It isn’t often that an Orange County law firm does work for free.
But year-old Eagan O’Malley & Avenatti LLP is offering its services on a contingency basis to try and establish business here.
Contingency cases,those that are worked on by lawyers who do not collect payment for their services unless their clients win a lawsuit,are typically associated with personal injury
attorneys.
Newport Beach-based Eagan O’Malley, which specializes in complex business litigation, is vying to be one of the few corporate law firms to boast a contingency model, according to firm cofounder Michael Avenatti.
Contingency cases require lawyers to put into them a lot of time and investment but there’s no guarantee they will win and get paid, Avenatti said, which is why many firms avoid them.
“Contingency work isn’t for everyone,” he said. “It doesn’t reward you for mediocrity on performance. It’s high risk, but it has high rewards.”
About 60% of Eagan O’Malley’s work is on contingency cases, Avenatti said. The firm generates revenue from a percentage of the verdicts awarded to its clients.
It also generates revenue by charging legal fees that range from $225 to $650 an hour depending on the type of work being provided, Avenatti said.
Founders’ Pedigrees
Eagan O’Malley is the new kid on the block, but its founding partners aren’t new to the legal industry.
Michael Eagan worked as a litigation partner at San Francisco’s Howard, Rice, Nemerovski, Canady, Falk & Rabkin before starting a San Francisco-based firm in 1992.
John O’Malley worked at Los Angeles-based Paul Hastings Janofsky & Walker LLP before joining Call, Jensen & Ferrell in Newport Beach.
Avenatti worked at Los Angeles-based O’Melveny & Myers LLP and then went to Santa Monica-based Greene Broillet & Wheeler LLP.
The partners worked with one another on various cases over the years before starting their own boutique firm, Avenatti said.
They wanted to carve a niche in the legal market as a corporate law firm that specializes in contingency cases, he said, and chose OC because the county has an array of small to midsize companies that can’t afford high hourly legal fees for lawsuits that can last for years, Avenatti said.
“A lot of small to midsize companies just don’t have the resources to pay hourly legal fees,” he said. “People are more in tune
with the bottom line in this economic environment.”
The firm, which counts clients such as London-based Sony Ericsson Mobile Communications AB, Fannie Mae of Washington D.C. and Connecticut’s General Electric Co., has had its share of victories.
In October, Eagan O’Malley won a $31.8 million verdict against KPMG LLP in an accounting negligence lawsuit brought by gift manufacturer Cast Art of Corona.
Eagan O’Malley’s lawyers believe the verdict is the largest to ever be awarded against KPMG.
The second largest award was a $22.5 million settlement KPMG reportedly agreed to pay Anaheim-based laptop bag maker Targus Group International Inc. in 2006 also argued by Eagan O’Malley’s named partners.
KPMG plans to appeal the Cast Art verdict, according to spokesman Dan Ginsburg.
The firm has received more inquiries about contingency work since the victory, but the firm has to be very selective about the lawsuits it takes on, Avenatti said.
“It has to be a case we know we can win,” he said.
If the firm takes on a case that it loses, the end result can be devastating.
“We don’t collect anything,” Avenatti said. “We can easily lose $1 million in out-of-pocket costs and $2 million in fees.”
Like other law firms that work on contingency, Eagan O’Malley can go for years without getting paid on a case.
“We have to run lean,” Avenatti said.
The firm has some 12 lawyers spread across its offices in Newport Beach, Los Angeles and San Francisco, Avenatti said.
Eagan O’Malley wants to stay small.
“We like being a boutique firm,” he said.
