We couldn’t have won without you.”
Jeffreys wasn’t buying. “Call it what you like, but it’s personal to me.” Tempted to use theatrics to reassert control, he paused, recalling what he’d learned in anger management class.
Borgstrom resumed his pitch. “Let me cut to the chase. I’m so sure this’ll work that I’ll write a check right now for your last invoice, and as soon as the motion is filed, I’ll sign it.” The litigator’s jaw was clenched. “I don’t like this, Mark

“Just hear me out, Dean. Meinert’s a good lawyer, but he’s used to playing with other peoples’ money. With his own assets at risk, he’ll fold! Harrigan could snatch a figure out of the air that’ll bankrupt him! Even ten percent of $2,000,000 is still a ton of money, and if he appeals, we can tie up his assets! Let him feel what it’s been like for me the last four years!”
Jeffreys drew a deep breath. “And maybe Charley will shove some of your own medicine down your throat! Back at the start, he and I made a gentlemans’ agreement not to litigate this case in the media. You go after sanctions, Meinert may figure that all deals are off, and start talking to reporters. Do you want this in the papers? You’re overplaying your hand with a judge who’s on record as disliking sore losers, so a sore winner, well—you do the math.” Borgstrom spoke slowly, palpably seething with anger. “I’m perfectly capable of assessing the risks. I’ve had my corporate counsel working on this motion for the past two months, and I want it filed! This is my case, not yours!”
Jeffreys gathered his thoughts. “Mark, when another lawyer wants to rent my bar number, I see red. I’ve done things in this case I’m not proud of, but threatening a $2,000,000 sanction that only an incompetent judge would consider runs contrary to everything I stand for. And these strong arm tactics to get the tail to wag the dog really stick in my throat.” “For whatever it’s worth, I’ve already cleared it with your boss, Al Marriner. He’s got no problem going after sanctions.”
“Marriner’s not my boss, Mark. My only boss is the grey-haired guy I see in the mirror when I shave. Now, if Marriner thinks that’s the answer, let him sign the motion. But let me warn you:
If you run that Chapter 11 rap on Al, he might coldcock you!” Given that Marriner was a former pugilist and a seasoned barroom brawler prone to using his size to intimidate, an argument between the two men over money could easily get physical.
“Dean, I’m not looking to switch horses now,” Borgstrom quietly replied.
“After what I accomplished, I wouldn’t think so,” began Jeffreys. “Look, this is way too big for any snap decision. I need to study this sanction workup by corporate counsel, so you’ll have my answer tomorrow.” Jeffreys closed his briefcase and led his team out of the room.

