Trenk DiPasquale Della Fera & Sodono is entitled to some of the $184,000 previously awarded to it in litigation against a former client, a state appeals court has said, although it reversed and remanded on some points.

The Appellate Division on Monday affirmed the award of $94,041 in fees the West Orange firm claimed it was owed for representing corporate and individual clients in connection with a series of cases against them.

However, the panel reversed the award of $61,071—the amount Trenk DiPasquale racked up in its effort to collect from the client.

And the panel also remanded the award of $41,495 in interest on the unpaid client fees, for a determination on whether the 18 percent annual interest rate imposed by the firm's retainer agreement was reasonable.

According to the unpublished decision, Trenk DiPasquale was retained to defend Industrial Urban Corp., its principals and related entities in connection with lawsuits filed by Valley National Bank alleging default on some $2 million in lines of credit. Attorney and client at some point discussed the possibility of a Chapter 11 bankruptcy filing, though that never materialized, and Industrial Urban and the other defendants retained other counsel and resolved the litigation.

Trenk DiPasquale later attempted to collect $94,041 in fees for work done on the Valley National litigation, including fee arbitration, but to no avail. The firm lodged a civil case against its former clients in the Law Division in early 2015. The defendants filed a counterclaim for legal malpractice and gross negligence, claiming that the firm didn't follow through on the discussed strategy of threatening a Chapter 11 filing in order to leverage a better outcome in the Valley National litigation.

The counterclaim was dismissed, as the defendants' expert was found to lack expertise in bankruptcy law. The defendants amended the counterclaim to add a breach-of-contract count, but that, too, was dismissed. Essex County Superior Court Judge Stephanie Mitterhoff found that the contract claim was in essence a legal malpractice claim that required, and still lacked, an affidavit of merit from a bankruptcy practitioner.

In early 2017, Mitterhoff awarded the sums Trenk DiPasquale sought, minus $12,000, and entered a $184,136 judgment in the firm's favor.

The defendants appealed, raising various points—some with success.

In Monday's per curiam decision, Appellate Division Judges Joseph Yannotti, Robert Gilson and Arnold Natali Jr. ruled that Mitterhoff wrongly awarded Trenk DiPasquale $61,071 in fees for the time it spent attempting to recover the money owed in the underlying litigation.

In the state Supreme Court's 2012 decision in Segal v. Lynch, “after addressing the competing policy arguments, the court concluded the 'better rule' was that fee awards to self-represented attorneys should be disallowed,” the panel said. “We perceive no exceptional circumstances in this record that would justify a departure from the holding in Segal.”

The panel also remanded for findings and conclusions on whether the 18 percent annual interest rate provided for in the retainer was reasonable.

The Rules of Professional Conduct “do not address the amount of interest that can be charged on outstanding legal invoices, as to legal services,” but “RPC 1.5(a) requires that 'a lawyer's fee … be reasonable,'” the court said, finding “no principled reason why a similar requirement should not be extended to interest charged on those fees.”

As to the award of the fees for work in the underlying case, and the dismissal of counterclaims, the defendants' appeal failed.

The court rejected the argument that an affidavit of merit was unnecessary for the counterclaims, noting that the retainer made no mention of bankruptcy services and the “failure to file for bankruptcy was not a clear breach of a contractual provision.”

The contract claim “was not based on a clear breach of the terms or conditions of a retainer agreement, but was based on proof of a deviation from the professional standard of care of an attorney in the field of bankruptcy,” and the defendants' expert admittedly lacked bankruptcy expertise, the panel said.

The court also rejected the defendants' arguments that the fees charged in the Valley National litigation were unreasonable.

The defendants “did not challenge any specific entry made in any of the statements,” the panel said.

“The rates per hour for partners, associates, and support staff were all included in the retainer agreement. In response, and as the court correctly noted, defendants failed to produce any evidence, consistent with Rule 4:46-2, which created a genuine and material factual issue supporting their claim that Trenk's fees were unreasonably high or that the amount charged deviated from common standards,” the court said.

As for the argument that Industrial Urban should not be held responsible for the full amount of the fees, the court pointed out that the retainer provided for the representation of Industrial Urban, and that the company “faced significant liability” in the Valley National litigation because there were alleged fraudulent transfers of assets to the company.

“Thus, Industrial Urban received the benefit of Trenk's work on the behalf of co-defendants, a fact that is not changed simply because in certain circumstances Trenk itemized its bills to reflect those instances where it provided specific legal services to Industrial Urban,” the panel said.

Little work was done specifically for Industrial Urban and the retainer agreement didn't specifically state that each defendant was jointly and severally liable for the full amount of fees, according to the defendants, but the court took no stock in those positions, noting that the company's president signed the retainer.

Finally the panel turned back the defendants' effort to void a retainer provision that provided for the client's waiver of the right to contest fees in the event that no objection came within 30 days of invoicing.

“Here, defendants did not submit any evidence to the trial court demonstrating that the 30-day objection period was fraudulent or that it is even an atypical or uncommon practice,” the panel said. “To the contrary, on its face, such a policy is reasonable because it promotes the timely resolution of disputes related to an attorney's services.”

Trenk DiPasquale earlier this year was essentially absorbed by McManimon, Scotland & Baumann, though one of its name partners, Joseph DiPasquale, went to Lowenstein Sandler.

Hackensack solo William Goldberg, counsel to Industrial Urban and the other defendants, said there was no decision yet about seeking Supreme Court review in the case.

He said the most important legal issue in the case is that Industrial Urban—a “nominal defendant” for whom Trenk DiPasquale did almost no work—is held jointly and separately liable for the full law firm bill.

He added that Industrial Urban already paid the judgment.

Representing Trenk DiPasquale on appeal was firm lawyer Henry Karwowski. Karwowski, now a partner with McManimon Scotland, didn't return a call about the decision.

Neither did William O'Connor of McElroy, Deutsch, Mulvaney & Carpenter in Morristown, who represented Trenk DiPasquale on the defendants' counterclaims.