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Keywords

contractlitigationattorneymotionsummary judgmentfiduciarybankruptcyfiduciary dutybreach of fiduciary dutyrescission
contractlitigationattorneybankruptcy

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Ryan v. Butera, Beausang, Cohen & Brennan, 193 F.3d 210

Facts

Raymark, a manufacturer of asbestos-containing products, faced numerous personal injury claims leading to its bankruptcy in 1989. Anticipating renewed litigation after the bankruptcy stay was lifted, Raymark hired Beausang and his firm under a contract that included a $1 million nonrefundable retainer. After only ten weeks, Raymark terminated Beausang and sought to recover the retainer, claiming breach of fiduciary duty and rescission. Beausang counterclaimed for additional fees, leading to cross-motions for summary judgment.

Raymark, a manufacturer of asbestos-containing products, faced numerous personal injury claims leading to its bankruptcy in 1989. Anticipating renewed litigation after the bankruptcy stay was lifted, Raymark hired Beausang and his firm under a contract that included a $1 million nonrefundable retainer.

Issue

Was the $1 million nonrefundable retainer enforceable under Pennsylvania law, and was the fee provision reasonable?

Was the $1 million nonrefundable retainer enforceable under Pennsylvania law, and was the fee provision reasonable?

Rule

Under Pennsylvania law, a nonrefundable general retainer is enforceable if it is reasonable and not clearly excessive, and the attorney-client relationship is contractual.

Under Pennsylvania law, a nonrefundable general retainer is enforceable if it is reasonable and not clearly excessive, and the attorney-client relationship is contractual.

Analysis

The court found the agreement clear and unambiguous, determining that the $1 million fee was a nonrefundable general retainer intended to secure Beausang's availability for Raymark's anticipated litigation. The court applied the McKenzie standard to assess the reasonableness of the fee, concluding that Raymark benefited from the arrangement despite the short duration of the engagement, as it secured access to Beausang's services.

The court found the agreement clear and unambiguous, determining that the $1 million fee was a nonrefundable general retainer intended to secure Beausang's availability for Raymark's anticipated litigation.

Conclusion

The court affirmed the judgment for Beausang on Raymark's claim for the return of the retainer and for Raymark on the counterclaim, holding that the retainer was enforceable and reasonable.

The court affirmed the judgment for Beausang on Raymark's claim for the return of the retainer and for Raymark on the counterclaim, holding that the retainer was enforceable and reasonable.

Who won?

Beausang prevailed on Raymark's claim for the return of the retainer because the court found the nonrefundable retainer enforceable and reasonable under Pennsylvania law.

Beausang prevailed on Raymark's claim for the return of the retainer because the court found the nonrefundable retainer enforceable and reasonable under Pennsylvania law.

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