* * *

Sustained sleep that night proved elusive. Again and again, just as Dean was about to drift off, another fragmentary thought prompted tossing and turning. Financial concerns dominated, because if Borgstrom & Co. filed for bankruptcy protection under Chapter 11, the effects could be devastating. Years ago, Albert Marriner realized that his colleagues were accepting new cases without adequately assessing the risks, figuring that if the case were a loser or the client didn’t pay, the loss would be spread among the firm’s 11 partners. Marriner spearheaded an amendment to the partnership agreement whereby the originating attorney in any case bore responsibility for “recapture of allocable salaries and expenses,” and recognizing Jeffreys’ prowess in accounting and legal draftsmanship, commissioned him to devise the complex formulae and work with the firm’s computer technician to carry it into effect. Dean rose to the challenge, but now faced the sublime irony that several hundred thousand dollars in salaries paid to the firm’s associates to grind out the billable hours defending Borgstrom’s gargantuan fee could be backcharged to him.
But there was more. Personal autonomy was a major part of Dean’s self-image, and that was under attack by Borgstrom. As an older partner in the Marriner firm, he enjoyed a level of independence that others envied. He didn’t accept undesirable clients or cases—that was the role of the firm’s junior attorneys. His yeoman days entailed tedious hours slogging through lay depositions, answering interrogatories, doing small-stakes trials, and dealing with what Marriner called “junkyard cases and mangy clients.” But now, his dues were paid. Let others take lay depositions; he would examine physicians, engineers, accountants and other experts. Let others draft summary disposition motions; he would do the editing, embellishing them with his unique literary flair, for Jeffreys was a master wordsmith. Let others watch in awe as his powers of persuasion captivated judges and juries alike.
At 4:15, Dean finally surrendered to insomnia, brewing a cup of coffee that he took into his combined home office and den. With burled walnut paneling, built-in bookcases, and leather furniture, it was a tranquil retreat from the chaos and dysfunction at Marriner, Norgren, Abbey & Crane. Here, he could calmly deliberate on the issues facing him as a litigator, including a strategy to prevent Borgstrom and his money from being parted. Jeffreys pondered the option of allowing Albert Marriner do Borgstrom’s dirty work—a task at which he excelled. That would be too easy, as Al’s frame of reference is leverage, not ethics. But for the luck of the draw, a different judge might have drastically cut Borgstrom’s fee, or allowed a jury trial, and then Meinert might be seeking sanctions against us. But Charley isn’t that kind of a guy—and for exactly that reason, he doesn’t deserve what Borgstrom wants me to inflict on him.
Jeffreys opened a leatherbound compilation of his graduation addresses, seminar presentations and professional articles, a 60th birthday gift from his secretary. Leafing through the pages, he came to a commencement speech given at the University of Michigan Law School, and carefully read the concluding sentences: “In the arc of a career that may span five decades, clients come and go, but the things that count remain a constant. Civility, judgment, integrity, and dedication to the law as a civilizing, stabilizing force in an increasingly uncivil, unstable and violent world—these are what lawyers stand for. Today, it is fashionable to justify the unjustifiable with excuses, alibis, and trendy jargon. Situational ethics, moral relativism, the end justifies the means—these are all weasel words intended to enable those shirking their duties to escape moral responsibility. But in the grand scheme of things, your place in the pantheon of this esteemed and honorable profession will depend not on how many cases were won or lost, or how much money was earned, but by your adherence to the ethical standards that guide us. And that, more than anything else, is what makes up the soul of a great lawyer—a soul that isn’t for
sale, not at any price.”
At 9:15 that morning, Dean had Borgstrom on the phone. “I just spoke to Meinert, and he’s very optimistic about appealing. To avoid that, he’ll settle for fee reduction down to $15,000,000. I’d strongly urge you to take it.” “Does he realize that he’s got a huge hurdle to clear first? Is he prepared to pay us, if Harrigan sees it our way? ”
“He knows what he’s up against, but this notion that Harrigan will pile a big sanction award on top of what you’re already getting─Charley figures you’re just whistling Dixie. And candidly, so do I. Now, if you’re adamant about going the sanction route, well, Marriner awaits you. Just remember, though—at times, he has more balls than brains.”
“I am adamant. Thanks for your great work, Dean. Let’s have no hard feelings.” Not the
response I hoped for, but my conscience is clear, Jeffreys concluded.
***

EPILOG: FIVE MONTHS LATER
Albert Marriner strode into Jeffreys’ office and brusquely dropped a sheet of paper on his desk. “Your friend, the illustrious Judge Harrigan,” he growled, before departing just as quickly.
Jeffreys eagerly read the order:
Defendants filed a post-judgment motion for sanctions under 28 U.S.C. §1927, and Plaintiffs filed a cross motion under said statute and F.R.Civ.P. 11, along with a motion under F.R.Civ.P. 59(a)(2), asking the court to amend its factual findings and conclusions of law, and for leave to file a petition for fees and costs under Section 1132 of ERISA. The issues were extensively briefed and orally argued, after which the court announced its findings, conclusions and rulings.
For the reasons stated on the record, the Court ORDERS as follows:
1. The Plaintiffs’ Rule 59(a)(2) motion is GRANTED, and Defendants’ attorney fee is reduced from $19,589,275.30 to $11,754,740.65, or 20% of the net recovery.
2. The Defendants’ Motion for Sanctions is DENIED.
3. The Plaintiffs’ motion for sanctions against Albert J. Marriner is GRANTED, in the amount of $21,273.75.
4. The Plaintiffs may file a fee petition, as authorized under ERISA, and the Clerk shall retain $2,000,000 in anticipation thereof. The remaining $5,834,534.65 is restored to the Pension Fund.
5. The Defendants’ oral motion for a stay pending appeal is DENIED.
6. The Clerk shall make the disbursements required under Paragraphs 1, 3, and 4 above, along with accrued interest, calculated pro-rata.
/s/Peter Harrigan
U.S. District Judge
Jeffreys couldn’t suppress a smug grin. I love lawyers, but they sure make lousy clients.