Former Client Disputes Arbitration Decision Awarding $3M in Attorney Fees

On January 29^th, a unique case was filed in Dallas County. In Parallel Networks, Inc. v. Jenner & Block, LLP, a former client of the law firm filed a motion to vacate an arbitral award of $3 million in attorney fees. In the case, Jenner & Block represented Parallel Networks on a contingency fee basis in a lawsuit against Oracle. After losing a motion for summary judgment, the law firm reportedly determined that Parallel Networks was unlikely to win a large financial award and withdrew from representing the company. The parties’ representation agreement stated any disputes over attorney fees would be subject to arbitration.

With the assistance of new counsel, Parallel Networks later settled the disagreement with Oracle for $20 million. After the case settled, Jenner & Block sought in excess of $10 million in attorney fees from Parallel Networks for the work previously performed by the firm. Pursuant to the parties’ representation agreement, the fee dispute was arbitrated and Jenner & Block received a $3 million award. Parallel Networks now argues the award should be vacated because the arbitrator “exceeded his powers” and Texas law prohibits a contingent fee attorney from seeking further compensation from a client after the relationship is ended based solely upon economic reasons. It will be interesting to see how the court rules.

Thanks to Dennis Crouch at PatentlyO for bringing this case to our attention. Stay tuned to Disputing for more updates on this case.