When Japanese gaming billionaire Kazuo Okada hired elite litigation boutique Bartlit Beck in 2017, he was in a difficult spot.

For five years, he'd been locked in a billion-dollar battle with Wynn Resorts, which had ousted him from its board and forcibly redeemed his shares. Trial was six months away, and a series of adverse rulings—not to mention a finding of fact by the trial court judge in Nevada that he "was not a credible witness"—left Okada's prospects for recovery dim.

Less than six months later, Bartlit lawyers led by Chris Lind, Philip Beck, Hamilton Hill and Brian Swanson helped deliver an outcome that a panel of arbitrators deemed an "extraordinary monetary recovery." 

Wynn agreed to pay out $2.6 billion and Okada got to clear his name to boot, getting all claims against him dismissed with prejudice. As he told The Wall Street Journal at the time, "Now the world knows what I have known all along—I am innocent."

Most clients would be grateful, right? But Okada responded by refusing to pay Bartlit Beck's $50 million contingency fee, declaring it "unconscionable." 

Admittedly, it does work out to about $10 million a month—a substantial haul. But that doesn't mean Okada is off the hook. 

In a decision made public on Tuesday, a panel of arbitrators sided whole-heartedly with Barlit Beck, ordering Okada to pony up the full fee plus interest and costs, for a total $54,641,079. Every day he doesn't pay adds another $12,243 in interest to the tab.

"We don't like being in the position of litigating against a client," said Bartlit partner Adam Hoeflich, who represented the firm in the arbitration along with Lind and Latham & Watkins partner Sean Berkowitz. "The client came to us in a difficult situation. A successful result was not only far from guaranteed, but doubtful… We delivered exactly what they asked for."

Some background: Okada founded gaming giant Universal Entertainment Corp., or UEC, which makes pachinko and slot machines, arcade games, and publishes video games. He owns about 67% of the company.

Until 2012, UEC also owned about 20% of Wynn Resorts, and Okada sat on Wynn's board. But Okada was forced out after a year-long investigation by former FBI director Louis Freeh, "who found that Okada likely violated the Foreign Corrupt Practices Act … and committed other illegal acts to advance his business interests in Asia," according to the arbitration decision.

 The board forcibly redeemed Okada's shares (held by UEC). In exchange, Wynn gave UEC a 10-year nontransferable note. Wynn also sued Okada in Nevada state court, alleging breach of fiduciary duty.

Okada's troubles mounted. In early summer 2017, UEC ousted him as its chairman based on allegations that he had misappropriated company funds. 

Up until then, lawyers from Buckley had jointly represented UEC and Okada in the Wynn Resorts litigation. Buckley continued on as UEC's counsel, but was conflicted out of repping Okada—who then determined he needed his own ace litigators to supplement his team from Holland & Hart. (According to the decision, his short list also included Ted Wells of Paul Weiss.)

Bartlit Beck got the nod.

The decision by neutrals Dana Welch, Nancy Lesser and Ronald Prager offers a fascinating look at the nitty-gritty of the firm's hybrid fee deal with Okada.

Bartlit initially asked for a $700,000 per month fixed fee, $75,000 per day for trial, and the potential for a success bonus of between $15 million and $50 million.

Okada countered at $500,000 a month. They agreed on $600,000, and the contingency success bonus was capped at $50 million. Bartlit Beck also had to foot the bill for a Japanese-speaking lawyer to assist Okada, projected to cost up to $100,000 per month.

Before the deal was signed, Barlit lawyers met with Okada at his home in Tokyo, where the global chief legal officer of Okada's company was present, as was Tatsu Kamiyama, a lawyer from Clifford Chance whom Okada had engaged.

In other words, this was not some hastily executed agreement by unsophisticated naifs.

The Barlit lawyers threw themselves into the work, reviewing nearly one million pages of documents, testimony from 150 days of depositions, and thousands of court filings.

