Bruce Nagel, with Nagel Rice. Bruce Nagel, with Nagel Rice.

At least six law firms in New Jersey and Texas used invalid retainer agreements to charge illegally excessive contingency fees for more than 1,400 clients who sued over transvaginal mesh devices, according to a new class action.

The suit alleged legal malpractice claims against Nagel Rice in Roseland and the Potts Law Firm in Houston, along with at least four other firms in Houston. Plaintiff Debbie Gore, a resident of Dickinson, Texas, alleged that her retainer agreement paid a 40% contingency fee, which was illegal under New Jersey law. She filed the case Monday in Bergen County Superior Court, where mesh lawsuits against C.R. Bard Inc. and Johnson & Johnson's Ethicon Inc. have been coordinated.

“On information and belief, defendants collectively paid themselves substantial attorney's fees and expenses from the settlements of the plaintiff's and the proposed class members' cases, in violation of New Jersey law,” says the complaint, which seeks compensatory and punitive damages and an accounting of the 1,450 other cases filed by the same law firms.

Bergen County Superior Court Judge Rachelle Harz ordered the defendant firms to respond by July 2.

Gore's attorney, Adam Slater of Mazie Slater Katz & Freeman in Roseland declined to comment about the complaint. Nagel Rice partners Bruce Nagel, Andrew O'Connor and Robert Solomon were named as individual defendants in the case.

“This is a ridiculous lawsuit by my former partners in retaliation for our $40 million malpractice suit against them that we filed,” Nagel wrote in an email, referring to lawsuit he filed against Mazie Slater partner David Mazie, who was his law partner until an acrimonious split in 2006. “This firm is also suing other firms for giving them a minuscule share of the $500 million fees in the mesh MDL. They have lost every attempt to get money from us and they should spend their time representing clients and not chasing other law firms with nonsense cases.”

Responding to Nagel's comment, Slater said, “This class action lawsuit has nothing to do with any other case. Mr. Nagel filed more than 1,000 cases on behalf of plaintiffs with no retainer agreements with any of them, among many other things. The facts speak for themselves.”

The suit is the latest skirmish over attorney fees in transvaginal mesh devices, surgically implanted in women to treat pelvic organ prolapse and incontinence. Lawyers have filed more than 100,000 lawsuits across the country over the devices, with verdicts reaching multimillion dollars, but many cases have settled.

Mazie Slater is one of four firms challenging an estimated $550 million in fees to attorneys who worked for the “common benefit” in the transvaginal mesh litigation. The fund comes from multidistrict litigation pending in the U.S. District Court for the Southern District of West Virginia.

Slater has accused lawyers tasked with doling out those fees of self-dealing and bill padding while limiting compensation to his firm, which filed the first case in the country against Ethicon in 2008 in New Jersey state court and, last year, obtained a $68 million verdict against Bard.

Derek Potts, national managing partner of the Potts Law Firm, is on the executive committee leading the MDL, while Riley Burnett, of Burnett Law Firm in Houston, is on the MDL's fee and compensation committee. This week's legal malpractice complaint names Potts individually, and Burnett Law Firm is a defendant.

Potts and Burnett did not respond to emails and calls requesting a comment.

Monday's lawsuit alleges that Nagel Rice and the Potts Law Firm filed Gore's complaint in 2014 despite not having retainer agreements that were valid under New Jersey law. They filed about 1,450 similar suits against Ethicon and Bard in New Jersey state court.

“In violation of New Jersey law, defendants' retainer agreement with plaintiff and other members of the class contracted for a 40% attorney's fee and deduction of expenses from the plaintiff's portion of the recovery, both of which were improper and in violation of New Jersey law,” Slater wrote. New Jersey law caps contingency fees in products liability cases based on their settlement values, with the maximum at 33 1/3%.

The suit also alleges other violations of New Jersey's contingency fee law, such as paying law firms that provided no legal services in the case, appearing as legal counsel while not having a retainer agreement and improperly deducting the fees from the gross settlement value.

Other defendants in the complaint are:

  • Previous names for what is now Houston's Bailey Cowan Heckaman, and its founding member, K. Camp Bailey. Bailey did not return a call for comment.
  • Houston-based Mesh Litigation Center, which the complaint described as a “a law firm and/or administrative entity owned and operated by the Potts defendants and the Bailey defendants, for the purpose of settling and administratively processing the settlements of pelvic mesh cases and claims.”
  • Annie McAdams, a solo practitioner in Houston, along with her former firm, Houston-based Steelman McAdams. McAdams declined to comment.
  • Houston's Junell & Associates. Junell & Associates managing partner Harris Junell did not respond to an email seeking comment.