Things promptly started to turn around for Okada. The trial court judge granted a motion to reconsider a decision granting summary judgment in favor of the Wynn Resorts' directors. "The result: Okada had affirmative claims to pursue, and with them, the chance for recovery," the arbitrators wrote. "This significant victory positioned Okada for the favorable settlement that occurred several months later."

And then (for Okada, at least) came a windfall—a sexual misconduct scandal erupted involving Steve Wynn, the CEO of Wynn Resorts, and with it, a threat to the company's all-important gaming license. Suddenly, the dynamics of the case shifted and Okada had new leverage. 

The case settled at a premium—and Bartlit sought to get paid. 

Okada balked. 

"No law firm deserves to be paid $10,600,000 per month for 5 months of work as co-counsel with four other high caliber firms sharing the work on ANY case regardless of the client's wealth," Raymond Ryan of Stanford, Ryan & Associates, who represented Okada in the fight with Barlit, wrote me in an email.

Unable to collect, Bartlit in 2018 filed a claim for breach of contract with the International Institute for Conflict Prevention and Resolution, per the firm's agreement with Okada.

Okada responded by filing an action in Nevada state court seeking to declare the agreement and its arbitration clause unconscionable and void and to enjoin the arbitration. After the suit was removed to federal court, Okada voluntarily dismissed it and participated in the arbitration—until he didn't.

During discovery, the panel wrote, "Okada engaged in various dilatory tactics … that caused significant expense, delay, and at times violated the panel's orders."

For example, "The panel had ordered Okada, prior to his deposition, to search his own email and files for responsive documents, and specifically to search for documents using Japanese search terms, as Japanese is the only language he speaks. Okada failed to do so, only searching for emails on his iPhone on the two mornings of his deposition, claiming that no responsive documents existed."

The hearing was set for a Monday late October of 2019, but on the Friday before, Ryan emailed the panel. "I was packed, prepared and ready to get on a plane tomorrow morning at 10:40 a.m. along with my trial partner," he wrote. "However, Mr. Okada recently informed me that he is not attending the scheduled arbitration. I sincerely apologize for this situation to all of you on behalf of my firm and Mr. Okada."

He followed up, writing "Mr. Okada has instructed me to provide you with his translated response: 'I believe that the alleged agreement that Bartlit Beck is trying to enforce against me is invalid and therefore unenforceable. I have explained many times the number of reasons that this alleged agreement is invalid. If Bartlit Beck does not agree that the alleged agreement is invalid, there is no reason for me to attend the proposed arbitration. Further, I have become ill and am unable to make the long journey to the USA. Even if I were to agree to participate in the proposed arbitration, I am unable to do so due to my health.'"

The panel responded, "We will hear arguments first thing Monday morning as to the appropriate remedy, so both parties should be prepared to address this issue. The panel will then make its decision on the record. Thank you, and safe travels."

According the decision, "In less than an hour, Ryan responded. 'Unfortunately, Mr. Okada informed us that we are not authorized to attend the arbitration because he rejects the validity of the engagement agreement and objects to the proceeding. We are cancelling all reservations, witnesses and ordered services.'"

So…that didn't go over well. The panel responded that Okada "has forfeited the right to present any defense so the panel will not accept or consider any papers that he may now seek to submit. We will base our award on whether claimant has met its burden of proof."

Their answer? A resounding yes. That is, they found the contract was valid, that Okada signed it without duress, that Bartlit fully performed its obligations and "the terms of the agreement unambiguously entitle Bartlit Beck to the $50 million contingency fee." Moreover, the panel found the fee was reasonable and that Okada breached the agreement by failing to pay it as promised.

In a final dig, they added, "Although the panel was surprised to learn at the last minute that Okada would not participate in the long-scheduled evidentiary hearing, in retrospect, we should not have been. He acted in accordance with his previous behavior."

As for Ryan, in his email he said, "We were prepared to present a valid and strong defense and were deprived of the opportunity to obtain justice for our client. We are now working on proposing legislation to limit or prohibit arbitration clauses in attorney/client fee agreements."